Apple has released the company's first quarter 2016 results, and highlights include 74.8m iPhones, 16.1m iPads, 5.3m Macs, $18.4b profit.
"Our team delivered Apple's biggest quarter ever, thanks to the world's most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV," said Tim Cook, Apple's CEO. "The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.""Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment," said Luca Maestri, Apple's CFO. "We generated operating cash flow of $27.5 billion during the quarter, and returned over $9 billion to investors through share repurchases and dividends. We have now completed $153 billion of our $200 billion capital return program."
So Apple beat expectations on earnings, but fell short on revenue and unit sales. In other words, the company made a ton of money in profits but off of sales that weren't quite as large as Wall Street expected.
For context, Apple is facing a matured mobile market that already boasts incredibly high adoption rates for the company's profit, and a global economy — including and especially a Chinese economy — that's not in the best shape for a company that sells multi-hundred-dollar phones and multi-thousand-dollar computers.
Apple typically concentrates on making great products in hopes that the rest simply works itself out over time. Wall Street, of course, hates that approach and would much rather see Apple spin on whatever the most recent trend is in the market, no matter how risky it is to long term sustainability. (See Netbooks, budget phones, televisions, etc.)
Products will continue, including the rumored iPhone 5se, the anticipated iPhone 7, and the reported interest in cars and virtual/augmented reality. The most interesting aspect right now, though, is the more overt positioning of the company as a services business with recurring revenue potential far beyond initial device sales. That includes the big, blinking, neon 1 Billion Active Devices number.
Apple seems to be taking a multi-faceted approach to services revenue. In addition to the income generated from iTunes and App Store purchases, the company is adding Apple Music subscriptions, Apple Pay transactions, rumored Apple News subscriptions. Such services also increase the overall value of traditional businesses, namely device sales.
Apple Upgrade Program, while not generating independent revenue, begins to transition the iPhone itself into a service, and one that keeps customers on the platform and in the ecosystem. Services in Q1 2016 generated $5.5 billion, up 15%. The potential could be enormous.
Regardless, Apple just posted the best results of any company, ever. So, of course, expect the "Apple is doomed" headlines to intensify.
You can see everything broken down in chart form over at Six Colors and the full press release below!
Apple today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter's revenue.
"Our team delivered Apple's biggest quarter ever, thanks to the world's most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV," said Tim Cook, Apple's CEO. "The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices."
"Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment," said Luca Maestri, Apple's CFO. "We generated operating cash flow of $27.5 billion during the quarter, and returned over $9 billion to investors through share repurchases and dividends. We have now completed $153 billion of our $200 billion capital return program."
Apple is providing the following guidance for its fiscal 2016 second quarter:
- revenue between $50 billion and $53 billion
- gross margin between 39 percent and 39.5 percent
- operating expenses between $6 billion and $6.1 billion
- other income/(expense) of $325 million
- tax rate of 25.5 percent
Apple's board of directors has declared a cash dividend of $.52 per share of the Company's common stock. The dividend is payable on February 11, 2016, to shareholders of record as of the close of business on February 8, 2016.
Apple will provide live streaming of its Q1 2016 financial results conference call beginning at 2:00 p.m. PST on January 26, 2016 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.
