Apple Beats Expectations With $51.5 billion Quarter, 48 Million iPhones Sold

Apple has announced its fiscal Q4 earnings. Financial analysts had been expecting $51.04 billion in revenue and earnings per share (EPS) of $1.88. Apple beat both sets of expectations with $51.5 billion in revenue and $1.96 EPS.

The company said it had net profit of $11.1 billion. Gross margins were 39.9 percent versus expectations of 39.3 percent. Apple said its record fiscal Q4 revenues were fueled by iPhone, Mac and Apple Watch sales. The company’s shares are up in after-hours trading.

Here are the device numbers, also reflected above:

• iPhone: 48.04 million units; $32.2 billion in revenue
• iPad: 9.8 million units; $4.27 billion
• Mac: 5.7 million units; $6.88 billion
• Services: $5.08 billion
• Other (including Apple Watch): $3.04 billion

The Mac outperformed expectations, while both the iPhone and iPad came in somewhat under analyst consensus estimates. Greater China was down sequentially but almost double a year ago. All other regions were up.

Notes from the earnings call:

Highlights from CEO Tim Cook’s opening remarks:

• 231 million iPhones sold in fiscal 2015.
  
• Generated $53 billion in net income in FY2015.
• Demand for new iPhones is exceeding supply.
• Sold 5.7 million Macs (defying 11 percent industry contraction).
• $5.1 billion in services revenue, an all-time record.
• Apple Watch sales ahead of expectations.
• Over 13K apps for the Apple Watch.
• 25 stores in Greater China, heading toward 40 stores.
• 61 percent of active iOS devices now running iOS 9.
• Apple Music: More than 15 million accounts, 6.5 million paying customers.
• 50 auto models announced with Car Play support.
• Apple News: 40 million readers.
• Enterprise revenues $25 billion over the past year.

CFO Luca Maestri:

• Apple growth despite major currency “headwinds.”
• Quarterly cash flow: $13.5 billion (fourth quarter record).
• iPhone growth 22 percent year over year.
• Significant growth in Asia and China. China was 31 percent of quarterly revenue.
• Mac growth driven primarily by the new Macbook.
• iPad 73 percent share of tablets priced above $200.
• Apple App Store revenue grew more than 120 percent year over year.
• The “other” revenue category grew 61 percent year over year due primarily to the Apple Watch.
• 463 global Apple Stores.
• $205 billion in cash on hand (91 percent of total outside US).

Selected excepts from analyst questions and discussion:

Question about modest holiday outlook: Tim Cook says guidance is actually 8 to 10 percent beneath currency challenges. Cook believes that iPhone growth in the next quarter will be partly fueled by “switchers” from Android. Expects to do better also in emerging markets and China.

There were several questions about Apple’s perceived weaker outlook over the next several quarters. Cook repeated the list of growth drivers above, but at a very general level.

Question about boosting enterprise revenues: Will there be an expanded sales force? Cook says no.

Question about China and iPhone sales growth. Cook said that the iPhone 6 is the top-selling phone in China, and the iPhone 6 Plus is number 3. Cook says that China eventually will be Apple’s top market.

Android switchers: 30 percent of iPhone buyers last quarter were Android switchers, according to Cook.

Despite currency-related price hikes in non-US markets, Maestri says that “iPhone sales have been very resilient.”