Apple is reporting its third-quarter earnings after the bell this afternoon. This will be the first quarter where the company’s new iPhones have been on sale — though only for a few weeks or so. Nevertheless, Apple’s earnings reports are always huge news for the company’s stock, which has basically gone back to where it started at the beginning of the year in recent weeks.
But still, the company has other products than the iPhone that it can talk about — particularly the Apple Watch. The earnings report should come out at around 1:30 PM Pacific, and TechCrunch’s Alex Wilhelm and Matthew Lynley will be dissecting the report and bringing it up-to-the-second information as it comes in.
All that and Apple is off about 30 basis points. So, nothing really happened. Go have a drink.
And that’s a wrap! Big things impacting Apple’s upcoming Quarter: foreign exchange, popularity in China, of course the new iPhones, and so on and so forth.
Thanks for joining!
Annnnd that is it.
New iPhones were available in China for just two days, according to Cook. Also, according to the exec, the 6S is the company’s most popular device right now.
In short, if you want Apple to do well, it’s time for the dollar to take it in the shorts.
Talking the foreign exchange impact again on Apple’s upcoming Q1 earnings, “it remains a significant headwind,” Maestri says. “On a net basis, foreign exchange will clearly be a sequential headwind.”
A small bit of color, for those following along in text. Tim Cook, Apple’s CEO, is a pretty commanding presence on the call. He is taking 100% zero static from analysts.
Cook points out that no one has asked about the iPad yet. Here’s the quick and dirty from him for iPads in China:
In China, the developer community is growing faster than any other country in the world, Cook says. “The ecosystem there is very, very strong. I was very impressed with the number of developers I met last week, and of course customers at stores are enthusiastically contagious.”
We are 46 minutes into this call, so we have about 15 minutes left. So far, no one has landed a real blow on Apple. Some growth concerns, but Apple is shouting forex! as a decent parry.
Here’s a thought: Apple is pivoting, slightly, to the enterprise, but mostly sells one-off products, like computers. It’s an inherently non-SaaS proposition, somewhat. We’ll dig more into this, but it’s an interesting anti-riff on what most companies that are working on selling products into the enterprise are doing, strategically.
That’s an important thing to note, as Apple has that huge partnership with IBM. Apple is quietly building a huge enterprise business.
According to Cook, the iPhone 6 was the bestselling smartphone in mainland China last quarter.
Apple’s not planning on building out an enterprise sales force, Cook says.
“I don’t envision Apple having a large enterprise sales force, we’ll continue adding some people, more on the engineering side. But I don’t envision having a large direct sales force.”
Put more simply, if currency rates had stayed the same compared to the year-ago quarter, Apple would have put even more points on the board.
You might not really care about global exchange rates, and I don’t blame you. But when a company’s financial performance is greatly predicated on sales outside of its home country, and rates change, it can materially impact sales growth.
Back to Apple’s stock really quickly: it’s about flat right now, so nothing super exciting for investors on the call thus far.
We just spent a chunk of time discussing financial models, during which CEO Tim Cook dropped a bomb on the question. He essentially was like, no, and I disagree with your model, and you are an idiot.
Analyst: Just to follow up…
I wonder if they have speech trials for CFOs — that’s to say, if your voice is exciting, you are not hired.
These plans are being offered in some derivation in dozens of countries around the world, Cook says. “It seems we’re on the front end of a fairly major trend in the industry.”
Lynley, for the noobs, what does that mean in PlainSpeak?
Carriers are also offering upgrade plans, and in aggregate it’ll have a positive impact in replacement cycles, Cook says.
Also two other questions.
Gene Munster! It’s him! Isn’t he the guy who keeps saying that Apple is building a TV?
How do you think about the iPhone upgrade cycle compressing over the next few years, one analyst asks.
That was a long one because it was an important question, by the way.
According to Cook, the App Store is growing at over 20%. It has become a “sizable business,” according to CEO Tim Cook.
Analysts love to follow up. They are akin to PR people, but more annoying.
Who loves follow-ups
FOLLOW UP TIME
Apple just said that its enterprise business is now a $25 billion enterprise tip. Impressive.
“Apple TV is off to a great start, Apple Watch is just getting going, the App Store hit a new record again last quarter, and the growth seems to be really great there. I’m really happy with the early days of Apple Music and the people moving from the free trial to the music business. And finally the enterprise business is not to be underestimated, I doubt that many people knew we had a $25B enterprise business we quietly built in not too many years. But our penetration is low but we have significant actions going on to really deepen that.”
Please applaud how fast Lynley just typed that out.
“We believe iPhone will grow in Q1, we based that on what we’re seeing from a switcher point of view. We recorded the highest rate on record for Android switchers last quarter at 30%. We also look at the # of people that have upgraded that were in the install base prior to iPhone 6 and 6 Plus. That number is in the low 30 percentages, so we feel like we have a very open field in front of us. Our performance in emerging markets, although it is quite good… our market share is low and the LTE penetration in these markets is quite low,” Cook says.
“Also, if I zoom out and look at China, as I said before, we see an enormous change in China over the next several years. The latest study I’ve seen from McKinsey, if you look back 5 years China’s middle class had about 50m people, if you look ahead 5 years it’ll have 10 times that number. We’re reasonably well positioned in China, I’m sure we can do better but I think we’re doing fairly well there.”
Cook is currently discussing constant-currency headwinds, and how they impact earnings. Again, forex is to companies as weather is to economists.
“How do you get comfortable that Apple isn’t on the verge of ex-growth?”
Question and answer time! Who’s ready for analysts to ask 3 questions per session.
Ok we are on to questions! Strap in!
Apple declared a cash dividend of $0.52 per share, Maestri says.
While I enjoy the company of my colleague, he just misspelled ‘beer,’ which I find inexcusable.
I think we could all use some Red Bull.
Apple is now up a mere 0.06% in after-hours trading. Its shares are fading as its earnings call goes on. Perhaps investors could use a Red Bull.
Apple just extended its iPad ancillary revenue accounting period to three, from two years. I presume that that is due to the fact that consumers are buying iPads at a slower cadence than they do with iPhones. As such, you must adjust.
Breaking! Apple has opened a store in Belgium. In other news, Trappist monks are fans of Facetime.
According to the company, it has 1 million members in its Chinese developer community.
Surprise shoutout to Macs being deployed in IBM — with each device saving $270 thanks to reduced support costs and better residual value, according to Maestri. “This is a terrific example of the opportunity our devices offer to… create value in the enterprise world.”
How can you tell that Apple is Your Dad’s Tech Company? It’s currently discussing how well it is performing inside of IBM.
The CFO is currently touting iPad’s market share. It’s about 75% in the US, give or take. That is at once a lame defense, given iPad’s falling unit volume, and a slam at the larger US tablet market, given its falling unit volume.
According to the CFO, Apple saw its iPhone average selling price (ASP) rise in its most recent quarter. I presume that that boost is predicated on growing share of S iPhones, which cost more than regular-sized devices.
Current tally: Apple shares are up a 1.42%. That’s about half of its prior gains in after-hours trading. Investors are still digesting, it seems.
The CFO is now speaking. You can tell that it is the CFO as all charisma has fallen off of the call.
Okay, Apple is going over the September quarterly results in more detail. This is basically a recap of the financial statement — which we’ve covered below.
According to Cook, 40 million people are using Apple News. 70 partners are onboard.
Apple News launched in the UK and Australia with a slew of new partners, Cook says.
Not super clear what that means, but either way, the company is working to expand Apple Pay really aggressively.
Who uses American Express?
Apple is partnering with American Express to bring Apple Pay to “eligible customers in key global markets” as of today, Cook said. Apple Pay will be available to “eligible customers” in Australia and Canada this year.
Apple Pay, according to Cook, is seeing double-digit growth on a month-over-month basis. No baseline to compare to, of course, but even an Amazon’d stat can be slightly useful.
*insert Android joke here
61% of active iOS devices are running iOS 9 weeks after the release.
Cook just namechecked the iPad Pro, but didn’t disclose any sort of metrics.
Again, no stats for the Apple TV — then again, it’s been available for about a split-second.
“We think apps represent the future of TV,” Cook says.
Apple now has 25 stores in China. It expects to reach its 40 by the middle of next year.
There are now 13,000 apps for the Apple Watch, according to CEO Tim Cook.
So basically a really strong showing for the iPhone 6s and 6s Plus, though he hasn’t given out any kind of new stats just yet. Then again, Apple usually doesn’t break out specific iPhone version sales.
According to Cook, the 5.7 million Macs that it sold was an all-time records. That sound you hear is Lenovo et al crying into their porridge.
Demand for new iPhones exceeded supply exiting the quarter, Cook said, though the supply chain is doing a decent job of keeping up.
Cook just said ‘privacy.’ — Drink.
Apple completed 15 acquisitions, Cook says.
“We’re in the very early innings of this promising new part of our business,” Cook says on the Apple Watch — no stats or anything like that yet.
Cook now crowing about having 100 billion total downloads on its App Store to date. Hot take: That’s more than what Windows 10 has accreted.
According to Cook, that was the largest aggregate dollar increase in its revenue ever.
Apple reported revenue of $234B for its fiscal 2015 year, an increase of 28% over 2014, Tim Cook says.
Tim Cook is going to kick things off. He’s the uncle you wished that you had. Since he flies private.
Here we go! The call is starting for the 4Q earnings.
I am firing up a new device, as Apple wants me to use iTunes to listen to its call on my Surface Book. I currently have enough screens up to get a tan.
Here’s the quick roundup:
iPhone sales: 48.05M
iPad sales: 9.9M
Mac sales: 5.7M
T-minus 8 minutes until the earnings call. We’ll be listening in and updating as the information comes in.
Ok! That is the rough take. The earnings call kicks off in 12 minutes. If you want to get a beer, now is the time. Or two. Your humble servant is about to raid the TechCrunch fridge. I shall return.
According to the company, Apple has “completed over $143 billion of [its] $200 billion capital return program.” — Read differently, expect Apple to announce either a new program, or an extension of its current. Bored cash makes no fans.
So if you sold your Apple shares, to buy Twitter shares ahead of earnings, beers are on TechCrunch.
In other news, Twitter shares are still off nearly 11%. That’s bad. But, Twitter’ decline in value is worth a minor fraction of Apple’s gain, given the extreme difference in their aggregate market caps.
For more on Apple’s Chinese performance, our own Lucas Matney has you more than covered: https://techcrunch.com/2015/10/27/apple-revenues-in-china-shoot-up-99-in-q4/
And that is why we track YoY revenue growth, and not sequential quarter revenue gyrations with seasonal companies!
Greater China revenue was down compared to the last quarter: $12.5 billion this quarter, compared to $13.2 billion in 3Q. This can be sort of apples/oranges, and revenue has about doubled year-over-year (it was $6.3 billion in Q4 2014).
That is factually accurate. TechCrunch has pinged a few sources, and they can confirm — albeit off the record — that the amount of cash that Apple has transcends this mortal coil.
This company has so much cash it’s unreal.
I feel poor.
Apple is, by our back-of-the-envelope math, now worth just over $670 billion. Up from around $653 billion at the end of regular trading.
You don’t say!
A quote to keep things fun. This is from Tim Cook: “Fiscal 2015 was Apple’s most successful year ever.”
Apple returned $17 billion in share repurchases and dividends as part of their $200 billion capital return program.
So, Apple is up around 1/4th of an Uber in after-hours trading.
Shares of Apple are up just under 2% in after-hours trading. If that sounds surprising, given the company’s massive quarter, keep in mind that 2% of Apple is worth more than $12 billion.
That’s a lot of dollars.
Here’s the guidance for the huge upcoming holiday quarter: $75.5 billion to $77.5 billion in revenue, with gross margin coming in between 39% and 40%.
Apple’s aggregate cash supply is now north of $205 billion. That is more money, I can confirm, than I currently own.
Gross margin was 39.9 percent, compared to 38 percent in the year-ago quarter, according to the company.
Here’s a number that should make you weep: In its most recent quarter, Apple had operating cash flow of $13.5 billion. Oh, and its gross margin improved in the period to 39.9%. Like Apple or not, it’s a dope shop all around from a number perspective.
The iPhone was, as usual, the biggest revenue driver by far. $32.2 billion of the company’s earnings came from sales.
9.9 million iPads, 5.7 million Mac units.
Keep in mind that this is Apple’s final fiscal quarter of its year, so we have full-year results. According to the phone company, it’s revenue for the fiscal year of $234 billion was up 28 percent, compared to the prior year. That’s ok.
Apple sold 48.05 million iPhones.
According to first reports, the company managed to earn $1.96 per share, off revenue of $51.5 billion in revenue. That’s better than expectations.
Shares of Apple are up 2.5%
First take is that Apple beat on both revenue, and profit!
The results are out!
I have to ask, Matthew: Are you excited?
The earnings report should be out any minute now.
China’s a big question for Apple, for sure. There are also some questions around slowing growth, and China is a huge market for Apple.
Also keep in mind that the new iPhone has only been for sale for so long. That could deprecate trailing sales, while not implying that holiday quarter shipments would be light.
Tablets maybe — there are questions over whether the tablet market has actually been saturated. Then again, Apple gave the iPad a whole section to itself at the last iPhone event.
We’ll have a keen eye on Chinese sales figures, and, of course, if the iPad can stop its unit volume declines. Tablets for now? Tablets forever? Tablets maybe.
Apple’s stock hasn’t done quite so well in recent weeks, and on the year it’s given up most of its gains from earlier in the year.
In the mean time, here’s what analysts are expecting: $1.88 in earnings per share, an revenue of around $51 billion.
Alex here. I can confirm that Matthew is still a handsome devil.
Good afternoon! The earnings report should be out shortly.
- Founded 1976
- Overview Apple is a multinational corporation that designs, manufactures, and markets mobile communication and media devices, personal computers, portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. Apple provides many products and services, including iPhone; iPad; iPod; Mac; Apple TV; a portfolio …
- Location Cupertino, CA
- Categories Consumer Electronics, Retail, Hardware, Software, Electronics
- Website http://www.apple.com
- Full profile for Apple