Yesterday, August 1, Apple released the financial results of its fiscal third quarter 2017.
As we have already reported, the company's revenue was $ 45.4 billion (+ 7%), the net profit in $ 8.7 billion (+ 11.5%) and earnings per diluted in $ 1.67 (+ 17.6%).
Sales figures for iPhones, iPads and Macs were respectively 41 million (+ 2%), 11.4 million (+ 15%) and 4.3 million units (+ 1%), reaching revenues of US $ 24.8 billion (+ 3%), US $ 5 billion (+ 2%) and US $ 5.6 billion (+ 7%). The Services the company's (which include iCloud, Apple Music, Apple Pay, App Store and others) had a 22% increase in revenues, totaling US $ 7.3 billion; j the category Others (Apple Watch, Apple TV, AirPods, Beats headphones and other products) increased 23%, with gains of $ 2.7 billion.
As traditionally happens, Tim Cook (CEO) and Luca Maestri (CFO) participated in an audio conference to explain and talk a little more about the details of these last three financial months of Ma.
Below, you can see all the highlights!
- According to the company, the good financial result was achieved even with a negative impact (of 200 basis points) on the exchange rate in relation to the same period of the previous year due to the exchange rate variation especially in Europe and China;
- The performance was very strong in all sectors, with growth in all product categories and in almost all markets worldwide;
- Apple has experienced double-digit growth in many developed markets, including Germany, Australia, Canada, Korea, Spain and the United States;
- Emerging markets outside Greater China grew 19% over the year;
- Apple's gross profit margin for the period was 38.5%, at the top of the company's estimate;
- The operating margin was 23.7% of revenue, while cash flow from operations was $ 8.4 billion;
- Apple ended the fiscal quarter with $ 261.5 billion in cash, a sequential increase of $ 4.7 billion;
- $ 246 billion of that money (representing 94% of it) is outside the United States;
- Apple returned $ 11.7 billion to investors during the fiscal quarter, paid $ 3.4 billion in dividends and equivalents, and invested $ 4.5 billion in repurchases of 30.4 million of its shares through open market transactions ;
- The company has completed $ 222.9 billion of the $ 300 billion capital return program, including $ 158.5 billion in share buybacks;
- The company's Board of Directors declared a cash dividend of US $ 0.63 per common share, to be paid on August 17, 2017 to shareholders registered until August 14, 2017.
- The results of the iPhone were impressive, with an especially strong demand for top-of-the-line models;
- In the period, the iPhone 7 was the most popular device; sales of the iPhone 7 Plus increased dramatically compared to those of the 6s Plus in the same quarter last year;
- Year-over-year, iPhones 7 and 7 Plus grew by two digits;
- A decade after the launch of the first iPhone, Apple has now sold 1.2 billion devices throughout the history of the smartphone;
- Apple reduced the stock of the iPhone to 3.3 million units; this is the lowest level in two and a half years;
- Such a stock would serve Apple for 5-7 weeks, which reinforces the possibility of seeing new iPhones being launched in the middle / end of September (as traditionally happens);
- Sales increased year on year in most markets, with many (Asia, Latin America and the Middle East) increasing by more than 25%;
- Apple is very pleased with the result of the iPhone in the fiscal quarter, especially considering the difficult comparison with the FQ3 2016, when it launched the iPhone SE (which undoubtedly boosted sales);
- ASP was $ 606, up from $ 595 last year, thanks to strong demand for the iPhone 7 Plus, which represented a larger percentage of the iPhone mix compared to the Plus model a year ago;
- In the USA, data from 451 Research indicates that customer satisfaction with the iPhone is at 95% (iPhone 7) and 99% (iPhone 7 Plus);
- Among consumers planning to buy a smartphone, the purchase intention for the iPhone was almost three times the rate of the closest competitor;
- Among corporate smartphone buyers, satisfaction was 94% and, of those planning to buy smartphones in the next quarter, 78% want an iPhone.
- The iPad had a very positive fiscal quarter, with growth in units, revenue and market share;
- IPad sales have grown in all geographic segments with sharp two-digit increases in key markets (Germany, USA, France, Greater China and Japan);
- Apple had the largest global market share in more than four years, based on IDC's latest estimates on the tablet market results for the June quarter;
- In markets like China and Japan, more than half of the iPads were sold to people who buy their first iPad;
- IPad sales were especially strong in the American education market, rising 32% year over year to more than 1 million units;
- Public schools in Saint Paul, Minnesota, will purchase more than 40,000 iPads for teachers and students;
- The Shawnee Mission School District, outside Kansas City, recently purchased 19,000 iPads, extending its program started in 2014;
- According to the NPD, the iPad had a 55% share of the American tablet market in June compared to 46% a year ago;
- Among the ten best-selling tablets, eight are iPads;
- Among tablets that cost more than US $ 200 (in which Apple competes), the participation of the iPad was 89%;
- The most recent survey by 451 Research indicated that the level of customer satisfaction (domestic and corporate) with the tablet ranges from 95% to 99%;
- Among those planning to buy tablets, the purchase intent for the iPad was over 70%;
- Walmart deploys more than 19,000 iPads for employee training in 50 US states, with projections of more than 225,000 iPad-trained associates by the end of the year;
- According to Apple, companies' initial response to iOS 11 and the new iPad Pro was incredible;
- Some companies, including Bank of America, Medtronic and Panera Bread, have said they will purchase and implement 10.5 ? iPad Pro in all key areas of their organizations.
- The Mac gained market share in the global market, reaching record sales figures in mainland China and Japan;
- Mac revenue grew 7% year on year, driven by the strength of the new MacBooks Pro with Touch ID and the iMac despite IDC's last estimate of a 4% contraction in the global PC market;
- According to Apple, with almost the entire line of Macs updated (with the exception of the Mac Pro and Mac mini), the company is very well positioned for the back-to-school season (in the US);
- Customer satisfaction with the Mac is 97%, according to a 451 Research survey;
- The installed base of Macs grew two digits, taking into account the last 12 months.
Services (App Store, Apple Music, Apple Pay, iCloud, etc.)
- Service revenue reached a historic quarterly record ($ 7.3 billion);
- The category performed well around the world, with double-digit growth in all geographic segments;
- Over the past 12 months, Services have managed to grow to the size of a company Fortune 100 according to Apple, a milestone reached earlier than expected;
- The App Store was one of the main drivers of this performance according to the latest report from App Annie, it remains by far the preferred destination for purchases, generating almost double the revenue from Google Play;
- Apple Music and iCloud storage revenues have also grown a lot;
- In all service offerings, the number of paid subscriptions reached more than 185 million, an increase of almost 20 million in the last 90 days;
- Denmark, United Arab Emirates, Finland and Sweden will receive Apple Pay later this year, no Brazil in 2017;
- Apple Pay, by far, is the # 1 NFC payment service on mobile devices, with almost 90% of all transactions worldwide;
- The Apple Pay momentum is very strong in international markets, where the infrastructure for mobile payments has developed faster than in the USA 75% of Apple Pay transactions take place outside the USA.
Other products (Apple Watch, Apple TV, AirPods, Beats headphones, etc.)
- Apple Watch sales grew more than 50% in the fiscal quarter;
- This is the # 1 smartwatch in the world (in sales) by a very wide margin;
- According to Apple, Watch is having a positive impact on the lives / health of people, who now move more, sit less and exercise more.
- AirPods today have a 98% satisfaction rating, based on a survey by Creative Strategies;
- Apple has increased the production capacity of the AirPods and is trying, in every way, to make more units available to customers nonetheless, the demand is still much greater than the supply.
- Apple stores received a total of more than 300 million visitors;
- The company recently opened its first stores in Singapore and Taiwan, now reaching a total of 497 locations worldwide;
- The initiative ?Today at Apple? had 87 thousand sessions throughout the fiscal quarter.
- More than 1.2 million students of all ages now use the iPad and Swift Playgrounds to learn the basics of programming;
- More than 1,000 K-12 (Middle School) schools in the United States plan to use the program ?Everyone Can Code? (?Everyone Can Program?) from Apple in their resumes, soon;
- Apple will soon launch the annual ?Application Development with Swift? course for high school students and the community who wish to pursue careers in the area. This is an innovative, free curriculum designed by Apple engineers and educators for schools in order to to teach students to program and design fully functional applications, gaining critical skills in software development and information technology;
- About ARKit, Apple believes it will help the industry's most creative minds to use the latest technologies to create compelling content;
- The augmented reality has a wide general applicability (education, entertainment, interactive games, companies and different categories);
- With hundreds of millions of people actively using iPads and iPhones today, iOS will become the largest augmented reality platform in the world once iOS 11 is released;
- SAP launched Success Factors Mobile, its first native iOS application for Human Resources, which supports 47 million iPhone and iPad users worldwide in various industries;
- Apple's partnership with Deloitte has recently expanded to seven more European countries.
Questions and answers
Asked if he could comment further on the possibility of Apple opening three factories in the United States commented by Donald Trump, Cook responded in a very indirect way saying that the company is working to generate even more jobs on the three possible fronts (iOS ecosystem, chain supply for Apple products and the company's own workforce). Overall, Ma is very proud of the more than 2 million jobs it has already created and is very excited about the investment fund it launched to help with this task.
On Apple's relationship with China and why the company collaborates with the government, Cook responded very directly to something we covered in this article that directly addresses the issue.
About Apple TV (which Cook has said many times is an area of ??great interest to Apple, but not even commented on by the company) and original content, the CEO replied that the company has been experiencing original content 100% focused on Apple Music , but that everything is still a great learning experience, perhaps for other businesses.
Currently, we have a few more (programs and series) that are being released in a week or more, which will be available on Apple Music. The purpose of this is really twofold. One for our own learning, since we are new to this video area in terms of creation; and, two, give our Apple Music subscribers exclusive content and hope that it grows our subscriber base.
We recently hired two fantastic people with a lot of experience in creating content, like Breaking Bad and The Crown, and it's really top notch content, so we'll see how that area goes. It is still an area of ??great interest.
On autonomous systems, Cook stressed that Apple is very focused on autonomous systems from the point of view of technology.
We have a big project going on and we're making a big investment in it. From our point of view, autonomy is a kind of mother of all AI (artificial intelligence) projects. Autonomous systems can be used in several ways, and a vehicle is just one. There are many different areas. I don't want to go any further with this.
On augmented reality (and how the company sees it from a business point of view), the executive made the following comment:
I couldn't be more excited about AR and what we are seeing with ARKit in the first steps. To answer your question about the category in which it starts, just take a look at what is on the web in terms of what people are doing and it is everywhere. From entertainment to games, I saw what I would call solutions for small businesses, I saw solutions for consumers, I saw business solutions. I think AR big and deep. This is one of those huge things that we will look back on and marvel at the beginning. I think customers will see it in many ways. Companies take a little longer to start, but I can say that there is already a lot of excitement. I think we will start to see some applications too. It's great to make it happen at a level that can allow developers to embrace the idea. I couldn't be more excited about it.
Forecasts for the fourth fiscal quarter (FQ4) 2017
For the fourth fiscal quarter of 2017, Apple expects revenue between $ 49 and $ 52 billion, a gross margin between 37.5% and 38%, operating expenses between $ 6.7 and $ 6.8 billion, other revenue / (expenses) of $ 500 million and a tax rate of 25.5%.