Service Record, iPads Succeeding… Check Out Apple's Fiscal Q2 2019 Highlights

As expected, Apple yesterday released the financial results for its second fiscal quarter of 2019. Revenue for the period was $ 58 billion (-5% compared to the same period of 2018), with net income of $ 11.6 billion (-16%) and gains from diluted $ 2.46 (-10%). International sales accounted for 61% of all quarterly sales and gross margin for the period was 37.6% (if we take into account only products, the margin was 31.2%).

As usual, the CEO Tim cook and the CFO Luca Maestri held a conference on audio to announce the results and comment a little on the company's performance in the last period and the projection for what is yet to come. In this event, whether during executive talk or question and answer sessions with analysts / journalists, they always paint interesting information. And we, of course, follow closely to bring Ma's last quarter highlights to you.

The highlights

Apple's financial results were within expectations for Apple, however, close to what they call the “upper limit of the guidance range” (ie, near the top of the forecast).

"We see this as a positive result despite the headwinds of exchange rates," Cook said. The numbers also surprised the financial market as a whole, which were expecting a lower result. That is why Apple shares opened the day today at a strong high.

Apple's actions in the middle of the nail (May 1)

Some factors contribute to this: the segment Services (with the best quarter ever, $ 11.5 billion in revenue and records for the App Store, AppleCare, Apple Pay, iCloud, and more); the segment iPad (thanks to iPads Pro, revenues increased 21.5%, the highest in the last six years, with growth in all geographic segments and about half of devices sold to new users); and the segment Wearable (Apple Watch, AirPods, and others, which grew nearly 50%) The CEO emphasized that AirPods (already selling in Brazil) “are a cultural phenomenon,” while the CFO stated that Apple Watch is the world's best-selling smartwatch and that 75 % of sales went to people who have never worn a watch before.

Speaking of Apple pay, the company wants to end 2019 with present service in 40 markets soon, it should reach Netherlands. New York public transport is expected to accept payments via Apple Pay by mid-year here in Brazil, MetrRio announced the news this week and Ticketmaster announced that accepting payments on the web using Apple Pay, as well as most studios where NFL games take place. By the end of the year, it will be over 10 billion transactions using the service!

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Official image

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So now more than 390 million users subscribing to some type of Apple service (iCloud, Apple Music and Apple News + storage), up 30 million from the last quarter and 120 million compared to the same quarter in 2018. By 2020, Apple reach 500 million subscriptions (after all, Apple Arcade and Apple TV + are coming to). Subscriptions to third party applications also saw great growth, around 40%.

Cook said recent price cuts in China were well received by the public, making performance in the country improve beyond, of course, government incentives and US-China tariff war negotiations.

The question is whether these price reductions I will come to countries other than China and India's explanation given by Cook for these adjustments in values ​​perfectly matches our reality here. Brazil, but so far nothing around here (apart from a few promos made by retailers)

THE active installed base Apple's device market continues to grow across all geographic segments where the company operates and set a new record for the quarter (across all major product categories).

Current family of Macs (Mac mini, MacBook Air, iMac, MacBook Pro, and MacBook)

On the numbers referring to MacsCook believes they were severely impacted by restrictions on processor supply (this Intel). Even so, the installed base of Macs reached a new record and about half of the computers sold in the quarter went to new users who were not part of the ecosystem.

This quarter we brought the Apple Watch Series 4 ECG app to Hong Kong and 19 European countries. Just like in the US, it's hardly a day without me receiving a letter or email from a customer in one of these countries, talking about how this feature has significantly changed their lives. We believe we are just beginning to explore ways in which we can help people actively explore their health. Other examples are the Apple Heart Study, in partnership with Stanford, and Apple Health Records at the US Medical and Veterans Affairs Department. .

Cook also commented that he was very excited about the 2019 releases (hardware, software and services) and now is the time to share some of this news at WWDC19, which will take place between June 3rd and 7th.

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Image: https://www.shutterstock/image-photo/rostovondon-russia-november-2018-apple-iphone-1226941282

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THE customer satisfaction continues high, according to 451 Research research: Putting the current iPhones (XS, XS Max and XR) in the same pie, we have 99% satisfaction. Even though sales are down, Apple saw four times more volume in its trade-in! In addition, 81% of surveyed companies plan to buy iPhones. Moving to iPads, the customer satisfaction rate was 93%, with 77% of consumers and 75% of companies planning to buy new models.

Apple ended the quarter with $ 225 billion in cash / marketable securities with a liquidity of almost $ 113 billion, which makes it possible to make investments in basically any business area. The company's priority, however, remains the same: to keep the cash needed to run the operation, aiming for a more neutral liquid cash position. Given the company's confidence in the future, the Board of Directors has authorized an additional $ 75 billion share buyback. Quarterly dividends were also increased for the seventh time in less than seven years to $ 0.77.

Questions and answers

Shannon Cross of Cross Research asked Cook about the according to Qualcomm. Apple's CEO simply said the company was happy to leave the fight behind and happy to have a multi-year supply contract, saying he was still feeling good about the outcome.

Asked about the investments are already to be done on the new services (Apple Arcade and Apple TV +), Maestri said that while they really need to invest heavily, the services have a very good margin of about 60%, which is very positive for Apple's ecosystem.

Morgan Stanley's Katy Huberty noted that quarterly quarterly revenue for the next quarter has typically fallen by about 15% over the past five fiscal years, but now Apple expects a sequential fall of “only” 8%. The CFO responded that the company is on a strong wave of revenue growth in non-iPhone categories and that the scenario in China is likely to continue to improve.

About India, Cook mentioned how we have already announced here that the company is manufacturing products there and that this is quite important to Apple's plans, as such a requirement is necessary for the establishment of stores in the countries.

The fiscal quarter in charts

Apple's second fiscal quarter of 2019 in charts

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Apple's second fiscal quarter of 2019 in charts

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Apple's second fiscal quarter of 2019 in charts

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Apple's second fiscal quarter of 2019 in charts

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Apple's second fiscal quarter of 2019 in charts

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Apple's second fiscal quarter of 2019 in charts

Projections for next fiscal quarter

Looking ahead to the fiscal third quarter of 2019, Apple forecasts revenue of $ 52.5-54.5 billion, gross margin between 37% and 38%, operating expenses between $ 8.7 and $ 8.8 billion, other revenues / (expenses) of $ 250 million and a tax rate of approximately 16.5%.

via MacRumors, AppleInsider, MacStories