As expected, Apple yesterday released the financial results for its fourth fiscal quarter of 2019. Revenue for the period was $ 64 billion (1.7% more compared to the same period of 2018), with net income of $ 13.7 billion (-2.8%) and gains from diluted $ 3.03 (-4.1%). International sales comprised 60% of all quarterly sales.
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.
That was Apple's biggest revenue for a fiscal fourth quarter even though profit was not a record. The numbers are even more impressive as Apple predicted a foreign exchange impact of almost $ 1 billion in a scenario without such currency variation, revenue growth would have been 3%.
Geographically, Apple has set new revenue records in the Americas and the rest of Asia Pacific. The company also saw numbers improve in Greater China from a 27% drop in the first fiscal quarter of the year to a "just" 2% drop in the latter.
Leaving iPhone numbers aside, Apple's revenue grew 17%, with a record of “Services”, which grew 18%. In “Wearables, Home and Accessories”, Apple grew an amazing 54.3% (also a record), driven by wearable products like Apple Watch and wireless headsets.
For the first time in a fiscal year, Apple surpassed the $ 100 billion mark in US revenue. In total, the Services category earned $ 46 billion in the year a record for all regions where Ma operates. Alone, the “Services” category today would be a company listed on Fortune 70.
According to Maestri, product revenue was $ 51.5 billion, down 1% from last year, mainly due to the iPhone but largely offset by very strong performance from the “Wearables” and “iPad” segments. The “Wearables” segment, by the way, had explosive growth and generated more annual revenue than two thirds of the companies listed in Fortune 500.
The "Mac" category generated record annual revenue in the fiscal year. Excluding the iPhone category numbers, annual revenue grew $ 17 billion to nearly $ 118 billion. And it wasn't just in the US that Apple made it beautiful, no. Cook said the company had record revenues in countries like Germany, Brazil, Canada, Korea, Philippines, France, Italy, Malaysia, Poland, United Kingdom, Singapore, Thailand and Vietn.
Maestri commented that the company's gross margin was 38%, divided as follows: 31.6% for products and 64.1% for services.
The company money
Operating cash flow of $ 19.9 billion was also a record in the fourth quarter, nearly $ 400 million more than the previous record set last year.
Apple ended the quarter with nearly $ 260 billion in cash and negotiable securities. The company issued $ 7 billion in new term debt, withdrew $ 3 billion in overdue debt and reduced commercial paper by $ 4 billion during the quarter in total, the company's debt now $ 108 billion.
As a result, net cash was $ 98 billion at the end of the quarter, and the company will continue to be on a neutral net cash position over time. It returned more than $ 21 billion to shareholders in the quarter, including nearly $ 18 billion through open market repurchases (86 million Apple shares and $ 3.5 billion in dividends and equivalents).
While iPhone revenue was down 9%, the figure was positive as we saw a 15% fall from the first three fiscal quarters.
Cook said that since the launch, the iPhone 11 has quickly become the best-selling device, something fully expected but always good to confirm. Maestri said the latest survey by 451 Research in the US indicated 99% customer satisfaction for the XS, XS Max and XR iPhones. In the corporate market, among those planning to buy smartphones in the next three months, 83% plan to buy iPhones.
Still according to Maestri, the active installed base of the iPhone continued to grow reaching a new record in all geographic segments of Apple.
As we speak, revenue was $ 12.5 billion, an 18% increase over last year ($ 1.9 billion) and surpassing the previous record set in the June quarter by more than $ 1 billion. According to Cook, this is not a local phenomenon precisely because the segment has grown two digits and has record revenue in the five regions where Apple operates.
We set new records in various service categories, including the App Store, AppleCare, Apple Music, cloud services, and our App Store ad business.
Cook also commented that the company is on track to reach the goal of doubling revenue from “Services” by 2020, which is set in 2016.
In total, the “Services” accounted for 20% of mix revenue and 33% of mix gross margin.
Maestri commented that customer engagement with Apple's ecosystem continues to grow, and the number of paid accounts and transactions in content stores has reached a new record, with double-digit growth in all geographic segments. Now there are more than 450 million subscriptions paid on Apple services, compared to over 330 million just a year ago, the goal is to exceed 500 million by 2020.
App Store absolute revenue grew by two digits, thanks to strong customer demand for app purchases and subscriptions. The business of third party app subscriptions has grown into several categories and increased by almost 40% year over year. There are currently over 35,000 subscription apps in store; The largest person generates less than 0.25% of total service revenue.
Speaking specifically of Apple Pay, the company also had record revenue. Not only that, we also had record transactions, which more than doubled in the fourth fiscal quarter compared to 2018, reaching 3 billion. To give you an idea, the number exceeds PayPal transactions, with a 4x faster growth.
Apple Pay is now present in 49 markets worldwide (including Brazil and Portugal), with over 6,000 issuers on the platform.
Talking about the Apple Card, Cook reported that it is currently possible to get 3% of cashback at services / establishments like Uber, Uber EATS, Walgreens, Duane Reade and T-Mobile as long as you use Apple Pay, and not the physical card as a payment method.
Cook took advantage of the financial event to announce yet another new feature: later this year, the company would offer customers the option of buying a new iPhone paying in 24 months without interest without losing the benefit of 3% of cashback! Would it be great if we had access to the Apple Card in Brazil and benefits like that in it? Cad this international expansion, Cook ?! 😝
Apple Arcade, News + and TV +
Apple's CEO recalled the launch of the game service and said that, so far, customer feedback has been extremely positive: “We are very excited about the future of the service.”
He also spoke of Apple News +, which expanded beyond the United States and Canada, reaching Australia and the United Kingdom, and bringing together publications such as The Times of London, The australian, Hello Magazine, The Wall Street Journal, The LA Times, The new yorker, People, GQ and much more.
The executive spoke about the Apple TV +, which will be launched on Friday in more than 100 countries and regions. This is the first fully original video subscription service. Cook recalled that customers who purchased Apple devices (iPhones, iPads, Macs and / or Apple TVs) from September 10 will be entitled to 12 free months of service.
Clothing, Home & Accessories
Led by the Apple Watch Series 5, AirPods and Beats headphones, the category posted fourth quarter fiscal revenue records in all Apple-monitored markets worldwide, with revenue of $ 6.5 billion (up 54.7%). % over previous year).
Very focused on health, Cook recalled that Apple recently announced a new research application associated with three unprecedented medical studies covering audio, heart and movement, and women's health. “We are collaborating with leading healthcare institutions to reach more participants than ever before, enabling them to contribute to possible medical discoveries and help create the next generation of innovative health products.”
About Apple's tablet category, Cook commented on the 17.9% growth, largely driven by the iPad Pro.
Maestri, in turn, said revenue grew across the five geographic segments, with record fourth-quarter revenue in Japan. In total, more than half of customers who purchased iPads during the September quarter were new and the active installed base also set a new historical record.
451 Research's most recent surveys measured a 95% satisfaction rating for consumers and 97% for businesses. And among consumers and businesses planning to buy tablets in the next fiscal quarter, more than 80 percent plan to buy iPads.
J in the "Mac" category; Apple generated $ 7 billion in revenue. The CEO said the comparison with 2018 is complicated because last year Apple upgraded two of the MacBook Pro's sizes. Still, for fiscal year 2019, Apple generated the largest annual revenue ever seen in the category, with record highs. USA, India and Japan.
More than half of customers who bought Macs during the quarter were new to the Mac, and the active base installed reached a new high.
Online and Physical Stores
According to the CFO, online and retail stores have delivered fantastic results, generating record fiscal quarter revenue across all five geographic segments and strong double-digit growth for iPhones, iPads, Apple Watches and accessories.
The program of trade in has increased iPhone sales by more than five times compared to last year.
Corporate and Government Markets
Maestri commented that the company is seeing strong demand in the corporate market, with significant growth for the future. According to him, 80 of the 100 largest retailers in the world (Burberry, Ralph Lauren, Sephora, Gap and many others) are choosing Apple to modernize their customer and employee experiences across all of their business, using iPhones, iPads and Macs. to optimize their domestic operations, modernize the point of sale and offer different customer and employee experiences.
Already in government, the US Census Bureau is making fundamental changes in the design and implementation of next year's census to deliver cost-effective quality results while leveraging iOS's mobility, user experience and privacy. Hundreds of thousands of Apple devices will be deployed to support a new data collection and management model.
Forecast for next fiscal quarter
For the next fiscal quarter (the first of 2020), Apple forecasts revenue of between $ 85.5 and $ 89.5 billion already taking into account a negative exchange impact of $ 1 billion, a gross margin between 37.5 and 38.5%, operating expenses (OPIX) between $ 9.6 and $ 9.8 billion, other income / expenses (OINE) of $ 200 million, and a 16.5% tax rate.
As we have reported, the board of directors declared a cash dividend of $ 0.77 per ordinary share payable on November 14, 2019 to shareholders registered on November 11, 2019.
Questions and answers
Asked about the strategy behind Apple TV +'s one-year offer to buy a new device, Cook said it was a gift for users.
From a business standpoint, we are proud of the content and would like as many people as possible to see it. And so this allows us to focus on maximizing subscribers, especially at the beginning. And so it feels good to do that. I think a bold move. And the price also for people who do not buy a device in the period we offer it, the price is also very aggressive. You think about the quality of the content you get for $ 4.99 and it's amazing. wonderful.
On a possible strategy for future service hardware bundles (as Apple is now doing with Apple TV +) and whether Apple could ever offer subscription products, Cook commented that at the moment this strategy for Apple TV + makes sense, but for other services, no. This is not to say that in the future Apple will not be able to rethink and offer something like this if it is interesting.
Regarding hardware as a subscription, the Apple Card offering (in which you can split a product's payment in 24 interest-free times) doesn't stop that way, where you pay a monthly fee to use an Apple product, Cook said.
Asked about the wearable product cycle when an innovation came on the market (such as AirPods Pro noise cancellation), Cook replied that it's hard to talk about it now with such new products as Apple Watch and AirPods on the market.
About the AirPods themselves, he believes that many people who own the AirPods today will also buy Pro models for times when they need noise cancellation, which, as it turns out, makes no sense: if you buy AirPods Pro hardly use the common model again.
The quarter in charts
via iMore, MacStories