Apple Conference Call Highlights

Apple AAPL reported its third-quarter earnings Tuesday. Shares of the company are up 3.04 percent.

Below are some key takeaways from its conference call:

Growth:

• With iOS 8, we've opened over 4,000 APIs, providing more flexibility and opportunity for developers than ever before.
• We've also introduced Swift, an innovative new programming language for both iOS and OS X.
• Turning to our financial results, today we're reporting record June quarter revenue thanks to the very strong performance of iPhone, Mac, and the continued growth of revenue from the Apple ecosystem.
• Our teams executed brilliantly during the quarter with earnings per share up 20 percent year-over-year.
• We sold over 35 million iPhones, setting a new third quarter record.
• We generated healthy growth in our entry-price, mid-tier and lead iPhone categories.
• I'm especially happy about our progress in the BRIC countries where iPhone sales were up a very strong 55 percent year-over-year.
• We also had a record June quarter for Mac sales, with growth of 18 percent.
• Demand has been very strong for our portables in particular, and we've had a great customer response to the new higher-performance, lower-priced MacBook Air.
• It was another strong performance for the App Store and the other services contributing to the thriving Apple ecosystem.
• iTunes billings grew 25 percent year-over-year in the June quarter and reached an all-time quarterly high.
• We're continuing to invest in our incredible ecosystem, which is a huge asset for Apple.
• iPad sales met our expectations, but we realize they didn't meet many of yours.
• Our sales were gated in part by a reduction in channel inventory and in part by market softness in certain parts of the world.
• Display received an astonishing 100 percent customer satisfaction rate.
• The survey also found that among people planning to purchase a tablet within 90 days, 63 percent plan to buy an iPad.
• Not counting Beats, we have completed 29 acquisitions since the beginning of fiscal year 2013, including five since the end of the March quarter, and we've brought some incredible technology.

Financials:
• We set a new June quarter record for revenue, at $37.4 billion, up $2.1 billion or 6 percent year-over-year.
• This result was towards the high end of our guidance range, despite a reduction in channel inventory for both iPhone and iPad.
• The revenue growth was driven by strong sales of iPhones and Macs as well as the continued great performance of iTunes Software and Services.
• Gross margin was 39.4 percent, above our guidance range, and operating margin was $10.3 billion, representing 27.5 percent of revenue.
• We sold 35.2 million iPhones, an increase of 4 million over last year, representing 13 percent growth.
• iPhone sales grew well across all three of our entry price, mid-tier, and lead product categories. In the U.S., iPhone accounts for 41.9 percent of the smartphone subscriber base.
• iPhone earned a 97 percent customer satisfaction rate.
• Turning to iPad, we sold 15.3 million units compared to 14.6 million in the June quarter last year.
• iPad sales grew overall in the developing markets, with particularly strong year-over-year growth in the Middle East where iPad sales were up 64 percent, in China where they grew 51 percent.
• We reduced iPad channel inventory by 500,000 from the end of the March quarter, which left us within our target range of four to six weeks.
• We sold 4.4 million Macs compared to under 3.8 million in the year ago quarter, an increase of 18 percent year-over-year.
• Macs have now gained global market share for 32 of the last 33 quarters.
• The Apple ecosystem continues to grow and thrive.
• Total revenue from iTunes Software and Services was $4.5 billion, an increase of 12 percent year-over-year.
• Our iTunes store generated all-time record billings of $5.4 billion in the June quarter, up 25 percent year-over-year.
• These iTunes billings translated to quarterly iTunes revenue of almost $2.6 billion, up 8 percent from the year-ago quarter.
• Software and Services revenue was $1.9 billion, up 19 percent from a year ago.
• We ended the quarter with $164.5 billion in cash plus marketable securities, a sequential increase of $13.9 billion.
• Our domestic cash was $26.8 billion at the end of the June quarter, a sequential increase of $8.3 billion, and $137.7 billion or 84 percent of our total cash was offshore.
• We also continue to execute our shareholder return program, with $8.3 billion of capital returned to investors during the June quarter.

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