Apple posted quarterly revenue of $58.3 billion, an increase of 1% from the year-ago quarter. The company also posted and quarterly earnings per diluted share of $2.55, up 4 percent.
Origin: Apple Insider – Notes of interest from Apple’s second quarter 2020 earnings report
Highlights from the earnings report, and the conference call
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- Apple’s wearables and services were leaders, with wearables climbing over $1 billion from the year-ago quarter
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- Percentages for regions:
Americas -0.5%
Europe +9.5%
Greater China -7.5%
Japan -5.9%
rest of Asia-Pacific +7.5%
- Percentages for regions:
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- Quarterly revenue record for Apple Retail
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- Cook expects to meet goal of doubling of 2016 services revenue by 2020
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- All-time records in several Services categories
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- Services gross margin: 65.4% !!!!
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- «Slight elongation» in iPhone replacement cycle, active install base of iPhones is at an all-time high
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- All-time revenue records in App Store, Apple Music, Cloud Services, App Store Search Ad businesses
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- Third-party subscriptions grew over 40% year-over-year, all-time high
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- 515 million paid subscriptions across all services, up 125 million versus a year ago
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- Wearables the size of a Fortune 140 company by itself
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- 75% of Apple Watch purchasers in the quarter new to the product
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- Half of Mac and iPad purchasers new to the product
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- All-time high Mac and iPad user base
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- $22 billion returned to shareholders with $18.5 billion of that in buybacks
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- iPad and Mac expected to improve year-over-year
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- $40 billion remains in current share repurchase plan
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- Apple stock at $288.75 as of 5:30 P.M. Eastern Time
Q & A:
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- Wamsi Mohan – Bank of America: Given unprecedented times, how should we expect product development to proceed
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- Tim Cook: iPhone SE, MacBook Air shipped while company was under duress. «New products are our lifeblood»
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- Katy Huberty – Morgan Stanley: Where do you see structural changes on the back of this health crisis in regards to revenue streams?
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- Cook suspects remote learning trend will accelerate, working remotely will as well in some jobs
Apple has significant solutions and products in this, and health
Cook in regards to health: «You can bet that we’re looking at other areas»
- Cook suspects remote learning trend will accelerate, working remotely will as well in some jobs
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- Q: $50 billion share repurchase, lower than last few years. Context?
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- Maestri: No real change in buyback strategy or philosophy.
Nothing has changed in regards to mergers and acquisitions. «We purchase companies on a very regular basis»
- Maestri: No real change in buyback strategy or philosophy.
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- Jeriel Ong – Deutsche Bank: Will Services be materially impacted by coronavirus and other macro changes?
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- Maestri: Expect digital services to perform at the same level of performance & growth as during the previous quarter
June quarter will see impacts to AppleCare (repairs & warranty specifically, because of store closures
Uncertainty will also impact Advertising business on App Store, Apple News, and third-party agreements
- Maestri: Expect digital services to perform at the same level of performance & growth as during the previous quarter
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- Samik Chatterjee – J.P. Morgan : China increases & recoveries are driven by what?
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- Cook: Strong iPad, wearables, Services in China
March, stores reopened and recovery began and continues into April.
Store foot traffic not yet back to pre-lockdown in China, more move to online
Not yet clear if this is a permanent shift
- Cook: Strong iPad, wearables, Services in China
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- Chris Casons – Raymond James : What was behind the iPhone SE return and strategy?
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- Cook: «Always been about delivering the best product at a good price, that fundamental strategy has not changed at all»
Don’t read anything more into that
- Cook: «Always been about delivering the best product at a good price, that fundamental strategy has not changed at all»
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- Q: What do you expect for commodity pricing changes?
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- Cook: Displays, DRAM declined in the last quarter with an increase in NAND.
DRAM, NAND expected to stay static, display expected to decline in the next quarter
- Cook: Displays, DRAM declined in the last quarter with an increase in NAND.