Apple Reports Second Quarter Results

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Apr 30, 2019 04:30 pm
CUPERTINO, Calif. -- 

Apple® today announced financial results for its fiscal 2019 second quarter ended March 30, 2019. The Company posted quarterly revenue of $58 billion, a decline of 5 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.46, down 10 percent. International sales accounted for 61 percent of the quarter’s revenue.

“Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record,” said Tim Cook, Apple’s CEO. “We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services. We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June.”

“We generated operating cash flow of $11.2 billion in the March quarter and continued to make significant investments in all areas of our business,” said Luca Maestri, Apple’s CFO. “We also returned over $27 billion to shareholders through share repurchases and dividends. Given our confidence in Apple’s future and the value we see in our stock, our Board has authorized an additional $75 billion for share repurchases. We are also raising our quarterly dividend for the seventh time in less than seven years.”

Reflecting the approved increase, Apple’s board of directors has declared a cash dividend of $0.77 per share of the Company’s common stock, an increase of 5 percent. The dividend is payable on May 16, 2019 to shareholders of record as of the close of business on May 13, 2019.

The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.

Apple is providing the following guidance for its fiscal 2019 third quarter:

• revenue between $52.5 billion and $54.5 billion
• gross margin between 37 percent and 38 percent
• operating expenses between $8.7 billion and $8.8 billion
• other income/(expense) of $250 million
• tax rate of approximately 16.5 percent

Apple will provide live streaming of its Q2 2019 financial results conference call beginning at 2:00 p.m. PDT on April 30, 2019 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

Apple periodically provides information for investors on its corporate website, apple.com, and its investors relations website, investor.apple.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance and details related to its annual meeting of shareholders.

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), tax rate, and plans for return of capital. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation: the effect of global and regional economic conditions on the Company's business, including effects on purchasing decisions by consumers and businesses; the ability of the Company to compete in markets that are highly competitive and subject to rapid technological change; the ability of the Company to manage frequent introductions and transitions of products and services, including delivering to the marketplace, and stimulating customer demand for, new products, services and technological innovations on a timely basis; the effect that shifts in the mix of products and services and in the geographic, currency or channel mix, component cost increases, increases in the cost of acquiring and delivering content for the Company’s services, price competition, or the introduction of new products or services, including new products or services with higher cost structures, could have on the Company’s gross margin; the dependency of the Company on the performance of distributors of the Company's products, including cellular network carriers and other resellers; the inventory and other asset risks associated with the Company’s need to order, or commit to order, product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components, services and new technologies essential to the Company's business, including components and technologies that may only be available from single or limited sources; the dependency of the Company on manufacturing and logistics services provided by third parties, many of which are located outside of the US and which may affect the quality, quantity or cost of products manufactured or services rendered to the Company; the effect of product and services design and manufacturing defects on the Company’s financial performance and reputation; the dependency of the Company on third-party intellectual property and digital content, which may not be available to the Company on commercially reasonable terms or at all; the dependency of the Company on support from third-party software developers to develop and maintain software applications and services for the Company’s products; the impact of unfavorable legal proceedings, such as a potential finding that the Company has infringed on the intellectual property rights of others; the impact of changes to laws and regulations that affect the Company’s activities, including the Company’s ability to offer products or services to customers in different regions; the ability of the Company to manage risks associated with its international activities, including complying with laws and regulations affecting the Company’s international operations; the ability of the Company to manage risks associated with the Company’s retail stores; the ability of the Company to manage risks associated with the Company’s investments in new business strategies and acquisitions; the impact on the Company's business and reputation from information technology system failures, network disruptions or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data protection; the continued service and availability of key executives and employees; political events, international trade disputes, war, terrorism, natural disasters, public health issues, and other business interruptions that could disrupt supply or delivery of, or demand for, the Company’s products; financial risks, including risks relating to currency fluctuations, credit risks and fluctuations in the market value of the Company’s investment portfolio; and changes in tax rates and exposure to additional tax liabilities. More information on these risks and other potential factors that could affect the Company’s financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom), or call Apple’s Media Helpline at (408) 974-2042.

© 2019 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple Inc. Other company and product names may be trademarks of their respective owners.

   
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)
 
Three Months Ended Six Months Ended
March 30,
2019
  March 31,
2018
March 30,
2019
  March 31,
2018
Net sales:
Products $ 46,565 $ 51,287 $ 120,000 $ 130,451
Services 11,450   9,850   22,325   18,979
Total net sales (1) 58,015 61,137 142,325 149,430
Cost of sales:
Products 32,047 33,936 80,285 84,511
Services 4,147   3,779   8,188   7,585
Total cost of sales 36,194   37,715   88,473   92,096
Gross margin 21,821   23,422   53,852   57,334
 
Operating expenses:
Research and development 3,948 3,378 7,850 6,785
Selling, general and administrative 4,458   4,150   9,241   8,381
Total operating expenses 8,406   7,528   17,091   15,166
 
Operating income 13,415 15,894 36,761 42,168
Other income/(expense), net 378   274   938   1,030
Income before provision for income taxes 13,793 16,168 37,699 43,198
Provision for income taxes 2,232   2,346   6,173   9,311
Net income $ 11,561   $ 13,822   $ 31,526   $ 33,887
 
Earnings per share:
Basic $ 2.47 $ 2.75 $ 6.70 $ 6.69
Diluted $ 2.46 $ 2.73 $ 6.66 $ 6.63
Shares used in computing earnings per share:
Basic 4,674,071 5,024,877 4,704,945 5,068,877
Diluted 4,700,646 5,068,493 4,736,949 5,113,140
 
(1) Net sales by reportable segment:
Americas $ 25,596 $ 24,841 $ 62,536 $ 60,034
Europe 13,054 13,846 33,417 34,900
Greater China 10,218 13,024 23,387 30,980
Japan 5,532 5,468 12,442 12,705
Rest of Asia Pacific 3,615   3,958   10,543   10,811
Total net sales $ 58,015   $ 61,137   $ 142,325   $ 149,430
 
(1) Net sales by category:
iPhone $ 31,051 $ 37,559 $ 83,033 $ 98,663
Mac 5,513 5,776 12,929 12,600
iPad 4,872 4,008 11,601 9,763
Wearables, Home and Accessories 5,129 3,944 12,437 9,425
Services 11,450   9,850   22,325   18,979
Total net sales $ 58,015   $ 61,137   $ 142,325   $ 149,430
 
   
Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in thousands and par value)
 
March 30,
2019
September 29,
2018
ASSETS:
Current assets:
Cash and cash equivalents $ 37,988 $ 25,913
Marketable securities 42,104 40,388
Accounts receivable, net 15,085 23,186
Inventories 4,884 3,956
Vendor non-trade receivables 11,193 25,809
Other current assets 12,092   12,087  
Total current assets 123,346 131,339
 
Non-current assets:
Marketable securities 145,319 170,799
Property, plant and equipment, net 38,746 41,304
Other non-current assets 34,587   22,283  
Total non-current assets 218,652   234,386  
Total assets $ 341,998   $ 365,725  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 30,443 $ 55,888
Other current liabilities 35,368 33,327
Deferred revenue 5,532 5,966
Commercial paper 11,924 11,964
Term debt 10,505   8,784  
Total current liabilities 93,772 115,929
 
Non-current liabilities:
Term debt 90,201 93,735
Other non-current liabilities 52,165   48,914  
Total non-current liabilities 142,366   142,649  
Total liabilities 236,138   258,578  
 
Commitments and contingencies
 
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,607,284 and 4,754,986 shares issued and outstanding, respectively 42,801 40,201
Retained earnings 64,558 70,400
Accumulated other comprehensive income/(loss) (1,499 ) (3,454 )
Total shareholders’ equity 105,860   107,147  
Total liabilities and shareholders’ equity $ 341,998   $ 365,725  
 
 
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
 
Six Months Ended
March 30,
2019
  March 31,
2018
Cash, cash equivalents and restricted cash, beginning balances $ 25,913   $ 20,289  
Operating activities:
Net income 31,526 33,887
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 6,435 5,484
Share-based compensation expense 3,073 2,644
Deferred income tax benefit (124 ) (34,235 )
Other (215 ) (151 )
Changes in operating assets and liabilities:
Accounts receivable, net 8,094 3,523
Inventories (1,006 ) (2,807 )
Vendor non-trade receivables 14,616 9,715
Other current and non-current assets (717 ) (1,053 )
Accounts payable (20,024 ) (12,004 )
Deferred revenue (540 ) 394
Other current and non-current liabilities (3,273 ) 38,026  
Cash generated by operating activities 37,845   43,423  
Investing activities:
Purchases of marketable securities (13,854 ) (48,449 )
Proceeds from maturities of marketable securities 16,880 31,884
Proceeds from sales of marketable securities 22,635 38,942
Payments for acquisition of property, plant and equipment (5,718 ) (7,005 )
Payments made in connection with business acquisitions, net (291 ) (305 )
Purchases of non-marketable securities (490 ) (163 )
Other 30   216  
Cash generated by investing activities 19,192   15,120  
Financing activities:
Proceeds from issuance of common stock 390 327
Payments for taxes related to net share settlement of equity awards (1,427 ) (1,190 )
Payments for dividends and dividend equivalents (7,011 ) (6,529 )
Repurchases of common stock (32,498 ) (32,851 )
Proceeds from issuance of term debt, net 6,969
Repayments of term debt (2,500 ) (500 )
Other (87 ) 1  
Cash used in financing activities (43,133 ) (33,773 )
Increase in cash, cash equivalents and restricted cash 13,904   24,770  
Cash, cash equivalents and restricted cash, ending balances $ 39,817   $ 45,059  
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 9,497 $ 6,340
Cash paid for interest $ 1,762 $ 1,356
 

Apple
Press Contact:
Kristin Huguet, (408) 974-2414
khuguet@apple.com

Investor Relations Contacts:
Nancy Paxton, (408) 974-5420
paxton1@apple.com
Matt Blake, (408) 974-7406
mattblake@apple.com

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