Apple today has officially reported its Q4 2016 earnings results with $46.9 billion in revenue and $9 billion in profit from the July to September quarter. In its earnings press release, Apple says the following:

Apple® today announced financial results for its fiscal 2016 fourth quarter ended September 24, 2016. The Company posted quarterly revenue of $46.9 billion and quarterly net income of $9 billion, or $1.67 per diluted share. These results compare to revenue of $51.5 billion and net income of $11.1 billion, or $1.96 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

Below is the breakdown of numbers:

  • iPhone – 45.51 million
  • iPad – 9.28 million
  • Mac – 4.89 million

Apple’s earnings come out to $1.67 per share, slightly higher than the $1.66 that analysts were expected. Revenues were slightly lower than expectation, $46.9 billion vs 46.94 billion. AAPL stock is down 2.5 percent in after-hours trading following the earnings release.

Apple CEO Tim Cook spoke fondly of the company’s “strong” results, noting that the company is “thrilled” with the customer response to iPhone 7, iPhone 7 Plus, and Apple Watch Series 2. Additionally, Cook noted that Apple’s Services sector grew 24 percent to set another record:

“Our strong September quarter results cap a very successful fiscal 2016 for Apple,” said Tim Cook, Apple’s CEO. “We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record.”

Additionally, Apple’s massive pile of cash grew $6.1 billion in Q4 2016, putting it at $237.6 billion, an all-time record for the company.

Notable tidbits:

  • China down 30 percent year over year
  • Services up 24 percent, all-time high
  • Other Products (Apple Watch, iPod, Apple TV, Beats) down 22 percent year over year

Apple’s Q4 2016 numbers compare to last quarter’s $42.4 billion in revenue and $7.8 billion in profit on sales of 40.4 million iPhones, 9.9 million iPads, and 4.2 million Macs. In the year ago quarter, Apple reported revenue of $51.5 billion and profit of $11.1 billion, while it sold 48 million iPhones, 9.8 million iPads, and 5.7 million Macs.

Q4 marks our first look at the iPhone 7’s early affect on Apple numbers, though it’s worth noting that the iPhone 7 came out just a week before Apple’s Q4 ended, so the device likely didn’t have a huge impact on numbers this quarter. The holiday quarter, however, will be a different story.

As usual, Apple isn’t breaking out Apple Watch sales for “competitive” reasons, but various other reports have offered a likely look at the sales of Apple’s wearable.

Apple is providing the following guidance for its fiscal 2017 first quarter, note that its revenue estimate is up year-over-year ($75.9 billion in Q1 2016).

  • revenue between $76 billion and $78 billion
  • gross margin between 38 percent and 38.5 percent
  • operating expenses between $6.9 billion and $7 billion
  • other income/(expense) of $400 million
  • tax rate of 26 percent

The full press release for Apple’s earnings can be seen below, while Apple will hold a conference call in 30 minutes to discuss the numbers. We’ll have live coverage of that call, as well.

Apple Reports Fourth Quarter Results

Services Revenue Grows 24% to All-Time Quarterly Record of $6.3 Billion

October 25, 2016 04:30 PM Eastern Daylight Time

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced financial results for its fiscal 2016 fourth quarter ended September 24, 2016. The Company posted quarterly revenue of $46.9 billion and quarterly net income of $9 billion, or $1.67 per diluted share. These results compare to revenue of $51.5 billion and net income of $11.1 billion, or $1.96 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

“We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program.”

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“Our strong September quarter results cap a very successful fiscal 2016 for Apple,” said Tim Cook, Apple’s CEO. “We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record.”

“We are pleased to have generated $16.1 billion in operating cash flow, a new record for the September quarter,” said Luca Maestri, Apple’s CFO. “We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program.”

Apple is providing the following guidance for its fiscal 2017 first quarter: • revenue between $76 billion and $78 billion • gross margin between 38 percent and 38.5 percent • operating expenses between $6.9 billion and $7 billion • other income/(expense) of $400 million • tax rate of 26 percent

Apple’s board of directors has declared a cash dividend of $0.57 per share of the Company’s common stock. The dividend is payable on November 10, 2016 to shareholders of record as of the close of business on November 7, 2016.

Apple will provide live streaming of its Q4 2016 financial results conference call beginning at 2:00 p.m. PDT on October 25, 2016 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), and tax rate. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk 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 and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 26, 2015, its Form 10-Q for the fiscal quarter ended December 26, 2015, its Form 10-Q for the fiscal quarter ended March 26, 2016, its Form 10-Q for the fiscal quarter ended June 25, 2016, and its Form 10-K for the fiscal year ended September 24, 2016 to be filed with the SEC. 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’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

© 2016 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except number of shares which are reflected in thousands and per share amounts)

Three Months Ended Twelve Months Ended
September 24, 2016 September 26, 2015 September 24, 2016 September 26, 2015
Net sales $ 46,852 $ 51,501 $ 215,639 $ 233,715
Cost of sales (1) 29,039 30,953 131,376 140,089
Gross margin 17,813 20,548 84,263 93,626
Operating expenses:
Research and development (1) 2,570 2,220 10,045 8,067
Selling, general and administrative (1) 3,482 3,705 14,194 14,329
Total operating expenses 6,052 5,925 24,239 22,396
Operating income 11,761 14,623 60,024 71,230
Other income/(expense), net 427 439 1,348 1,285
Income before provision for income taxes 12,188 15,062 61,372 72,515
Provision for income taxes 3,174 3,938 15,685 19,121
Net income $ 9,014 $ 11,124 $ 45,687 $ 53,394
Earnings per share:
Basic $ 1.68 $ 1.97 $ 8.35 $ 9.28
Diluted $ 1.67 $ 1.96 $ 8.31 $ 9.22
Shares used in computing earnings per share:
Basic 5,366,912 5,646,916 5,470,820 5,753,421
Diluted 5,393,333 5,682,519 5,500,281 5,793,069
Cash dividends declared per share $ 0.57 $ 0.52 $ 2.18 $ 1.98
(1) Includes share-based compensation expense as follows:
Cost of sales $ 186 $ 145 $ 769 $ 575
Research and development $ 476 $ 390 $ 1,889 $ 1,536
Selling, general and administrative $ 368 $ 380 $ 1,552 $ 1,475

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares which are reflected in thousands and par value)

September 24, 2016 September 26, 2015
ASSETS:
Current assets:
Cash and cash equivalents $ 20,484 $ 21,120
Short-term marketable securities 46,671 20,481
Accounts receivable, less allowances of $53 and $63, respectively 15,754 16,849
Inventories 2,132 2,349
Vendor non-trade receivables 13,545 13,494
Other current assets 8,283 15,085
Total current assets 106,869 89,378
Long-term marketable securities 170,430 164,065
Property, plant and equipment, net 27,010 22,471
Goodwill 5,414 5,116
Acquired intangible assets, net 3,206 3,893
Other non-current assets 8,757 5,422
Total assets $ 321,686 $ 290,345
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 37,294 $ 35,490
Accrued expenses 22,027 25,181
Deferred revenue 8,080 8,940
Commercial paper 8,105 8,499
Current portion of long-term debt 3,500 2,500
Total current liabilities 79,006 80,610
Deferred revenue, non-current 2,930 3,624
Long-term debt 75,427 53,329
Other non-current liabilities 36,074 33,427
Total liabilities 193,437 170,990
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,336,166 and 5,578,753 shares issued and outstanding, respectively 31,251 27,416
Retained earnings 96,364 92,284
Accumulated other comprehensive income/(loss) 634 (345 )
Total shareholders’ equity 128,249 119,355
Total liabilities and shareholders’ equity $ 321,686 $ 290,345

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Twelve Months Ended
September 24, 2016 September 26, 2015
Cash and cash equivalents, beginning of the period $ 21,120 $ 13,844
Operating activities:
Net income 45,687 53,394
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 10,505 11,257
Share-based compensation expense 4,210 3,586
Deferred income tax expense 4,938 1,382
Changes in operating assets and liabilities:
Accounts receivable, net 1,095 611
Inventories 217 (238 )
Vendor non-trade receivables (51 ) (3,735 )
Other current and non-current assets 1,090 (179 )
Accounts payable 1,791 5,400
Deferred revenue (1,554 ) 1,042
Other current and non-current liabilities (2,104 ) 8,746
Cash generated by operating activities 65,824 81,266
Investing activities:
Purchases of marketable securities (142,428 ) (166,402 )
Proceeds from maturities of marketable securities 21,258 14,538
Proceeds from sales of marketable securities 90,536 107,447
Payments made in connection with business acquisitions, net (297 ) (343 )
Payments for acquisition of property, plant and equipment (12,734 ) (11,247 )
Payments for acquisition of intangible assets (814 ) (241 )
Payments for strategic investments (1,388 )
Other (110 ) (26 )
Cash used in investing activities (45,977 ) (56,274 )
Financing activities:
Proceeds from issuance of common stock 495 543
Excess tax benefits from equity awards 407 749
Payments for taxes related to net share settlement of equity awards (1,570 ) (1,499 )
Payments for dividends and dividend equivalents (12,150 ) (11,561 )
Repurchases of common stock (29,722 ) (35,253 )
Proceeds from issuance of term debt, net 24,954 27,114
Repayments of term debt (2,500 )
Change in commercial paper, net (397 ) 2,191
Cash used in financing activities (20,483 ) (17,716 )
Increase/(Decrease) in cash and cash equivalents (636 ) 7,276
Cash and cash equivalents, end of the period $ 20,484 $ 21,120
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 10,444 $ 13,252
Cash paid for interest $ 1,316 $ 514
Apple Inc.
Q4 2016 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q4 2016 Q3 2016 Q4 2015 Sequential Change Year/Year Change
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $20,229 $17,963 $21,773 13% – 7%
Europe 10,842 9,643 10,577 12% 3%
Greater China 8,785 8,848 12,518 – 1% – 30%
Japan 4,324 3,529 3,929 23% 10%
Rest of Asia Pacific 2,672 2,375 2,704 13% – 1%
Total Apple $46,852 $42,358 $51,501 11% – 9%
Q4 2016 Q3 2016 Q4 2015 Sequential Change Year/Year Change
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (1) 45,513 $28,160 40,399 $24,048 48,046 $32,209 13% 17% – 5% – 13%
iPad (1) 9,267 4,255 9,950 4,876 9,883 4,276 – 7% – 13% – 6% 0%
Mac (1) 4,886 5,739 4,252 5,239 5,709 6,882 15% 10% – 14% – 17%
Services (2) 6,325 5,976 5,086 6% 24%
Other Products (1)(3) 2,373 2,219 3,048 7% – 22%
Total Apple $46,852 $42,358 $51,501 11% – 9%

(1)

Includes deferrals and amortization of related software upgrade rights and non-software services.

(2)

Includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.

(3)

Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.