Just a few minutes ago, Apple announced its second quarter earning results for 2018. The numbers included $61.1 billion in revenue on sales of 52.2 million iPhones, 9.1 million iPads, and 4.07 million Macs. As is tradition, the earnings release is being followed by a conference call with Apple CEO Tim Cook and CFO Luca Maestri.
For the full earnings release, check out our coverage here. Tim Cook touted Apple’s numbers this month, saying that customers chose iPhone X more than any other iPhone each week during the quarter:
“Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20% growth in Greater China and Japan.”
The call is slated to begin at 2PM PT/5PM ET and can be live streamed on Apple’s investor relations website. Tim Cook will kick things off with a broad overview of the numbers, with CFO Luca Maestri then diving in for a deeper look. Things will wrap up with a Q&A from analysts.
Check out all of the details from the call down below:
- “We’re proud to announce the results of a very successful quarter today, setting new March quarter records.”
- Sixth consecutive quarter of growth
- iPhone revenue up 14 percent, services up 31 percent, and wearables up almost 50 percent.
- Best quarter ever for Services, revenue tops $9 billion, up $2 billion compared to year ago quarter
- All-time record revenue from App Store, Apple Music, Apple Pay, and more
- Paid subscriptions pass 270 million, up over 100 million compared to year ago
- Apple Pay active users double YOY, transactions triple
- “Most successful mobile transit payment system in Tokyo, which has the busiest transit system of all.”
- Norway, Poland, and Ukraine to get Apple Pay in coming months
- Apple Watch growing “strong double digits” to new March quarter record
- AirPods a “runaway hit, working hard to meet demand”
- “Looking forward to adding new features to HomePod and releasing it to new markets soon.”
- Tim touting Apple in education, new iPad + Apple Pencil
- Now talking iOS 11.3, hyping augmented reality and ARKit, medical records in iOS, and more.
- “Privacy is a key element of these initiatives. We’re relentless about making the best products and services in the world and protecting user privacy.”
- Tim wrapping up the first half of the year, “best pipeline of products and services we’ve ever had.”
- “Recent corporate tax reform” allows Apple to invest $350 billion in U.S., narrowing list of cities for new United States campus
- Talking Apple’s new $100 billion buyback program
- Now handing the call over to Luca
- iPhone ASP hits $728, up year over year but not sequentially
- Services double four years ago, Apple Music passes 40 million subscribers
- AppleCare + iCloud also increases
- “Other” category sets new record thanks to Apple Watch and AirPods, which accounted for 90 percent of that growth
- iPad install base hits new all-time high
- Apple continues to make headway in the enterprise market thanks to partnerships with Cisco & IBM
- iPhones also growing in health care, with Luca touting partnerships with hospital
- Retail grows thanks to iPhone, AirPods, and HomePod, currently 502 stores across the world today
- Net cash position of $145 billion, returned $27 billion to investors
- “Want to maintain the cash we need to fund operations, invest in future, and provide flexibility. The new tax legislation gives us increased flexibility with access to global cash.”
- “Our goal is to become net cash neutral”
- More about Apple’s new buyback program and dividend increases
- Outlining expectations for next quarter:
- • revenue between $51.5 billion and $53.5 billion • gross margin between 38 percent and 38.5 percent • operating expenses between $7.7 billion and $7.8 billion • other income/(expense) of $400 million • tax rate of approximately 14.5 percent
- Q: Thoughts on iPhone X positioning at $1,000 price point – sustainability at that price point?
- Tim: Revenue up 14 percent YOY on iPhone, our iPhone line shows there’s a variety of different customers in a market this large. We’ll continue to provide different iPhones to meet needs. On iPhone X specifically, I think it’s important to emphasize that customers chose iPhone X more than any other iPhone every week in the March quarter. The iPhone X is a beloved product.
- Q: What’s driving inventory growth QOQ?
- Luca: Our inventory level has gone up, just a temporary event. We have decided to make some purchasing decisions given current market conditions. That should unwind over time.
- Q: What the biggest driver of services growth?
- Tim: The great thing about it is it’s not a specific location or service. We set records from the App Store to Apple Pay to iCloud and more.
- Q: Apple’s preparation for “trade war with China?”
- Tim: My view is that China and the US have this unavoidable mutuality where China only wins if US wins and vice versa, and the world only wins if both win. Lots of things bind the countries together. We’re very optimistic
- Q: What’s working for Apple in China right now”
- Tim: iPhone X was the most popular smartphone in China last quarter, but several things are working well. Services, wearables.
- Q: How does Apple feel about privacy and recent legislation around privacy?
- Tim: We protect user data by encrypting it. We keep the bulk of the information on the device, and overall collect much less data than others do. Users are not our product. We view privacy as a fundamental human right.
- Q: Apple’s play in health care? Just selling Apple Watches or broader?
- Tim: We think about it very broadly with things like ResearchKit and HealthKit. This all comes from getting significantly engaged in Apple Watch. There’s also a Heart Study going on and I don’t want to give too much away, but it’s an area of great interest.
- Q: Update on India?
- Tim: We set a new first half record and continue to put great energy there. Our objective over time there is to go there with all of our different initiatives, such as retail. It’s a huge market.
- Q: Price elasticity of demand at the top end of the market?
- Tim: We price for the value that we delivery with the the iPhone X, and it’s the most innovative product on the market. We have it jam-packed. We try to price a reasonable price for the value we deliver and I feel we did that.
- Q: Lots of thoughts about market saturation – thoughts?
- Tim: We still believe that over time, every phone sold will be a smartphone. It seems to us that with half a billion feature phones still being sold, that’s a pretty big opportunity in terms of the iPhone itself. Our task is to convince people that currently have another type of phone to switch.
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