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Apple Reports Record Third Quarter Results

July 21, 2015 4:30 PM EDT

iPhone, Apple Watch, Mac & App Store Drive Revenue Growth of 33%

CUPERTINO, Calif.--(BUSINESS WIRE)-- Apple® today announced financial results for its fiscal 2015 third quarter ended June 27, 2015. The Company posted quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion, or $1.85 per diluted share. These results compare to revenue of $37.4 billion and net profit of $7.7 billion, or $1.28 per diluted share, in the year-ago quarter. Gross margin was 39.7 percent compared to 39.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

The growth was fueled by record third quarter sales of iPhone® and Mac®, all-time record revenue from services and the successful launch of Apple Watch™.

“We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,” said Tim Cook, Apple’s CEO. “The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.”

“In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent,” said Luca Maestri, Apple’s CFO. “We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.”

Apple is providing the following guidance for its fiscal 2015 fourth quarter:

• revenue between $49 billion and $51 billion

• gross margin between 38.5 percent and 39.5 percent

• operating expenses between $5.85 billion and $5.95 billion

• other income/(expense) of $400 million

• tax rate of 26.3 percent

Apple’s board of directors has declared a cash dividend of $.52 per share of the Company’s common stock. The dividend is payable on August 13, 2015, to shareholders of record as of the close of business on August 10, 2015.

Apple will provide live streaming of its Q3 2015 financial results conference call beginning at 2:00 p.m. PDT on July 21, 2015 at www.apple.com/quicktime/qtv/earningsq315. 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 27, 2014, its Form 10-Q for the fiscal quarter ended December 27, 2014, its Form 10-Q for the fiscal quarter ended March 28, 2015, and its Form 10-Q for the fiscal quarter ended June 27, 2015 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, the Mac and Apple Watch. Apple’s three software platforms — iOS, OS X and watchOS — 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 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.

© 2015 Apple Inc. All rights reserved. Apple, the Apple logo, iPhone, Mac and Apple Watch 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

Nine Months Ended

June 27,2015

 

June 28,2014

June 27,2015

 

June 28,2014

 
Net sales $ 49,605 $ 37,432 $ 182,214 $ 140,672
Cost of sales (1)   29,924   22,697   109,136   86,144
Gross margin   19,681   14,735   73,078   54,528
Operating expenses:
Research and development (1) 2,034 1,603 5,847 4,355
Selling, general and administrative (1)   3,564   2,850   10,624   8,835
Total operating expenses   5,598   4,453   16,471   13,190
Operating income 14,083 10,282 56,607 41,338
Other income/(expense), net   390   202   846   673
Income before provision for income taxes 14,473 10,484 57,453 42,011
Provision for income taxes   3,796   2,736   15,183   10,968
Net income $ 10,677 $ 7,748 $ 42,270 $ 31,043
 
Earnings per share:
Basic $ 1.86 $ 1.29 $ 7.30 $ 5.06
Diluted $ 1.85 $ 1.28 $ 7.25 $ 5.03
 
Shares used in computing earnings per share:
Basic 5,729,886 6,012,635 5,788,922 6,136,147
Diluted 5,773,099 6,051,711 5,829,920 6,172,857
 
Cash dividends declared per share $ 0.52 $ 0.47 $ 1.46 $ 1.35
 
(1) Includes share-based compensation expense as follows:
Cost of sales $ 148 $ 115 $ 430 $ 334
Research and development $ 388 $ 313 $ 1,146 $ 902
Selling, general and administrative $ 320 $ 296 $ 1,095 $ 865
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

   

June 27,2015

September 27,2014

 
ASSETS:
 
Current assets:
Cash and cash equivalents $ 15,319 $ 13,844
Short-term marketable securities 19,384 11,233
Accounts receivable, less allowances of $83 and $86, respectively 10,370 17,460
Inventories 2,042 2,111
Deferred tax assets 5,010 4,318
Vendor non-trade receivables 9,537 9,759
Other current assets   9,291   9,806
Total current assets 70,953 68,531
 
Long-term marketable securities 168,145 130,162
Property, plant and equipment, net 21,149 20,624
Goodwill 5,044 4,616
Acquired intangible assets, net 3,779 4,142
Other assets   4,081   3,764
Total assets $ 273,151 $ 231,839
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
Current liabilities:
Accounts payable $ 26,474 $ 30,196
Accrued expenses 22,724 18,453
Deferred revenue 9,088 8,491
Commercial paper 4,499 6,308
Current portion of long-term debt   2,500   0
Total current liabilities 65,285 63,448
 
Deferred revenue, non-current 3,474 3,031
Long-term debt 47,419 28,987
Other non-current liabilities   31,296   24,826
Total liabilities   147,474   120,292
 
Commitments and contingencies
 
Shareholders' equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,705,400 and 5,866,161 shares issued and outstanding, respectively 26,327 23,313
Retained earnings 98,252 87,152
Accumulated other comprehensive income   1,098   1,082
Total shareholders' equity   125,677   111,547
Total liabilities and shareholders' equity $ 273,151 $ 231,839
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 
Nine Months Ended
June 27, 2015   June 28, 2014
 
Cash and cash equivalents, beginning of the period $ 13,844 $ 14,259
 
Operating activities:
Net income 42,270 31,043
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 8,138 5,977
Share-based compensation expense 2,671 2,101
Deferred income tax expense 2,820 3,154
Changes in operating assets and liabilities:
Accounts receivable, net 7,090 2,314
Inventories 69 170
Vendor non-trade receivables 222 1,486
Other current and non-current assets 2,286 931
Accounts payable (3,263) (2,531)
Deferred revenue 1,040 1,394
Other current and non-current liabilities 4,448   424
Cash generated by operating activities 67,791   46,463
 
Investing activities:
Purchases of marketable securities (137,524) (160,662)
Proceeds from maturities of marketable securities 9,916 15,111
Proceeds from sales of marketable securities 80,635 126,827
Payments made in connection with business acquisitions, net (230) (898)
Payments for acquisition of property, plant and equipment (7,629) (5,745)
Payments for acquisition of intangible assets (201) (216)
Other 134   7
Cash used in investing activities (54,899)   (25,576)
 
Financing activities:
Proceeds from issuance of common stock 324 435
Excess tax benefits from equity awards 684 562
Taxes paid related to net share settlement of equity awards (1,332) (839)
Dividends and dividend equivalents paid (8,597) (8,297)
Repurchase of common stock (22,000) (28,000)
Proceeds from issuance of long-term debt, net 21,312 11,960
Change in commercial paper, net (1,808)   2,010
Cash used in financing activities (11,417)   (22,169)
 
Increase/(decrease) in cash and cash equivalents 1,475   (1,282)
Cash and cash equivalents, end of the period $ 15,319 $ 12,977
 
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 10,604 $ 8,013
Cash paid for interest $ 427 $ 322
 
  Apple Inc.
Q3 2015 Unaudited Summary Data
(Units in thousands, Revenue in millions)
                       
Q3 2015 Q2 2015 Q3 2014 Sequential Change Year/Year Change
 
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $20,209 $21,316 $17,574 - 5% 15%
Europe 10,342 12,204 8,659 - 15% 19%
Greater China 13,230 16,823 6,230 - 21% 112%
Japan 2,872 3,457 2,627 - 17% 9%
Rest of Asia Pacific 2,952 4,210 2,342 - 30% 26%
Total Apple     $49,605 $58,010

$37,432

- 14% 33%
 
     
Q3 2015 Q2 2015 Q3 2014 Sequential Change Year/Year Change
 
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (1) 47,534 $31,368 61,170 $40,282 35,203 $19,751 - 22% - 22% 35% 59%
iPad (1) 10,931 4,538 12,623 5,428 13,276 5,889 - 13% - 16% - 18% - 23%
Mac (1) 4,796 6,030 4,563 5,615 4,413 5,540 5% 7% 9% 9%
Services (2) 5,028 4,996 4,485 1% 12%
Other Products (1)(3) 2,641 1,689 1,767 56% 49%
Total Apple     $49,605 $58,010 $37,432 - 14% 33%

(1)

 

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

(2)

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

(3)

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

Apple
Press:
Kristin Huguet, 408-974-2414
[email protected]
or
Investor Relations:
Nancy Paxton, 408-974-5420
[email protected]
Joan Hoover, 408-974-4570
[email protected]

Source: Apple Inc.



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