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Apple’s Latest Performance Exceeds Expectations

Apple CEO Cook

Apple’s stock price continued its strong rise last year. The company’s stock price has increased by more than 7% this year; since the first fiscal quarter report was released last year, the company’s stock price has increased by more than 100%.

Apple’s financial report for the first fiscal quarter of fiscal year 2020 released on Tuesday showed that benefiting from the first year of iPhone sales growth in a year and the surge in demand for wearable products such as AirPods wireless headsets, the company’s first fiscal quarter including the holiday shopping season Revenue and profits far exceeded Wall Street analysts’ expectations, pushing its stock price up more than 1% in subsequent after-hours trading.

Apple revenue rose 9% year-on-year to $ 91.8 billion, exceeding the company’s previous expectations. Apple’s first fiscal quarter revenue has changed significantly compared to the same period last year when the company had to lower its revenue forecast in the first fiscal quarter of fiscal 2019 due to the weak Chinese market.

Apple’s profit growth was partly driven by iPhone revenue growth of 8% year-on-year to $ 55.97 billion.

We are pleased to report Apple’s highest quarterly revenue ever, thanks to strong market demand for new products in our iPhone 11 and iPhone 11 Pro series, as well as service and wearable device revenues reaching record highs.

During the holiday season, our active equipment installation base has grown in all geographic regions and now exceeds 1.5 billion units. We think this is a strong proof of customer satisfaction, participation and loyalty, and a huge driving force for our overall development.

Apple CEO Cook

The Following are the Main Points of Apple’s Financial Report:

  • Earnings per share: $ 4.99, exceeding market expectations of $ 4.55.
  • Revenue: $ 91.8 billion, exceeding market expectations of $ 88.50 billion.
  • iPhone revenue: $ 55.97 billion, exceeding market expectations of $ 51.62 billion.
  • Service revenue: $ 12.7 billion, less than market expectations of $ 13.07 billion.
  • Revenue from other products: $ 10 billion, exceeding market expectations of $ 9.52 billion.
  • Gross profit margin: 38.4%, exceeding market expectations of 38.1%.
  • Second-quarter revenue forecast: $ 63 billion to $ 67 billion, exceeding market expectations of $ 62.45 billion.
  • Gross profit margin forecast for the second fiscal quarter: 38% to 39%, in line with market expectations of 38.2%.

However, Apple’s second-quarter expectations are wider than in the past, and Apple CEO Tim Cook attributed the change to uncertainty caused by the deadly coronavirus. “The uncertainty is greater and the situation is very variable,” Cook said.

Annualized Revenue equals Wal-Mart

Apple achieved another financial milestone in the first fiscal quarter, and the company is now steadily approaching $ 300 billion in annual revenue. Of all American companies, only Wal-Mart can do this.

Read: Apple iPhone 12 may Cancel the Lightning Interface next year

           Bloomberg Intelligence analyst John Butler pointed out in the research report: “The sales of the new iPhone in the first quarter were very hot.” The analyst also pointed out that Apple Watch and AirPods sales, and Apple’s rapid The growing services business will have “strong growth“.

Although Apple no longer discloses iPhone sales separately in its financial report, analysts at Bloomberg predict that the company sold nearly 67 million iPhones in the first quarter. Bloomberg analysts also predict that Apple is expected to sell nearly 195 million iPhones this year, meaning that the total sales of this iconic device since Apple launched its first iPhone will be close to 1.9 billion.

Apple’s fiscal 2020 revenue will reach a record of $ 276 billion and will exceed $ 300 billion in 2021. In addition to Apple, Amazon’s revenue is expected to reach $ 300 billion this year. But whether it’s Wal-Mart or Amazon, their business margins are much lower than Apple’s.

Take Apple’s services business, the gross profit margin of the business has been stable at about 65%.

iPhone sales are strong

iPhone revenue in the first fiscal quarter reached 55.97 billion US dollars, an increase of 8% over the same period last year of 52 billion US dollars, exceeding market expectations of 51.62 billion US dollars.

In order to attract users to stimulate sales, Apple reduced its starting price by $ 50 when it released new products for the iPhone 11 and iPhone 11 Pro series last fall. Cook said in the financial report that strong sales of new iPhone 11 and iPhone 11 Pro series products have driven the company’s revenue growth, saying that these devices are Apple’s most powerful iPhone product line ever.

Apple ’s growth rate has begun to slow because of reduced demand for the iPhone and increased competition from Chinese equipment manufacturers. Under CEO Cook’s leadership, Apple’s strategy has changed.

Read: Apple May Choose Samsung’s New Touch Integrated OLED Panel

       The company’s current goal is to sell new phones to users every 3 to 5 years and then provide as many services and accessories as possible over the next few years.

iPhone 12

But most of Apple’s revenue still comes from the iPhone. This vital business has improved from poor performance in FY 2019. New iPhone 11 and iPhone 11 Pro series products were very popular when they debuted last fall, and demand in the Chinese market is particularly strong.

More and more people are speculating that Apple may launch the company’s first 5G phone in September this year, which may reignite demand for the iPhone and bring a new “super cycle” to its stock price. However, market analysts said that Apple may not be in a hurry to release 5G mobile phones because 5G networks have not been widely used.

Service Business revenue misses expectations

In the first fiscal quarter, revenues from Apple services including iCloud, AppleCare, and Apple TV + reached US $ 12.7 billion, higher than the US $ 10.9 billion in the same period last year, but less than the market expectations of US $ 13.07 billion.

Many investors believe that Apple’s service revenue will eventually increase the gross profit margin. Apple’s gross profit margin in the first fiscal quarter was 38.35%, which was higher than the market expectation of 38.1%.

The shift to services depends on whether Apple can continue to expand its user base and get them to subscribe to services that analysts believe may be more profitable than hardware sales.

Apple Credit Card

Hardware sales can be inconsistent because they are bulk purchases that consumers make every few years. Apple said that it currently has more than 1.5 billion active installations of its own and third-party paid services, with more than 480 million users; compared to 1.4 billion a year ago, with 360 million users.

The company expects that in the second fiscal quarter through the end of March this year, the number of Apple services users will exceed the previously set target of 500 million people in fiscal 2020.

Cook said that Apple has set a new goal for its services business, which is to have 600 million users by the end of this year. “We are really proud of the 100 million user growth on the installed base,” he said.

Cash Reserves of $ 207.06 Billion

As of December 28, 2019, the company’s book cash reserves have reached 207.06 billion US dollars, which is less than 1% higher than the 205.9 billion US dollars as of the end of the fiscal year 2019 but is 245 billion US dollars at the end of the first fiscal quarter of the fiscal year 2019. About 15% lower.

Apple remains one of the U.S. companies with the most cash reserves. Entering 2020, Apple’s stock price continues its strong upward trend last year. The company’s stock price has increased by more than 7% this year; since the first fiscal quarter report was released last year, the company’s stock price has increased by more than 100%.

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