Apple financial results: Q1 2016 financial results
Apple announced its financial results for the first quarter of fiscal 2016 on Tuesday 26 January. Here, you'll find out how many iPhones, iPads, Macs, Apple Watches Apple has sold in the quarter as well as what analysts and Apple watchers expected Apple to have sold during its first fiscal quarter of 2016.
Apple financial results: How to listen to Apple's earnings call Q1 2016
Apple's earnings report conference call began at 2pm PT on Tuesday 27 October at 2pm PT, which is 10pm GMT, although the company released it's financial results to the market about an hour earlier. The results are for the quarter that began in September and ended this at the end of December. Apple's financial year runs from September to September.
Apple financial results Q1 2016: How much money did Apple make?
In the quarter just gone (quarter 1 of 2016, which actually ended on December 26, 2015) Apple posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share.
This compares to Q1 of 2015, when Apple posted a record quarterly revenue of $74.6 billion and record quarterly net profit of $18 billion, or $3.06 per diluted share, so we're essentially looking for an improvement on that. With the launch of the iPad Pro in November and the new Apple TV in October, in addition to this being the first full quarter that the iPhone 6s and iPhone 6s Plus, the holiday quarter was an huge quarter for Apple.
Last quarter, which ended on 26 September 2015, Apple posted a quarterly revenue of $51.5 billion and a quarterly net profit of $11.1 billion, which is $1.96 per diluted share.
In the quarter just gone, gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter's revenue.
Apple just about beat its expectations. Last quarter, Apple suggested that guidance for Q1 2016 should be:
- Revenue between $75.5 billion and $77.5 billion
- Gross margin between 39 percent and 40 percent
- Operating expenses between $6.3 billion and $6.4 billion
- Other income/(expense) of $400 million
- Tax rate of 26.2 percent
Analysts are likely to be disappointed as they were predicting an average of $77.1 billion and $3.25 per share for the quarter. Even that would have been a small increase compared with year-over-year revenue growth of 22% or higher in previous years.
That hasn't stopped Apple CEO Tim Cook celebrating. "Our team delivered Apple's biggest quarter ever, thanks to the world's most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV," he said.
Apple CFO Luca Maestri noted that the gains came despite "very difficult macroeconomic environment".
Apple financial results Q2 2016: Guidance for next quarter
Apple is providing the following guidance for its fiscal 2016 second quarter:
- Revenue between $50 billion and $53 billion
- Gross margin between 39 percent and 39.5 percent
- Operating expenses between $6 billion and $6.1 billion
- Other income/(expense) of $325 million
- Tax rate of 25.5 percent
Apple financial results Q1 2016: How many iPhones did Apple sell?
In the just gone quarter Apple sold 74.779 million iPhones and made $51.635 billion in revenue from those sales.
In the same quarter of 2015, Apple sold slightly fewer units: 74.468 million and made revenue of $51.182 billion. At the time this set a new record and represented an increase of 46% year-over-year.
Apple watchers had expected the new sales figures to come in very close to last year's figures, with growth at 1% year-over-year if anything.
There are likely to be concerns that this is a very small year on year increase, suggesting that the smartphone market is now saturated. Although it may also be due to people holding off buying a big iPhone because they would prefer a 4in model, said to be launching in March or April.
The iPhone 6s and iPhone 6s Plus were released on 25 September so have been available for the entirity of Q1 2016. With the new iPhone 6s and iPhone 6s Plus on sale for a small part of the quarter, analysts had predicted that Apple would have sold to 48.7 million iPhones in the first quarter of 2016, but Apple missed this estimate.
In the final quarter of 2015, Apple sold 48.046 million iPhones, and made $32.209 billion in revenue from those sales.
Apple financial results Q1 2016: How many iPads did Apple sell?
Even the iPad Pro hasn't pulled the iPad out of the doldrums. 16.122 million were sold in quarter 1. That's fewer than were sold in quarter 1 of 2015 when Apple sold 21.419 million units. Revenue was $7.084 billion for quarter one 2016, compared to $8.985 billion in the same quarter of 2015.
iPad sales have been declining over the past few quarters, which could well be the reason Apple decided not to host a seperate iPad event in October of 2015 like it normally does, and why the iPad Air 2 didn't get an update. We did see the launch of a new iPad mini 4 in September, and of course the introduction of the all-new iPad Pro, but despite this analysts had suggested that we'll still see a decline from the 21.4 million iPads sold in the year ago quarter, to around 18 million according to FBR Capital Markets, and unfortunately the number was even lower than that.
In the last quarter of 2015, Apple sold 9.9 million iPads, so Apple did significantly increase sales following the launch of the new models. In the first quarter of 2015, which is the quarter we should be more closely comparing with, Apple sold 21.4 million iPads, which was lower than the 26 million iPads sold in the first quarter of 2014.
During Apple's previous earnings call in October, Cook referred to the iPad Pro, saying: "iPad Pro will enable a new generation of apps for entertainment and productivity, design and illustration, engineering and medical."
Cook didn't say much more about iPad during that call with analysts, other than to comment that nobody had asked him about the device. He did say that: "If you look at iPad as just an example, in China, 68 percent of the people that purchased an iPad, it was the first tablet they've owned, and 40 percent of those had never owned any Apple product."
One reason why iPad sales have slowed may be that despite loving the device, those who currently own an iPad are not yet ready to upgrade to a newer model.
Apple financial results Q1 2016: How many Apple Watches did Apple sell?
We're now talking about the Apple Watch's third quarter of availability, and figures for Apple's wearable still remain a mystery. In September, two new colours were released in the £299 Apple Watch Sport range which could help boost numbers, and we expect the device was high on many Christmas lists this year.
Apple continues to bundle Apple Watch sales figures in with 'Other Products' - a category that also includes Apple TV and iPods, amongst other things. All Apple reveals is the revenue figure in this category (not numbers of units sold) and the figure in the last quarter of 2015 was $3.048 billion in revenue and for this quarter just gone, the figure was $4.351 billion.
That compared to $2.641 billion in the previous quarter, which was already up on the quarter before that one ($1.689 billion). In the same quarter of 2015 Apple made $2.689 billion from this category. The Other category saw a sales jump of 61 per cent compared to the same quarter in 2014. So things are definitely on the up and the Watch is likely to be the reason, although the category includes the Apple TV too, which has also been updated recently.
Cook had previously revealed that Watch sales were expected to soar during the Christmas quarter.
Explaining why the Watch sales aren't broken down when he announced the third quarter results, Apple CEO Tim Cook told analysts: "We made the decision back in September not to disclose the shipments on the watch, and that was not a matter of not being transparent, it was a matter of not giving our competition insight [on] a product that we worked hard on."
Apple financial results Q1 2016: How many Macs did Apple sell?
We've been impressed by Apple's Mac sales throughout 2015 and last quarter of 2015 didn't disappoint. Apple sold 5.709 million Macs, making revenue of $6.882 billion. This represents astonishing growth in a market that keeps contracting, at least for other PC manufacturers.
In the 2016 Q1 results Apple announced sales of 5.312 million Macs, bringing in revenue of $6.746 billion - which is smaller than the last quarter of 2015, perhaps because Apple has been lax with its Mac updates, other than the iMac which was updated in the quarter just gone.
In Q1 2015 results Apple sold 5.519 million Macs, and made $6.944 billion in revenue from those sales. So disappointingly we are seeing a decline in Mac sales, a category that had been doing well for Apple, despite the negative trend in the global personal computer market.
We hope to see an increase in Mac sales if Apple updates its Macs soon - it seems likely that the company has been awaiting the new Intel Skylake chips that would be destined for it's consumer Macs.
Apple financial results Q1 2016: Software and services
Apple made $6.056 billion in revenue from software and services in 2016's first quarter. In the same quarter last year this was $4.799 billion, perhaps the launch of the Apple TV has aided this figure.
More to come as we wait for the results of Apple's conference call with analysts.
Read page three for our full coverage of the previous quarter's financial results.