Apple financial results Q3 2015: Q3 2015 financial results
Apple has announced its financial results for the third quarter of fiscal 2015. Find out how Apple's results compared to what analysts were predicting and how the figures compare to previous years. Here you'll find out how many iPhones, iPads, Macs, Apple Watches and other products Apple sold during it's third fiscal quarter of 2015 which ended on 28 June.
Here are the highlights:
Apple posted revenue of $49.6 billion and made a profit of £10.7 billion
- 47.5 million iPhones
- 10.9 million iPads
- 4.8 million Macs
Apple's earnings report conference call started on Tuesday 21 July at 2pm PT, which is 10pm BST. The results will be for the quarter that began on 29 March and ended on 28 June.
Apple financial results Q3 2015: How much money did Apple make?
Apple posted revenue of $49.6 billion and made a profit of £10.7 billion. These figures beat it's own estimates and the year ago period.
This is usually a quiet quarter, so the fact that Apple has broken its own record for the quarter is great news.
Last quarter, Apple announced quarterly revenue of $58 billion and a quarterly net profit of $13.6 billion during its earnings call. Apple revealed that the gross margin for the second quarter of 2015 was 40.8 percent, and international sales accounted for 69 percent of the quarter's revenue.
Apple's forecast for Q3 was revenue of between $46 billion and $48 billion, up from $37.4 billion in the same quarter last year.
Analysts, on the other hand, predict a higher revenue of $50.61bn on average, which would represent a 34.6 percent year-over-year increase. Apple didn't quite hit that target.
Apple financial results Q3 2015: How many iPhones did Apple sell?
Apple announced that it sold 47.5 million iPhones in the three months prior to 28 June 2015. This is lower than the average analyst estimates, but higher than the year ago quarter when Apple sold 35.2 million iPhones.
Apple also made $31,368 billion in revenue from iPhone sales, compared to $19.751 in the same quarter of 2014. Apple CEO Tim Cook said: "We had an amazing quarter, with iPhone revenue up 59 percent over last year."
In the previous quarter, Apple sold 61.2 million units of the iPhone 6 and 6 Plus, making it the second biggest quarter for iPhone sales ever (the first? The previous quarter, when the company sold 74.5 million iPhones).
Analysts had predicted that Apple had sold 49.4 million iPhone units in the quarter, which would be a significant improvement over the year-ago quarter's unit sales of 35.2 million (up 40% year-over-year and 14.2 million units).
Taking a closer look, the highest prediction from analysts is 56.28m from Credit Suisse analyst Kulbinder Garcha, and the lowest is 43.5m from Oppenheimer analyst Andrew Uerkwitz.
Apple financial results Q3 2015: How many iPads did Apple sell?
Apple announced that it sold 10.931 million iPads in the quarter. This is slightly higher than the average analyst estimates, but lower than the year ago quarter when Apple sold 13.276 million iPads. With the numbers down on the same quarter last year, there are concerns that it suggests that iPad sales are slowing.
Revenue from iPad sales in the quarter was $4.538 billion, which is less than the revenue from Mac sales ($6.030 billion, nearly $1.5 million less).
On average, analysts expected Apple to sell 10.68 million iPad units during the quarter, which would be down on last quarter and down on the 13.28 million iPads sold in the same quarter last year. The lowest prediction comes from indie analyst Lee Storch from The Braeburn Group, who thinks Apple sold just 7.5 million iPads last quarter, whereas Patrick Smellie, also from the Braeburn Group, is more optimistice expecting 13.01m.
For more than a year now, iPad sales have been shaky (year-over-year sales have declined for nine quarters in a row now). Cook still has hopes for the iPad though. During the call with analysts he mentioned the partnership with IBM and also the new iPad productivity features in iOS 9. He didn't refer to the rumoured iPad Pro.
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. Cook said: "I believe that the iPad consumer upgrade cycle will eventually occur because as we look at the usage statistics on iPad, it remains unbelievably great. I mean, the next closest usage of the next competitor, we're six times greater. And so these are extraordinary numbers. It's not like people have forgotten iPad or anything, it's a fantastic product."
Last quarter, Apple sold 12.62 million iPads, which was down a worrying 23 percent year-over-year. Those sales translated to roughly $5.43 billion, which was lower than the $5.6 billion generated by the Mac during that quarter, representing the first time ever that Mac revenue has surpassed iPad revenue.
During the second quarter results, announced in April 2015, Apple CEO Tim Cook said: "We're clearly seeing cannibalisation from iPhone and, on the other side, from the Mac. Of course, as I've said before, we've never worried about that. It is what it is. That will play out. At some point it will stabilise. I'm not sure precisely when but I'm pretty confident that it will."
Apple financial results Q3 2015: How many Apple Watches did Apple sell?
Yes, this is the first full quarter of the Apple Watch's availability, and as a new product in a previously shaky category we're all interested to find out whether Apple's smartwatch has been a hit.
Unfortunately Apple hasn't revealed the precise figures for Apple Watch sales, in it's Summary Data document the company bundles Apple Watch with Other Products which also includes Apple TV and iPods, amongst other things. The figure here is disappointing, just $2.641 billion, but that is up on last quarter ($1.689 billion) and up on the same quarter of 2014 ($1.689 billion).
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."
The Other category is up $952 million from last quarter (and 49 percent versus the year-ago quarter), but Cook warned against basing Watch estimates on the change in Apple's Other Products accounting line because "the aggregate balance of that category is shrinking." In other words, the Apple Watch is doing much better than the figures suggest.
Cook did say that even with the company's inability to produce enough watches to fulfill demand, Apple sold more of the devices than the company's executives expected. He said: "Sales of the watch did exceed our expectations, and they did so despite supply still trailing demand at the end of the quarter… In fact, the Apple Watch sell-through was higher than the comparable launch periods of the original iPhone or the original iPad. And so as I look at all of these things, we feel really great about how we did."
Refuting reports that Apple Watch sales started off huge and then tanked, he said that June Apple Watch sales were higher than April and May. "I realise that's very different from some of what's being written," he said, referencing Slice Intelligence data, "but June sales were the highest."
Looking forward, Apple has high hopes for the Apple Watch in the Christmas shopping quarter. Indeed, the company plans to expand its sales channels in the run up to Christmas, having: "learned a lot about the [Apple Watch] buying experience."
Cook added: "We're convinced that the watch is going to be one of the top gifts of the holiday season."
During its second quarter earnings call, Apple did mention the Apple Watch, which had been on sale for just a few days. Cook said that the company was "very happy" with the reception the Apple Watch had received, but at the time demand was greater than supply.
Analysts were not particularly confident about the Apple Watch's sales prior to the earnings report. Canalys had forecast that Apple shipped 4.2 million units during the quarter, which is much lower than most new Apple devices after their first full quarter. It would still represent a significant improvement over other wearable devices that have launched so far, but it's much lower than projections from analysts last year prior to the Apple Watch's launch, which were as high as 30 million.
Other analysts, as listed by Fortune, projected an average of 4.7 million Apple Watch units, with the lowest prediction coming in at 2.85 from Financial Alchemist analyst Turley Muller and the highest from Sundeep Bakjikar from Jefferies, who estimates 5.7 million units.
However, analysts including experts at Cantor Fitzgerald said they expected sales of the Apple Watch to improve as we approach the Christmas shopping period, as it'll become the "go-to gift."
Research firm J. Gold Associates gas said that the Apple Watch is "a long-term play" and that "it's going to take another year or two, not just for Apple but for the market, to understand what it is that consumers really want these smartwatches to do for them. Apple will have to make adjustments and I think it'll become more popular over time."
Apple has already previewed WatchOS 2, a software update coming to Apple Watch later this year that will bring lots of improvements to the Apple Watch. Find out more here.
Apple financial results Q3 2015: How many Macs did Apple sell?
We've been impressed by Apple's Mac sales for a few quarters now and this quarter didn't disappoint.
Apple sold 4.796 million Macs in the past three months making revenue of $6.030 billion, the figures slightly missed the average analyst estimates but is actually astonishing growth of 9 percent in a market that market-research firm IDC estimates contracted by 12 percent during the quarter.
What's interesting here is that the predictions was that PC sales would decline due to increasing tablet sales, and yet, based on the declining sales of iPads, tablets aren't as popular as anticipated. Despite this, PC sales are declining while Mac sales are increasing.
Mac sales have been growing despite an overall decline in the PC market. In Q2 2015, Apple sold 4.5 million Macs, up 10 percent year-over-year.
For this quarter, analysts were predicting sales of 4.83 million Macs, which would represent another increase over the previous quarter and a 9.4 percent increase year-over-year.
Apple's biggest market is fast becoming China, and while the last two quarters have showed 75 percent year-over-year growth, Apple more than doubled its China revenue in this most recent quarter, compared to the same quarter a year ago. Apple isn't just growing in China, its growth is accelerating.
Cook emphasized that Apple believes China will ultimately be Apple's largest market. However, the Chinese stock market and economy has been called into question in recent days and there are concerns that too much of Apple's current growth is based on the Chinese market. This may be one reason why Apple's shares are slightly tumultuous at the moment.
Cook isn't worried, he pointed out that with LTE networking only available in 12 percent of China, there's an "incredible smartphone future" in the country as broadband speeds improve and online video becomes more viable nationwide.
Next quarter guidance
After announcing the financial results, Apple provided 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
There are some concerns that these are low estimates for the fourth quarter and overnight the Apple share price declined to $122.16 from $130.75.
Head to page three for the full rundown of results from Apple's Q2 2015 earnings call.