Cupertino, California-based super tech giant Apple (AAPL, Financial) came out with its fiscal 2015 first-quarter earnings yesterday, and boy oh boy what a quarter it has been for the iPhone maker. The performance numbers totally startled the Wall Street and business volume numbers broke multiple records. One extremely special thing about the quarter was the shipping of the 1 billionth iOS device – a 64GB Space Grey iPhone 6 Plus that’s now kept at the company headquarters as a memory of the achievement. Let’s take a closer look at the numbers and what all made such a phenomenal performance possible.
A look at the numbers
Apple reported consolidated revenues of $74.6 billion, up 30% or $17 billion over the prior year, and the bottom line came to $18 billion, breaking all previous records, translating into a 38% jump over the previous year. Diluted earnings per share set a new all-time quarterly record at $3.06, up 48% on the back of the company’s huge capital return activities. Looking at geographies, revenue from developed nations increased by 20% while that from emerging nations went up 58%. In all this, the performance of Greater China stood out as revenues surged by 70% to reach 416.1 billion.
Apple’s gross margin also looked extremely healthy beating the company’s own guidance by 39.9%. The quarter’s operating margin of 32.5% was its highest in 10 quarters. Even the cash flow from operations was incomparable at $33.7 billion – another new all-time record. No doubt analysts and investors were on cloud 9 after the results came out! The management believes these extraordinary numbers could have been even better without the foreign exchange fluctuations.
The iPhone maker started the fiscal with a bang and sold 74.5 million iPhones, suggesting an increase of 46% or 23.4 million units compared to the prior year period. However, sales of iPads dropped 22%, and the company could sell only 21.4 million units. The Mac did well as Apple sold around 5.5 million units, resulting in a 14% year on year growth. Even App Store revenues were up by a remarkable 41%. The company also made significant progress with the $130 billion capital return program and by the end of the quarter $103 billion were acted upon.
The star performers of the quarter
Such a strong performance from Apple wouldn’t have been possible without the unprecedented success of the latest iPhones. The smartphone has always been a show stealer, but this times numbers are nothing like anything. Tim Cook, Apple CEO, during the earnings call mentioned, “Demand for iPhone has been staggering, shattering our high expectation, with sales of over 74 million units, driven by the unprecedented popularity of iPhone 6 and iPhone 6 Plus. This volume is hard to comprehend. On average we sold over 34,000 iPhones every hour, 24 hours a day, everyday of the quarter…By the end of the quarter, our new iPhones were available in 130 countries around the world, making this our fastest and most successful rollout ever.” That’s something.
Apple’s focus on the health aspect of its users also paid off. iOS Health app has gained immense popularity over the last few months and users and app developers are using its services regularly. Automatically the interest surrounding HealthKit has also been high – more than 600 developers are integrating HealthKit into their apps so that there can be easy exchange of health data between the apps and iOS Health. According to Tim Cook, “with apps such as an American Well, users can securely share data such as blood pressure, weight or activity directly with physicians, and leading hospitals such as Duke Medicine, Stanford Children and Penn Medicine are integrating data from HealthKit into their electronic medical record so that physicians can reach out the patients proactively when they see a problem that needs attention.”
Another successful offering that the company launched was Apple Pay. Currently there are around 750 banks and credit unions that have partnered with the Cupertino giant to provide Apple Pay services to their customers. The popularity of the mobile payment platform is unprecedented. It accounts for almost 67% of all mobile payment transactions of three major US card networks. Experiences of Panera Bread (PNRA, Financial), a fast casual chain, and organic retail chain Whole Foods Market (WFM, Financial) clearly suggest how popular the mode of payment has become – at Panera Bread 80% of mobile payments take place via Apple Pay. The iPhone maker now has got USA Technologies (USATZ, Financial) on board. Thanks to this new partnership Apple Pay service will be available at 200,000 new outlets. The company has been experiencing huge demand from point-of-sale suppliers and Apple management feels all this will lead to an even stronger 2015.
Apple’s entire portfolio of products and services came together to paint such a bright picture for the company. Management is optimistic about the company’s future prospects, especially now that Apple Watch is about to go on sale from April.
