18 ms·

Apple Reports Q2 2018 Results

95 points by take4 8y ago

uptown 8y ago
APPLE SEES 3Q REV. $51.5B TO $53.5B, EST. $51.4B APPLE 2Q REV. $61.1B, EST. $60.9B APPLE REPORTS NEW $100B BUYBACK PROGRAM, BOOSTS DIVIDEND BY 16% APPLE 2Q IPHONE UNITS SOLD 52.2M, EST. 52.3M
- take4 8y ago
  Also they have services at 9.2B vs consensus 8.4B, which is a fantastic beat and 31% growth YoY.
chollida1 8y ago
My notes: Numbers: - Q Rev. $51.5B to $53.5B, Est. $51.4B - Q2 2018 revenue of $61 billion, equaling analyst's estimates. That's 16 percent growth from a year ago. It's the fastest year over year expansion since 2015 - Apple sold 52 million iPhones in the second quarter, compared to 50.1 million units in the year-ago quarter. This represents year-over-year 3 percent unit growth and 14 revenue growth - services revenue up 31 percent from a year ago and 8 percent from the preceding three months. - Quarter over quarter, iPhone sales fell 32 percent in terms of units and 38 percent in terms of revenue. The average selling price was $728 per phone compared with an average estimate of $740. - The iPad made gains from a year ago. Apple sold 2 percent more in the second quarter from a year ago with a 6 percent revenue gain. It sold fewer Mac computers compared with a year ago and revenue was flat. - other revenue, watch, pay, tv, etc Revenue was up 38 percent from a year ago. - Cash at end of 2Q $267.2 billion vs $285.1 billion q/q - est. 3Q operating expenses $7.7 billion to $7.8 billion - est. 3Q tax rate about 14.5% Commentary: - apple store now has 270 million paying subscribers - that's 100 million more than a year ago. - - In a note to investors, Morgan Stanley said it expects Apple to hike its capital return program by $150 billion to a total of $450 billion in returns by 2020. This would be up from the $300 billion program announced last year, which was expected to run through March-2019. Apple is also expected to up its quarterly dividend to 0.945 cents per share, up from the current 63 cents, according to Morgan Stanley. - Apple was the largest non-financial issuer of U.S. investment-grade bonds last year. and from Jon Elichman this was intersting Number of iPhones sold in Q2: Q2 2018: 52.2 million Q2 2017: 50.8 million Q2 2016: 51.2 million Q2 2015: 61.2 million Q2 2014: 43.7 million Q2 2013: 37.4 million Q2 2012: 35.1 million Q2 2011: 18.6 million Q2 2010: 8.8 million Q2 2009: 3.8 million Q2 2008: 1.7 million
- IBM 8y ago
  >- music now has 270 million paying subscribers - that's 100 million more than a year ago. That has to be wrong. They were at 40 million a few months ago.
  - chollida1 8y ago
    Your right, not apple music, I mistranslated there:). Appreciate the fact checking:)
    - nkkollaw 8y ago
      You're ;-)
- hw 8y ago
  Unit sales across the iPhone, iPad and Mac were a bit disappointing but better than I expected. Still, AAPL is a behemoth and the buybacks and dividends are welcome news
  - diminish 8y ago
    Why were you disappointed? Imho a traumatic unit sales drop was feared due to some supplier numbers but it didn't happen. What were you expecting?
    - hw 8y ago
      Well, iPhone sales have been pretty stagnant. The new iPhones Apple rolls out every year isn't exactly revolutionary. Not sure how long they can keep this up and expect people to buy new phones every cycle or every 2 cycle. The X was disappointing, given the hype, and I'd be interested to see the X sales numbers. The Macbook Pro line is also suffering some hardware issues - keyboard, batteries, touchpad. The touch bar also has been a real annoyance, and I've been favoring my 2012 rMBP over the newer models.
      - 8y ago
deleted 8y ago
[deleted]
oflannabhra 8y ago
One thing that is consistently amazing is how accurate Apple's guidance is. Horace Dediu: "How accurate is Apple’s Guidance? Over the last 23 quarters the average error has been 2.63% (measuring from top of guidance range)." [0] [0] - https://twitter.com/asymco/status/991345104848867333 https://twitter.com/asymco/status/991345104848867333
- khc 8y ago
  Is that surprising? What's the typical error margin?
- diminish 8y ago
  Imho this isn't chance but Apple management has several tools to realize it. My guesses are specific operator campaigns, pricing, supply. What's surprising is the absence of extreme overshoot. I think smartphone market has matured enough.
  - scarface74 8y ago
    They are also already a month into the next quarter by the time they announce it....
- samfisher83 8y ago
  They already probably have a month worth of data. They can extrapolate those numbers out. Also they have lots of data on what the trends are.
- rdlecler1 8y ago
  This must be a function of large numbers such that the sample is close to the expected value.
- brisance 8y ago
  What’s even more amazing is that these so-called journalists like Mark Gurman still have a job at Bloomberg. His piece yesterday was a hatchet job, with no numbers or even anything resembling expected sales figures. [1] [1] https://www.bloomberg.com/news/articles/2018-04-30/apple-results-to-show-iphone-x-problem-and-cook-s-plan-to-fix-it https://www.bloomberg.com/news/articles/2018-04-30/apple-res...
jonknee 8y ago
Some scale for the new $100b buyback program... Larger than the market cap of all but 51 of the S&P 500 (with one of those being Apple!). That's nuts!
- diminish 8y ago
  Are there any risks with such a huge buyback in 2019 to 2020 in a mature smartphone market and in the absence of other growth drivers next to iPhone??
  - jonknee 8y ago
    They have the cash and people generally invest in AAPL for reasons other than having a stake in a bond fund, so it makes some sense. Buybacks vs special dividend are debatable, but impossible to say what is better until you see the future share price. They did hike the dividend substantially too so they're playing both angles.
    - rdlecler1 8y ago
      Buybacks will also increase the dividend yield as dividends are distributed across a smaller number of shares.
      - jonknee 8y ago
        No, it will decrease the amount of money they have to pay out in dividends though... Theoretically the yield would decrease since the share price should increase as shares are bought back. That said, they did also announce a dividend increase which should counteract that. Think about it in round numbers, if there are 1 billion shares and a $1 dividend it's $1bn per dividend payment. If they buy back 100m shares, the next dividend payment would be $900m. tl;dr dividends are declared on a per share basis, not a total amount that is divided by the current number of shares.
        __blockcipher__ 8y ago
antirez 8y ago
I think the Apple future may not look good for a few reasons: 1. iPhones units sold stalled for 3 years in a row. This means the company need to seek every year some trick to earn more from each phone. It is not obvious if they'll be able to do for a long time. 2. Top Android devices are improving and Google Pixel 2 is really an incredible device that is making some iOS users switching. I've no data but my nerd friends are doing this a lot, and sometimes what you see in the nerd-sphere in a few years happens in the normal market. 3. They are struggling at competing in the space of the biggest ecosystems around phones. Cloud, computational photography, assistant.
- diminish 8y ago
  1. Maturing smartphone market. 4.No other growth drivers in sight after the failure of apple watch to become huge.
  - threeseed 8y ago
    > No other growth drivers in sight after the failure of iwatch to become huge Apple Watch is the number one smart watch. It sold 8 millions unit last quarter (a rise of 10.3%) and represents about half of all smart watch sales. You would have to be deluded to think that it isn't anything other than a huge success.
    - diminish 8y ago
      Apple watch is successful in smart watch market. Smart watch market seems not to be a billions-unit market. That's what I mean.
      - mcphage 8y ago
        > Smart watch market seems not to be a billions-unit market. How many billions unit markets are there out there?
        djrogers 8y ago
ChuckMcM 8y ago
That is a pretty stellar earnings release. Congratulations on another quarter of excellent execution! I think what Apple needs are some barbarians at the gates. Something which challenges them to be greater than they are, rather than sitting back on their laurels. I continue to be surprised that they don't step into the cloud computing pool. There are some solid advantages to having a cloud infrastructure that you can use to deploy new initiatives at scale. I also wish they would spin out their computer business (Macbook, Ma Pro, Mac Mini, iMac) into its own division. While I chided Google for creating Alphabet, having your own identity can sharpen your focus if it is done well. It would also let them decide where they wanted to go with some of the legacy product lines.
- ksec 8y ago
  Something like Project McQueen? https://venturebeat.com/2016/03/17/apple-cloud-project-mcqueen/ https://venturebeat.com/2016/03/17/apple-cloud-project-mcque... They also has their own CDN.
  - ChuckMcM 8y ago
    Yes something like that, although no follow up after 2016 other than one cryptic speculation about a data center project [1]. [1] http://fortune.com/2017/02/21/apple-data-center-project-isabel/ http://fortune.com/2017/02/21/apple-data-center-project-isab...
    - ksec 8y ago
      One reason we don't see much follow up is because DC are not of interest to most users. But their DC has definitely grown. Much like their CDN. Then there is the DC project in Ireland, more in HongKong, and few other places. I think their original plan were to have most of its cloud usage move back to its infrastructure by 2019, given delays in many parts of DC may be 2020.
- microtherion 8y ago
  > I also wish they would spin out their computer business (Macbook, Ma Pro, Mac Mini, iMac) into its own division To me, one of the core strengths of Apple is integration of all its devices, and it seems to me that creating separate divisions competing with each other would risk undermining this integration. In the late 90s, I heard hair raising stories of how various divisions at Sun were operating at cross purposes due to a myoptic focus on their own balance sheets. I believe you worked there. In your opinion, were the competing divisions a strength or a weakness of Sun?
ihuman 8y ago
MacStories has some visualizations with data from previous quarterly results https://www.macstories.net/news/apple-q2-2018-results-xxx-billion-revenue-xxx-million-iphones-xxx-million-ipads-sold/ https://www.macstories.net/news/apple-q2-2018-results-xxx-bi...
Analemma_ 8y ago
I'm kind of thrilled to see Mac revenue flat and unit sales down 3%. I was really worried that these keyboard problems wouldn't have any effect on the bottom line and give them an excuse to ignore it; hopefully this is setting off alarm bells and getting them to see that, yes, it really unacceptable and needs to be fixed.
- loudmax 8y ago
  I hope that's Apple's response too. But I fear they might just conclude to that their expertise is in cell phones and they shouldn't invest too much in laptops after all. Maybe introduce some more gimmicks and see if anything sticks. I really hope I'm wrong. I'd love to see an MBP I could get excited about.
  - rdlecler1 8y ago
    I think that would be a mistake. I believe at least, that Apple owes a lot to the size of it’s developer computer. Get them off Apple and you’re one step closer to Android, then you start developing apps for non-Apple products.
guelo 8y ago
$100 billion buyback? I thought cash repatriation was supposed to lead to an explosion of onshore investment.
- bertjk 8y ago
  It is an onshore investment. They are investing in Apple stock.

95 points by take4 8y ago

APPLE SEES 3Q REV. $51.5B TO $53.5B, EST. $51.4B APPLE 2Q REV. $61.1B, EST. $60.9B APPLE REPORTS NEW $100B BUYBACK PROGRAM, BOOSTS DIVIDEND BY 16% APPLE 2Q IPHONE UNITS SOLD 52.2M, EST. 52.3M

take4 8y ago
Also they have services at 9.2B vs consensus 8.4B, which is a fantastic beat and 31% growth YoY.

chollida1 8y ago

My notes: Numbers: - Q Rev. $51.5B to $53.5B, Est. $51.4B - Q2 2018 revenue of $61 billion, equaling analyst's estimates. That's 16 percent growth from a year ago. It's the fastest year over year expansion since 2015 - Apple sold 52 million iPhones in the second quarter, compared to 50.1 million units in the year-ago quarter. This represents year-over-year 3 percent unit growth and 14 revenue growth - services revenue up 31 percent from a year ago and 8 percent from the preceding three months. - Quarter over quarter, iPhone sales fell 32 percent in terms of units and 38 percent in terms of revenue. The average selling price was $728 per phone compared with an average estimate of $740. - The iPad made gains from a year ago. Apple sold 2 percent more in the second quarter from a year ago with a 6 percent revenue gain. It sold fewer Mac computers compared with a year ago and revenue was flat. - other revenue, watch, pay, tv, etc Revenue was up 38 percent from a year ago. - Cash at end of 2Q $267.2 billion vs $285.1 billion q/q - est. 3Q operating expenses $7.7 billion to $7.8 billion - est. 3Q tax rate about 14.5% Commentary: - apple store now has 270 million paying subscribers - that's 100 million more than a year ago. - - In a note to investors, Morgan Stanley said it expects Apple to hike its capital return program by $150 billion to a total of $450 billion in returns by 2020. This would be up from the $300 billion program announced last year, which was expected to run through March-2019. Apple is also expected to up its quarterly dividend to 0.945 cents per share, up from the current 63 cents, according to Morgan Stanley. - Apple was the largest non-financial issuer of U.S. investment-grade bonds last year. and from Jon Elichman this was intersting Number of iPhones sold in Q2: Q2 2018: 52.2 million Q2 2017: 50.8 million Q2 2016: 51.2 million Q2 2015: 61.2 million Q2 2014: 43.7 million Q2 2013: 37.4 million Q2 2012: 35.1 million Q2 2011: 18.6 million Q2 2010: 8.8 million Q2 2009: 3.8 million Q2 2008: 1.7 million

IBM 8y ago
>- music now has 270 million paying subscribers - that's 100 million more than a year ago. That has to be wrong. They were at 40 million a few months ago.
- chollida1 8y ago
  Your right, not apple music, I mistranslated there:). Appreciate the fact checking:)
  - nkkollaw 8y ago
    You're ;-)
hw 8y ago
Unit sales across the iPhone, iPad and Mac were a bit disappointing but better than I expected. Still, AAPL is a behemoth and the buybacks and dividends are welcome news
- diminish 8y ago
  Why were you disappointed? Imho a traumatic unit sales drop was feared due to some supplier numbers but it didn't happen. What were you expecting?
  - hw 8y ago
    Well, iPhone sales have been pretty stagnant. The new iPhones Apple rolls out every year isn't exactly revolutionary. Not sure how long they can keep this up and expect people to buy new phones every cycle or every 2 cycle. The X was disappointing, given the hype, and I'd be interested to see the X sales numbers. The Macbook Pro line is also suffering some hardware issues - keyboard, batteries, touchpad. The touch bar also has been a real annoyance, and I've been favoring my 2012 rMBP over the newer models.
    - 8y ago

deleted 8y ago

[deleted]

oflannabhra 8y ago

One thing that is consistently amazing is how accurate Apple's guidance is. Horace Dediu: "How accurate is Apple’s Guidance? Over the last 23 quarters the average error has been 2.63% (measuring from top of guidance range)." [0] [0] - https://twitter.com/asymco/status/991345104848867333 https://twitter.com/asymco/status/991345104848867333

khc 8y ago
Is that surprising? What's the typical error margin?
diminish 8y ago
Imho this isn't chance but Apple management has several tools to realize it. My guesses are specific operator campaigns, pricing, supply. What's surprising is the absence of extreme overshoot. I think smartphone market has matured enough.
- scarface74 8y ago
  They are also already a month into the next quarter by the time they announce it....
samfisher83 8y ago
They already probably have a month worth of data. They can extrapolate those numbers out. Also they have lots of data on what the trends are.
rdlecler1 8y ago
This must be a function of large numbers such that the sample is close to the expected value.
brisance 8y ago
What’s even more amazing is that these so-called journalists like Mark Gurman still have a job at Bloomberg. His piece yesterday was a hatchet job, with no numbers or even anything resembling expected sales figures. [1] [1] https://www.bloomberg.com/news/articles/2018-04-30/apple-results-to-show-iphone-x-problem-and-cook-s-plan-to-fix-it https://www.bloomberg.com/news/articles/2018-04-30/apple-res...

jonknee 8y ago

Some scale for the new $100b buyback program... Larger than the market cap of all but 51 of the S&P 500 (with one of those being Apple!). That's nuts!

diminish 8y ago
Are there any risks with such a huge buyback in 2019 to 2020 in a mature smartphone market and in the absence of other growth drivers next to iPhone??
- jonknee 8y ago
  They have the cash and people generally invest in AAPL for reasons other than having a stake in a bond fund, so it makes some sense. Buybacks vs special dividend are debatable, but impossible to say what is better until you see the future share price. They did hike the dividend substantially too so they're playing both angles.
  - rdlecler1 8y ago
    Buybacks will also increase the dividend yield as dividends are distributed across a smaller number of shares.
    - jonknee 8y ago
      No, it will decrease the amount of money they have to pay out in dividends though... Theoretically the yield would decrease since the share price should increase as shares are bought back. That said, they did also announce a dividend increase which should counteract that. Think about it in round numbers, if there are 1 billion shares and a $1 dividend it's $1bn per dividend payment. If they buy back 100m shares, the next dividend payment would be $900m. tl;dr dividends are declared on a per share basis, not a total amount that is divided by the current number of shares.
      - __blockcipher__ 8y ago

antirez 8y ago

I think the Apple future may not look good for a few reasons: 1. iPhones units sold stalled for 3 years in a row. This means the company need to seek every year some trick to earn more from each phone. It is not obvious if they'll be able to do for a long time. 2. Top Android devices are improving and Google Pixel 2 is really an incredible device that is making some iOS users switching. I've no data but my nerd friends are doing this a lot, and sometimes what you see in the nerd-sphere in a few years happens in the normal market. 3. They are struggling at competing in the space of the biggest ecosystems around phones. Cloud, computational photography, assistant.

diminish 8y ago
1. Maturing smartphone market. 4.No other growth drivers in sight after the failure of apple watch to become huge.
- threeseed 8y ago
  > No other growth drivers in sight after the failure of iwatch to become huge Apple Watch is the number one smart watch. It sold 8 millions unit last quarter (a rise of 10.3%) and represents about half of all smart watch sales. You would have to be deluded to think that it isn't anything other than a huge success.
  - diminish 8y ago
    Apple watch is successful in smart watch market. Smart watch market seems not to be a billions-unit market. That's what I mean.
    - mcphage 8y ago
      > Smart watch market seems not to be a billions-unit market. How many billions unit markets are there out there?
      - djrogers 8y ago

ChuckMcM 8y ago

That is a pretty stellar earnings release. Congratulations on another quarter of excellent execution! I think what Apple needs are some barbarians at the gates. Something which challenges them to be greater than they are, rather than sitting back on their laurels. I continue to be surprised that they don't step into the cloud computing pool. There are some solid advantages to having a cloud infrastructure that you can use to deploy new initiatives at scale. I also wish they would spin out their computer business (Macbook, Ma Pro, Mac Mini, iMac) into its own division. While I chided Google for creating Alphabet, having your own identity can sharpen your focus if it is done well. It would also let them decide where they wanted to go with some of the legacy product lines.

ksec 8y ago
Something like Project McQueen? https://venturebeat.com/2016/03/17/apple-cloud-project-mcqueen/ https://venturebeat.com/2016/03/17/apple-cloud-project-mcque... They also has their own CDN.
- ChuckMcM 8y ago
  Yes something like that, although no follow up after 2016 other than one cryptic speculation about a data center project [1]. [1] http://fortune.com/2017/02/21/apple-data-center-project-isabel/ http://fortune.com/2017/02/21/apple-data-center-project-isab...
  - ksec 8y ago
    One reason we don't see much follow up is because DC are not of interest to most users. But their DC has definitely grown. Much like their CDN. Then there is the DC project in Ireland, more in HongKong, and few other places. I think their original plan were to have most of its cloud usage move back to its infrastructure by 2019, given delays in many parts of DC may be 2020.
microtherion 8y ago
> I also wish they would spin out their computer business (Macbook, Ma Pro, Mac Mini, iMac) into its own division To me, one of the core strengths of Apple is integration of all its devices, and it seems to me that creating separate divisions competing with each other would risk undermining this integration. In the late 90s, I heard hair raising stories of how various divisions at Sun were operating at cross purposes due to a myoptic focus on their own balance sheets. I believe you worked there. In your opinion, were the competing divisions a strength or a weakness of Sun?

ihuman 8y ago

MacStories has some visualizations with data from previous quarterly results https://www.macstories.net/news/apple-q2-2018-results-xxx-billion-revenue-xxx-million-iphones-xxx-million-ipads-sold/ https://www.macstories.net/news/apple-q2-2018-results-xxx-bi...

Analemma_ 8y ago

I'm kind of thrilled to see Mac revenue flat and unit sales down 3%. I was really worried that these keyboard problems wouldn't have any effect on the bottom line and give them an excuse to ignore it; hopefully this is setting off alarm bells and getting them to see that, yes, it really unacceptable and needs to be fixed.

loudmax 8y ago
I hope that's Apple's response too. But I fear they might just conclude to that their expertise is in cell phones and they shouldn't invest too much in laptops after all. Maybe introduce some more gimmicks and see if anything sticks. I really hope I'm wrong. I'd love to see an MBP I could get excited about.
- rdlecler1 8y ago
  I think that would be a mistake. I believe at least, that Apple owes a lot to the size of it’s developer computer. Get them off Apple and you’re one step closer to Android, then you start developing apps for non-Apple products.

guelo 8y ago

$100 billion buyback? I thought cash repatriation was supposed to lead to an explosion of onshore investment.

bertjk 8y ago
It is an onshore investment. They are investing in Apple stock.