AAPL
$153.12
Apple
$1.03
.68%
Earnings Details
2nd Quarter March 2017
Tuesday, May 02, 2017 4:30:01 PM
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Summary

Apple Beats

Apple (AAPL) reported 2nd Quarter March 2017 earnings of $2.10 per share on revenue of $52.9 billion. The consensus earnings estimate was $2.02 per share on revenue of $52.6 billion. The Earnings Whisper number was $2.07 per share. Revenue grew 4.6% on a year-over-year basis.

The company said it expects third quarter revenue of $43.5 billion to $45.5 billion with gross margins of 37.5% to 38.5%, which calculates to earnings of approximately $1.42 to $1.61 per share. The current consensus earnings estimate is $1.57 per share on revenue of $45.05 billion for the quarter ending June 30, 2017.

Apple Inc designs, manufactures, & markets mobile communication & media devices, personal computers, & portable digital music players, & sells a variety of related software, services, accessories, networking solutions, & third-party digital content.

Results
Reported Earnings
$2.10
Earnings Whisper
$2.07
Consensus Estimate
$2.02
Reported Revenue
$52.90 Bil
Revenue Estimate
$52.61 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Apple Reports Second Quarter Results

Apple(R) today announced financial results for its fiscal 2017 second quarter ended April 1, 2017. The Company posted quarterly revenue of $52.9 billion and quarterly earnings per diluted share of $2.10. These results compare to revenue of $50.6 billion and earnings per diluted share of $1.90 in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue.

"We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus," said Tim Cook, Apple’s CEO. "We’ve seen great customer response to both models of the new iPhone 7 (PRODUCT)RED Special Edition and we’re thrilled with the strong momentum of our Services business, with our highest revenue ever for a 13-week quarter. Looking ahead, we are excited to welcome attendees from around the world to our annual Worldwide Developers Conference next month in San Jose."

Apple also announced that its Board of Directors has authorized an increase of $50 billion to the Company’s program to return capital to shareholders and is extending the program timeframe by four quarters. Under the expanded program, Apple plans to spend a cumulative total of $300 billion by the end of March 2019.

"We generated strong operating cash flow of $12.5 billion and returned over $10 billion to our investors in the March quarter," said Luca Maestri, Apple’s CFO. "Given the strength of our business and our confidence in our future, we are happy to announce another $50 billion increase to our capital return program today."

As part of the latest update to the program, the Board has increased its share repurchase authorization to $210 billion from the $175 billion level announced a year ago. The Company also expects to continue to net-share-settle vesting restricted stock units.

The Board has approved a 10.5% increase to the Company’s quarterly dividend, and has declared a dividend of $0.63 per share of the Company’s common stock, payable on May 18, 2017 to shareholders of record as of the close of business on May 15, 2017.

From the inception of its capital return program in August 2012 through March 2017, Apple has returned over $211 billion to shareholders, including $151 billion in share repurchases.

The Company plans to continue to access the domestic and international debt markets to assist in funding the program. The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.

Apple is providing the following guidance for its fiscal 2017 third quarter: ? revenue between $43.5 billion and $45.5 billion ? gross margin between 37.5 percent and 38.5 percent ? operating expenses between $6.6 billion and $6.7 billion ? other income/(expense) of $450 million ? tax rate of 25.5 percent

Apple will provide live streaming of its Q2 2017 financial results conference call beginning at 2:00 p.m. PDT on May 2, 2017 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), tax rate, and plans for return of capital. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 24, 2016, its Form 10-Q for the fiscal quarter ended December 31, 2016, and its Form 10-Q for the fiscal quarter ended April 1, 2017 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms -- iOS, macOS, watchOS and tvOS -- provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

(C) 2017 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in
thousands and per share amounts)
Three Months Ended
Six Months Ended
April 1,
March 26,
April 1,
March 26,
2017
2016
2017
2016
Net sales
$ 52,896
$ 50,557
$ 131,247
$
126,429
Cost of sales (1)
32,305
30,636
80,480
76,085
Gross margin
20,591
19,921
50,767
50,344
Operating expenses:
Research and development (1)
2,776
2,511
5,647
4,915
Selling, general and administrative (1)
3,718
3,423
7,664
7,271
Total operating expenses
6,494
5,934
13,311
12,186
Operating income
14,097
13,987
37,456
38,158
Other income/(expense), net
587
155
1,408
557
Income before provision for income taxes
14,684
14,142
38,864
38,715
Provision for income taxes
3,655
3,626
9,944
9,838
Net income
$ 11,029
$ 10,516
$
28,920
$
28,877
Earnings per share:
Basic
$
2.11
$
1.91
$
5.50
$
5.22
Diluted
$
2.10
$
1.90
$
5.46
$
5.19
Shares used in computing earnings per share:
Basic
5,225,791
5,514,381
5,262,226
5,536,656
Diluted
5,261,688
5,540,886
5,294,841
5,567,506
Cash dividends declared per share
$
0.57
$
0.52
$
1.14
$
1.04
(1) Includes share-based compensation expense as follows:
Cost of sales
$
217
$
191
$
446
$
395
Research and development
$
575
$
468
$
1,164
$
934
Selling, general and administrative
$
425
$
389
$
863
$
797
Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in
thousands and par value)
April 1,
September 24,
2017
2016
ASSETS:
Current assets:
Cash and cash equivalents
$
15,157
$
20,484
Short-term marketable securities
51,944
46,671
Accounts receivable, less an allowance of $53 at each period end
11,579
15,754
Inventories
2,910
2,132
Vendor non-trade receivables
9,033
13,545
Other current assets
11,367
8,283
Total current assets
101,990
106,869
Long-term marketable securities
189,740
170,430
Property, plant and equipment, net
27,163
27,010
Goodwill
5,473
5,414
Acquired intangible assets, net
2,617
3,206
Other non-current assets
7,549
8,757
Total assets
$
334,532
$
321,686
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
28,573
$
37,294
Accrued expenses
23,096
22,027
Deferred revenue
7,682
8,080
Commercial paper
9,992
8,105
Current portion of long-term debt
3,999
3,500
Total current liabilities
73,342
79,006
Deferred revenue, non-current
3,107
2,930
Long-term debt
84,531
75,427
Other non-current liabilities
39,470
36,074
Total liabilities
200,450
193,437
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value:
33,579
31,251
12,600,000 shares authorized; 5,205,815 and 5,336,166 shares issued
and outstanding, respectively
Retained earnings
100,925
96,364
Accumulated other comprehensive income/(loss)
(422 )
634
Total shareholders’ equity
134,082
128,249
Total liabilities and shareholders’ equity
$
334,532
$
321,686
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Six Months Ended
April 1,
March 26,
2017
2016
Cash and cash equivalents, beginning of the period
$
20,484
$ 21,120
Operating activities:
Net income
28,920
28,877
Adjustments to reconcile net income to cash generated by operating
activities:
Depreciation and amortization
5,319
5,431
Share-based compensation expense
2,473
2,126
Deferred income tax expense
2,822
3,092
Other
(209 )
308
Changes in operating assets and liabilities:
Accounts receivable, net
4,183
4,538
Inventories
(778 )
68
Vendor non-trade receivables
4,512
5,899
Other current and non-current assets
(896 )
186
Accounts payable
(6,862 )
(9,388 )
Deferred revenue
(221 )
219
Other current and non-current liabilities
316
(2,292 )
Cash generated by operating activities
39,579
39,064
Investing activities:
Purchases of marketable securities
(99,821 )
(86,242 )
Proceeds from maturities of marketable securities
12,429
9,148
Proceeds from sales of marketable securities
60,454
50,051
Payments made in connection with business acquisitions, net
(67 )
(140 )
Payments for acquisition of property, plant and equipment
(6,309 )
(5,948 )
Payments for acquisition of intangible assets
(126 )
(657 )
Payments for strategic investments
--
(126 )
Other
116
(196 )
Cash used in investing activities
(33,324 )
(34,110 )
Financing activities:
Proceeds from issuance of common stock
273
247
Excess tax benefits from equity awards
225
264
Payments for taxes related to net share settlement of equity awards
(788 )
(751 )
Payments for dividends and dividend equivalents
(6,134 )
(5,871 )
Repurchases of common stock
(18,012 )
(13,530 )
Proceeds from issuance of term debt, net
10,975
15,584
Change in commercial paper, net
1,879
(503 )
Cash used in financing activities
(11,582 )
(4,560 )
Increase/(Decrease) in cash and cash equivalents
(5,327 )
394
Cash and cash equivalents, end of the period
$
15,157
$ 21,514
Supplemental cash flow disclosure:
Cash paid for income taxes, net
$
6,878
$
6,630
Cash paid for interest
$
1,007
$
565
Apple Inc.
Q2 2017 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q2 2017
Q1 2017
Q2 2016
Sequential Change
Year/Year Change
Operating Segments
Revenue
Revenue
Revenue
Revenue
Revenue
Americas
$21,157
$31,968
$19,096
- 34%
11%
Europe
12,733
18,521
11,535
- 31%
10%
Greater China
10,726
16,233
12,486
- 34%
- 14%
Japan
4,485
5,766
4,281
- 22%
5%
Rest of Asia Pacific
3,795
5,863
3,159
- 35%
20%
Total Apple
$52,896
$78,351
$50,557
- 32%
5%
Q2 2017
Q1 2017
Q2 2016
Sequential Change
Year/Year Change
Product Summary
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
iPhone (1)
50,763
$33,249
78,290
$54,378
51,193
$32,857
- 35%
- 39%
- 1%
1%
iPad (1)
8,922
3,889
13,081
5,533
10,251
4,413
- 32%
- 30%
- 13%
- 12%
Mac (1)
4,199
5,844
5,374
7,244
4,034
5,107
- 22%
- 19%
4%
14%
Services (2)
7,041
7,172
5,991
- 2%
18%
Other Products (1)(3)
2,873
4,024
2,189
- 29%
31%
Total Apple
$52,896
$78,351
$50,557
- 32%
5%
(1)
Includes deferrals and amortization of related software upgrade
rights and non-software services.
(2)
Includes revenue from Digital Content and Services, AppleCare,
Apple Pay, licensing and other services.
(3)
Includes sales of Apple TV, Apple Watch, Beats products, iPod and
Apple-branded and third-party accessories.

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SOURCE: Apple Inc.

Apple
Press:
Kristin Huguet, 408-974-2414
khuguet@apple.com
or
Investor Relations:
Nancy Paxton, 408-974-5420
paxton1@apple.com
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