Apple Reports 2Q 2017 Results: $11B Profit on $52.9B Revenue, 50.8M iPhones

Apple today announced financial results for the second fiscal quarter of 2017, which corresponds to the first calendar quarter of the year. For the quarter, Apple posted revenue of $52.9 billion and net quarterly profit of $11.0 billion, or $2.10 per diluted share, compared to revenue of $50.6 billion and net quarterly profit of $10.5 billion, or $1.90 per diluted share, in the year-ago quarter.

Gross margin for the quarter was 38.9 percent compared to 39.4 percent in the year-ago quarter, with international sales accounting for 65 percent of revenue. Apple also declared an increased quarterly dividend payment of $0.63 per share, up from $0.57. The dividend is payable on May 18 to shareholders of record as of May 15.

In addition to the increase in the dividend payment, Apple says it will once again expand its share repurchase authorization by an additional $50 billion and the company says it expects to spend a total $300 billion in cash under its overall capital return program by the end of March 2019.


Apple sold 50.8 million iPhones during the quarter, down slightly from 51.1 million a year earlier, while Mac sales rose slightly to 4.20 million units from 4.03 million units in the year-ago quarter. iPad sales continued to decline, falling to 8.92 million from 10.25 million.
“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's guidance for the third quarter of fiscal 2017 includes expected revenue of $43.5–45.5 billion and gross margin between 37.5 and 38.5 percent.


Apple will provide live streaming of its fiscal Q2 2017 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

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Apple Expected to Report Strong Earnings Today, But Unlikely to Set Record-Breaking Quarter

Apple is set to report its earnings results for the second quarter of its 2017 fiscal year at 1:30 p.m. Pacific Time today.

Apple provided the following guidance for its second quarter on January 31:

• revenue between $51.5 billion and $53.5 billion
• gross margin between 38 percent and 39 percent
• operating expenses between $6.5 billion and $6.6 billion
• other income/expense of $400 million
• tax rate of 26 percent

That guidance suggests Apple will report its second-best March quarter earnings results in the company's history:

• Q2 2013: $43.6 billion
• Q2 2014: $45.6 billion
• Q2 2015: $58 billion
• Q2 2016: $50.6 billion
• Q2 2017: $51.5+ billion

Wall Street analysts generally expect Apple to meet the higher end of its guidance, with estimates averaging out to around $53 billion. If accurate, Apple will have grown around four to six percent compared to the year-ago quarter for its second consecutive quarter of growth after an uncharacteristic nine-month skid last year.

MacRumors.com compiled estimates from over a dozen financial institutions and independent firms tracking Apple and the company's stock. The figures are listed below, ranked from highest to lowest in terms of total revenue. The date column reflects when each research note was distributed to clients.


On a category-by-category basis, the highlight of Apple's earnings results will likely be its services, such as the App Store, iTunes, Apple Music, and Apple Pay. Most analysts estimate Apple's services revenue will be up to 20 percent higher, totaling up to $7.3 billion versus $5.9 billion a year ago.


iPhone remains Apple's most important product by a significant margin. Most analysts predict that Apple topped the 51.1 million iPhones it sold in the year-ago quarter, with several estimates coming in above 52 million. However, four analysts expect iPhone sales to decline compared to the year-ago quarter.

iPad unit sales are forecasted to decline to between 7 million and 9.8 million compared to the 10.2 million tablets Apple sold in the year-ago quarter, while Mac sales should remain relatively flat on a year-over-year basis.


Meanwhile, analysts believe Apple Watch sales totaled between 1.6 million and 3 million in the quarter. Apple does not disclose Apple Watch sales in its quarterly earning results, instead grouping the device under its "Other Products" category, alongside iPods, Apple TVs, Beats Electronics, and accessories.

Apple's cash and marketable securities total is projected to have surpassed $250 billion in the second quarter, up from $246.1 billion last quarter. Apple is expected to provide an update about its capital allocation, including dividends and share buybacks, as it usually does at this time of its fiscal year.

Apple CEO Tim Cook and CFO Luca Maestri will discuss the company's financial results on a conference call at 2:00 p.m. Pacific Time. MacRumors.com will transcribe the call as it unfolds for those unable to listen.

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Apple Reports Record Results for 1Q 2017: $17.9B Profit on $78.4B Revenue, 78.3M iPhones

Apple today announced financial results for the first fiscal quarter of 2017, which corresponds to the fourth calendar quarter of 2016. For the quarter, Apple posted revenue of $78.4 billion and net quarterly profit of $17.9 billion, or $3.36 per diluted share, compared to revenue of $75.9 billion and net quarterly profit of $18.4 billion, or $3.28 per diluted share, in the year-ago quarter. Both revenue and earnings per share were company records in what is traditionally Apple's strongest quarter due to the launch of new iPhone models.

Gross margin for the quarter was 38.5 percent compared to 40.1 percent in the year-ago quarter, with international sales accounting for 64 percent of revenue. Apple also declared an upcoming dividend payment of $0.57 per share, payable on February 16 to shareholders of record as of February 13.

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Apple sold a record 78.3 million iPhones during the quarter, up slightly from 74.8 million a year earlier, while Mac sales rose slightly to 5.4 million units from 5.3 million units in the year-ago quarter. iPad sales continued their recent declines, falling to 13.1 million from 16.1 million.
“We’re thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch,” said Tim Cook, Apple’s CEO. “Revenue from Services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline.”
Apple's guidance for the second quarter of fiscal 2017 includes expected revenue of $51.5–53.5 billion and gross margin between 38 and 39 percent. Revenue guidance is slightly below analyst expectations.

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Apple will provide live streaming of its fiscal Q1 2017 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

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Apple Expected to Return to Growth With Biggest Earnings Ever Today

Apple is scheduled to report its earnings results for the first quarter of the 2017 fiscal year at 1:30 p.m. Pacific Time today, revealing how much money it made between September 25 and December 31 of last year. The holiday shopping season typically makes this quarter Apple's most lucrative of the year.

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Apple benefitted from an extra week of sales in the quarter—14 versus the usual 13—due to a step it takes every 5 years or so to realign its September-ending fiscal quarter with the typical December-ending calendar quarter. Given it was partially the week of Christmas, the seven extra days of sales could be significant.

Apple's official guidance calls for revenue of between $76 billion and $78 billion, which would be its highest earnings in a single quarter ever—topping its current record of $75.9 billion in the year-ago quarter. Apple also expects gross margin between 38% and 38.5%, compared to 40.1% in the year-ago quarter.

The consensus among Wall Street analysts is that Apple will report revenue around the $77 billion mark, or roughly the midpoint of Apple's guidance. Herein is a list of some of those predictions, ordered from lowest to highest:

• Mark Moskowitz of Barclays: $76.6 billion
• Timothy Arcuri of Cowen and Company: $76.68 billion
• Steven Milunovich of UBS: $76.8 billion
• Amit Daryanani of RBC Capital Markets: $76.9 billion
• Rod Hall of J.P. Morgan: $76.9 billion
• Bloomberg News compiled average: $77 billion
• Yahoo Finance compiled average: $77.38 billion
• Reuters compiled average: $77.4 billion
• Brian White of Drexel Hamilton: $77.61 billion
• Neil Cybart of Above Avalon: $80 billion

The record-breaking revenue would put an end to Apple's past three consecutive quarters of declining revenue on a year-over-year basis, which resulted in the company's first annual revenue decline since 2001. Prior to 2016, Apple had an impressive streak of 51 consecutive quarters of uninterrupted sales growth.

While iPhone sales dropped for the first time ever last year, the smartphone is still Apple's most important product by far—it accounted for 60% of the company's revenue last quarter. The consensus among analysts is that Apple will have sold around 76 million iPhones, up slightly from 74.8 million in the year-ago quarter.

Most analysts believe a higher ratio of customers purchased a Plus-sized iPhone this launch, with the dual-lens camera in particular enticing customers to choose the 5.5-inch model over the smaller iPhone 7.

Above Avalon analyst Neil Cybart estimates Apple sold 5.6 million Macs in the quarter, a 5% increase over the 5.3 million it sold in the year-ago period. The quarter was highlighted by the launch of long-awaited MacBook Pro with Touch Bar models in late October, which likely inflated sales.

iPad sales may remain on a longstanding downward trend based on units, but more expensive iPad Pro models have led to higher average selling prices and increased revenue for Apple's tablet business.
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Cybart expects revenue from Apple's growing services category to rise to $6.7 billion, a 22% increase over the $6.1 billion it reported in the year-ago quarter. These earnings are derived from the App Store, iTunes, Apple Music, iCloud storage subscriptions, AppleCare, Apple Pay, licensing, and other services.

Investors will be looking closely at "Other Products" to measure the impact that Apple Watch Series 2 models and AirPods have on the category's revenue, which Cybart forecasts will rise 9% year-over-year. The category also includes sales of the Apple TV, Beats products, iPods, and many accessories.

Cybart expects Apple's guidance will point towards continued growth next quarter, suggesting the 2017 fiscal year will remain on an upward trend.

MacRumors will be providing live coverage of Apple's earnings results conference call with CEO Tim Cook and CFO Luca Maestri at 2:00 p.m. Pacific Time today.

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Apple Forecasted to Report Record Earnings Next Week, but Will iPhone 8 Keep Driving Growth?

Barclays estimates that Apple will report a record-breaking $76.6 billion in revenue when it announces its earnings results for the first quarter of fiscal 2017 on January 31. Apple reported revenue of $75.9 billion in the year-ago quarter, and offers guidance of $76 billion to $78 billion for this quarter.

Apple-Bonds
UBS estimates Apple will report revenue of $77.8 billion next week, which falls on the higher end of Apple's guidance. UBS analyst Steven Milunovich maintained a "buy" rating for Apple stock with a target price of $127—compared to $120 currently—in a research noted issued to investors today.

Meanwhile, Barclays analyst Mark Moskowitz lowered his price target for Apple's stock from $119 to $117 in a research note issued to investors today.

Moskowitz does not expect "meaningful upside potential" for Apple in 2017. He believes customers increasingly "mixing down" by opting for the iPhone 6s in favor of the iPhone 7 could weigh on Apple, while he is also concerned about China and India failing to emerge as growth catalysts in the next 12 months.

He said the so-called "iPhone 8" will potentially have "no must-have advanced features," making him skeptical of a meaningful growth rebound for Apple in the second half of this year. He added that smartphones have become "more than good enough" to serve the needs of most users over multiple years or until the device breaks.
While not likely to have a similar replacement cycle of PCs (i.e., 5-7 years), we think the smartphone market and thereby the iPhone franchise stand to face incremental headwinds this year and next, as the smartphone useful life extends to 3 to 4 years from 2 to 3 years previously. As a result, the prospect of revolutionary technology incorporated into the next iPhone (iPhone 8) is not likely to counter the expanding useful life of smartphones in general.
Specifically, he said OLED display options, bezel or bezel-less designs, an embedded Home button, and wireless charging are commonly mentioned in its discussions with industry participants about the next iPhone, but that the new features might not be able to reassert that "must have" element for customers.

Wireless charging in particular may be limited by the need to be close to a charging base. Moskowitz does not expect wireless charging over greater distances to develop until 2018-2019 at the earliest. He acknowledges that Apple could be making strides in this space by partnering with firms like Energous, but he maintains his view.

Nevertheless, he said Apple has a "sticky ecosystem" and a large cash balance that provide decent support for long-term investors.

Barclays predicted Apple has long-term growth opportunities related to India, its growing services category, the enterprise market, artificial intelligence, and possibly the cloud, but it does not expect those potential "what's next?" opportunities to emerge as "major needle movers" for the company over the next 12 months.


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Apple’s third-quarter earnings call – as it happened

Apple signaled to Wall Street that the worst of the iPhone decline is behind it, as it reported another slump in smartphone sales on Tuesday.

The Cupertino-based company has come under pressure to prove that its flagship product can grow again after reporting a 15 per cent drop in iPhones sold in the three months to June. Overall revenues fell 15 per cent to $42.4bn, with net income down 27 per cent to $7.8bn.

Nonetheless, Luca Maestri, Apple’s chief financial officer, said that iPhone sales fell at a slower rate than they had done in March, which he said had “turned out to be the low point for our cycle”. Apple shares rose 5 per cent after-hours on the more positive outlook.

Follow Tim Bradshaw and Richard Waters as they report live reaction to the results and commentary from Tim Cook, Apple chief executive, and Mr Maestri on the conference call with analysts.

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