Apple

Apple reports revenue of $91.8B for Q1 2020

Apple today reported the results of the first quarter of its fiscal 2020. The company’s revenue totaled $91.8 billion, far ahead of expectations of $88.43 billion.

Apple’s total revenue in fiscal Q1 was a record $91.8 billion, up 9% year over year. This easily beat management’s guidance for revenue between $85.5 billion and $89.5 billion. It also handily exceeded analysts’ average forecast for $88.5 billion.

Higher-than-expected revenue growth during the period helped drive margin expansion. Apple’s gross margin for the period was 38.4%, up from 38% in the year-ago period.

Combining Apple’s strong revenue growth and margin expansion with the company’s decrease in share count thanks to its aggressive share repurchase program, it’s no surprise that earnings per share spiked 19% year over year during the period to a record $4.99.

This crushed a consensus estimate for $4.55. And it was a significant acceleration from 4% EPS growth in the fourth quarter of fiscal 2019. 

“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” said Tim Cook, Apple’s CEO.

“During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”

Without a doubt, the iPhone was the headliner. Apple’s smartphone segment brought in $56 billion in revenue, smashing analysts’ average forecast for $51.6 billion. 

But the company’s two fastest-growing segments — services and wearables, home, and accessories — were important contributors to Apple’s robust results as well. Services revenue rose about 17% year over year to $12.7 billion, and wearables, home, and accessories jumped 37% to $10 billion.

The strong top-line growth translated to soaring profits, with earnings per share of $4.99, up 19% year over year, and easily outpacing expectations of $4.55.

“Our very strong business performance drove an all-time net income record of $22.2 billion and generated operating cash flow of $30.5 billion,” said Luca Maestri, Apple’s CFO.

“We also returned nearly $25 billion to shareholders during the quarter, including $20 billion in share repurchases and $3.5 billion in dividends and equivalents, as we maintain our target of reaching a net cash neutral position over time.”

The iPhone wasn’t the only contributor to Apple’s stellar results. Wearables, home, and accessories brought in more than $10 billion, up 37% year over year, and growing to nearly 11% of total sales.

On the conference call, Apple CEO Tim Cook said that the wearables business grew by 44%, led by strong demand for AirPods and Apple Watch.

Apple’s services segment boosted the company’s results, growing to $12.7 billion, up 17% year over year. The services business has generated revenue of $48 billion over the trailing-12-month period, and over the next several quarters, Apple is on track to make good on Cook’s promise to double services revenue by the end of 2020.

Apple is providing the following guidance for its fiscal 2020 second quarter:

• Revenue between $63.0 billion and $67.0 billion 
• Gross margin between 38.0 percent and 39.0 percent 
• Operating expenses between $9.6 billion and $9.7 billion 
• Other income/(expense) of $250 million 
• Tax rate of approximately 16.5 percent

Apple’s board of directors has declared a cash dividend of $0.77 per share of the Company’s common stock. The dividend is payable on February 13, 2020 to shareholders of record as of the close of business on February 10, 2020.

Consolidated Financial Statements

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