Apple Releases FY 2015 Q2 Earnings Results: Strong Growth In China Fuel Large Sales
by Brett Howse on April 27, 2015 6:30 PM EST- Posted in
- Smartphones
- Mac
- iPhone
- Financial Results
Today Apple announced their earnings for their second quarter for fiscal year 2015. Once again, iPhone dominated their revenue stream, with 40% more units sold and 55% more revenue than the same period last year. Total revenue for the quarter came in at $58 billion, which is up 27% year-over-year. Gross margin for the quarter was up too, coming in at 40.8% for this quarter. Net income was $13.6 billion, which works out to $2.33 per share.
| Apple Q2 2015 Financial Results (GAAP) | |||||
| Q2'2015 | Q1'2015 | Q2'2014 | |||
| Revenue (in Billions USD) | $58.010 | $74.599 | $45.646 | ||
| Operating Income (in Billions USD) | $18.278 | $24.246 | $13.593 | ||
| Gross Margin (in Billions USD) | $23.656 | $29.741 | $17.947 | ||
| Net Income (in Billions USD) | $13.569 | $18.024 | $10.223 | ||
| Margins | 40.8% | 39.9% | 39.3% | ||
| Earnings per Share (in USD) | $2.33 | $3.08 | $1.66 | ||
Almost 70% of Apple’s revenue came from international sales, but China was the big market for Apple this quarter. Sales in Greater China were up 71% year-over-year, to $16.8 billion for this quarter. This is even a 4% rise over Q1, which was the launch quarter for the iPhone 6 series. China is now the second biggest market for Apple, closing in on the Americas where sales this quarter were $21.3 billion.
iPhone sales kept up their torrid pace. In Q1, Apple sold almost 75 million iPhones, and while there is traditionally a drop in the quarter succeeding the launch of the phone, they still managed to sell over 61 million iPhones for Q1. Year-over-year, this is a 40% increase in devices sold and even better for Apple’s bottom line, revenue was up 55%. With Apple, there really is iPhone, and everything else. iPhone accounts for 69.4% of all of Apple’s revenue. They are top heavy in this one product, but it seems to be a product that just keeps giving returns.
Mac sales were also up, with a 10% increase in units sold as compared to Q2 2014. Revenue for Mac also increased, but only 2%. Unit sales were 4.5 million devices, which accounted for $5.6 billion in revenue. This works out to an Average Selling Price of $1230.55 per Mac computer. Macs have once again surpassed iPad sales to become the number two device at Apple. For Q1, and the launch of the new iPad Air 2, iPad sales briefly retook the lead, but Mac sales have surpassed iPad again.
iPad sales have continued to struggle. What was once thought to be the next iPhone has certainly struggled to maintain the trajectory it first had. Sales for Q2 were 12.6 million units, which is down from the 21.4 million last quarter (when the new products were launched) and also down significantly year-over-year from the 16.35 million in Q2 2014. That is a 23% decline in sales, and it resulted in a 29% reduction in revenue, with iPad now coming in at $5.4 billion.
| Apple Q4 2014 Device Sales (thousands) | |||||
| Q2'2015 | Q1'2015 | Q2'2014 | Seq Change | Year/Year Change | |
| iPhone | 61,170 | 74,468 | 43,719 | -18% | +40% |
| iPad | 12,623 | 21,419 | 16,350 | -41% | -23% |
| Mac | 4,563 | 5,519 | 4,136 | -17% | +10% |
Services however did not suffer such a fate, and at $4.996 billion in revenue, iTunes, the App Store, and other Apple services are now almost a $5 billion per quarter business. Revenue was up 4% since Q1 2015, and up 9% from a year ago.
The final segment Apple reports on is “Other Products” which include iPod, Apple TV, Beats, and accessories. Revenue for this segment was $1.69 billion, down from $1.88 billion a year ago, and $2.69 billion in Q1. This is a year-over-year decrease of 10%. Much of that would be iPod sales which only two quarters ago were still listed in their own category, but have been falling for several years now as they have been superseded by smartphones.
| Apple Q2 2015 Revenue by Product (billions) | |||||
| Q2'2015 | Q1'2015 | Q2'2014 | Revenue for current quarter | ||
| iPhone | $40.282 | $51.182 | $26.064 | 69.4% | |
| iPad | $5.428 | $8.985 | $7.610 | 9.4% | |
| Mac | $5.615 | $6.944 | $5.519 | 9.7% | |
| iTunes/Software/Services | $4.996 | $4.799 | $4.573 | 8.6% | |
| Other Products | $1.689 | $2.689 | $1.880 | 2.9% | |
As part of their announcement, Apple is also expanding their capital return program. What was first going to be a $90 billion share repurchase program is now up to $140 billion. There is also going to be an 11% increase to the quarterly dividend, which will now be $0.52 per share, payable on May 14th to all shareholders of record as of May 11th. Since the creation of their capital return program, Apple has paid out over $112 billion to shareholders, with $80 billion of that being share repurchases.
For Q3, the forecast is revenue of $46 to 48 billion, with margins between 38.5% and 39.5%.
To a certain extent, we have become numb to the record breaking numbers every quarter, but really it is impressive that they have been able to sustain this for so long. For Q2, they once again set records for iPhone and Mac sales, and the App Store had an all-time record quarter. They have some new products in the market now with the MacBook and the Apple Watch, so it will be interesting to see the Q3 numbers.
Source: Apple Investor Relations
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djboxbaba - Tuesday, April 28, 2015 - link
iPhone 4 man? that was due for an upgrade 2 years ago :Pchizow - Monday, April 27, 2015 - link
I think you and the other poster touched on the reason Tablets markets have become saturated, because they aren't obsoleted easily and in general, there's very little content/capability that a tablet from a few years ago can't do that a brand new one today can. Reality of it is, tablets aren't good enough for productivity/enterprise and there isn't enough demanding content to force people to upgrade. Most of the main cards have been played (resolution, battery life, thin-ness).Phone market is different though, Apple just played the size card, their next target will be resolution. Now the goals for everyone will be improving battery life as soon the phone market will reach market saturation in terms of absolute performance. There's no doubt we're going to start seeing people hold onto their phones longer as there are going to be fewer big reasons to force people to upgrade.
Anyways, biggest reason iPads are stagnating is because they have limited functionality in the enterprise. That's the market that can keep turning over Apple hardware, but there's just too many limitations on iPad/iOS compared to something like the Surface Pro. Only chance Apple has is to do something similar with an iPad Pro running Mac OS X at the minimum. While Mac OS also sucks for enterprise integration, it is still far better than iOS.
shameermulji - Monday, April 27, 2015 - link
"Tablets markets have become saturated, ..."According to Tim Cook, on today's conference call, 40% to 70% of iPad sales are going to new users, depending on country. Per his statements, this does not reflect a saturated iPad market.
Either he's blowing smoking up our asses or you and the poster above have data he doesn't.
chizow - Tuesday, April 28, 2015 - link
40-70% of an ever decreasing total sales number with a focus in new markets. Existing markets are saturated so he's trying to sell them to different markets and clearly, not doing that well at it. It's not like the smartphone market where there's a clearly defined 2 yr. refresh cycle and high chance of repeat buyers.So yeah, if they sold 80 million iPads in NA in the last 5 years and no one there is in a rush to buy a new one, the 20 million he sells in India this year will technically be going to "New Users", but that doesn't change the fact existing tablet markets are saturated and they are being forced to seek out new markets.
xype - Tuesday, April 28, 2015 - link
Uhm, I know the total iPad sales are "not impressive" (as much as selling 10+ million units can be interpreted as "not impressive"), but 40-70% to new users is actually quite good—and it _does_ mean the market in general is not yet saturated. Parts of the market are, yes, but worldwide they are still selling to new customers, who in turn might be upgrading their devices in 3-4 years or more.Everyone I know with an iPad is in no hurry to get a new one, though, including myself with the mini 2 and a bunch of people I know who are still quite happy with their iPad 2 (which is even pre-retina!). And the fact that people use their phones way more, like someone already mentioned, also puts less pressure on the tablets being updated.
I guess in a way Apple succeeded in turning the iPad into a "real appliance"; upgrading them regularly just isn’t on people’s radar. That doesn’t mean noone wants an iPad anymore, though.
Brakken - Tuesday, April 28, 2015 - link
Agree. With 6 Plus I no longer felt any necessity in upgrading the original Mini to a 2 or 3. As Apple brings out higher spces on iPads, the Mini 2 and 3 and Air 2 will become the new entry point models - very cheap but with capabilities competitors still struggle to match.chizow - Tuesday, April 28, 2015 - link
Mini is already dead, 6 Plus killed it. It just shows how fragile the use-cases were for iPad, especially given how limited it is in functionality compared to full-blown Windows x86 devices.name99 - Tuesday, April 28, 2015 - link
This sort of comment is just stupid. Compare the costs of a mini and an iPhone6+ --- not to mention the contract.Which are you going to give to your kid to play games on, or watch movies on?
chizow - Tuesday, April 28, 2015 - link
@name99 I don't have kids yet, but my brother does, and they give them their iPhone 6s to play with. They fight over who gets to play with the Plus though. 1 less thing to carry, 1 less thing to charge, just get a good insurance plan with the money you don't have to spend on an iPad Mini, anymore.And just to prove there's actual fact behind this shift in mentality.
http://techcrunch.com/2014/11/26/iphone-6-and-6-pl...
Its the same reason the Surface Pro 3 has gained traction in the marketplace. Why bother carrying a tablet and a laptop when you can get a suitable alternative to both in a single device?
chizow - Tuesday, April 28, 2015 - link
Its amazing you guys keep repeating all the key indicators that everyone with an iPad keeps saying, they're in no hurry to buy a new one. Existing markets are saturated. Apple has to try and find new markets to sell in, y'know, markets that somehow avoided the initial tablet rush to begin (for some undesirable reason or another) with which leads us to the reality that iPad is struggling. While it still turns out solid sales and revenue, it is obviously on the decline and NOT the next iPhone. If iPhone wasn't seeing such huge growth, the concern over declining iPad sales and demand would be much greater.