Today Apple announced their quarter 1 earnings, and once again Apple had record revenue of $75.9 billion, and a record quarterly profit of $18.4 billion. Revenue is up 2% compared to Q1 2015, and 66% of the quarter’s revenue came from International sales. Gross margin for the quarter was 40.1%, or $30.4 billion, up from 39.9% and $29.7 billion last year. Operating income was down slightly to $24.171 billion, but net income was $18.361 billion, which is up 1.8% year-over-year.

Apple Q1 2016 Financial Results (GAAP)
  Q1'2016 Q4'2015 Q1'2015
Revenue (in Billions USD) $75.872 $51.501 $74.599
Gross Margin (in Billions USD) $30.423 $20.548 $29.741
Operating Income (in Billions USD) $24.171 $14.623 $24.246
Net Income (in Billions USD) $18.361 $11.124 $18.024
Margins 40.1% 39.9% 39.9%
Earnings per Share (in USD) $3.30 $1.96 $3.08

Although the company had record iPhone sales, it was only just a record. It is still a massive part of their business, and for the quarter Apple sold 74.779 million iPhones, with an average selling price of $691. Compared to the year ago quarter, this is a gain of 311,000 iPhones. That’s a pretty small gain, and percentage wise Apple calls it a year-over-year change of 0%. Although the growth is not there, that is still a huge amount of devices sold. iPhones accounted for $51.6 billion in Apple’s revenue this quarter.

iPad has been a tricky market for Apple. After initial sales figures with huge growth, the platform stopped growing and started having a drop in sales quite a few quarters ago. The release of the iPad Pro was hoped to kick-start this, but, at least for the launch quarter, that has not been the case. iPad sales continued their fall, and in fact had an even larger drop of 25% year-over-year to 16.1 million devices. Revenue from iPads dropped 21% to $7.084 billion.

Mac sales were also down, with a year-over-year drop of 4% to 5.3 million devices sold. Revenue went down slightly less than that, with just a 3% drop, to $6.7 billion. Considering the slowdown in the PC market, the drop is less than what we’ve seen from the PC market as a whole, but still a drop nonetheless. Regardless, Apple is likely pretty happy with Mac sales, which have weathered the storm better than many other brands. Dividing revenue by sales leads to an average of $1269.95 per Mac sale, which is territory most other OEMs would love to be in.

Apple Q1 2016 Device Sales (thousands)
  Q1'2016 Q4'2015 Q1'2015 Seq Change Year/Year Change
iPhone 74,779 48,046 74,468 +56% 0%
iPad 16,122 9,883 21,419 +63% -25%
Mac 5,312 5,709 5,519 -7% -4%

Services, which includes the App Store, AppleCare, Apple Pay, licensing, and other services, had a much better quarter. This segment had revenue of $6.056 billion for the quarter, which is a 26% increase year-over-year.

Finally, Other Products, which includes Apple TV, Apple Watch, Beats, iPod, and accessories, had another great gain of 62% in revenue to $4.351 billion. Apple doesn’t break out individual numbers for this segment, but considering the Apple Watch did not exist in the 2015 numbers, you can be sure a lot of the gain is from this new product introduction.

Apple Q1 2016 Revenue by Product (billions)
  Q1'2016 Q4'2015 Q1'2015 Revenue for current quarter
iPhone $51.635 $32.209 $51.182 68.05%
iPad $7.084 $4.726 $8.985 9.34%
Mac $6.746 $6.882 $6.944 8.89%
iTunes/Software/Services $6.056 $5.086 $4.799 7.98%
Other Products $4.351 $3.048 $2.689 5.73%

Apple will pay a dividend of $0.52 per share, payable to shareholders of record as of February 8. The payment will be made on February 11. Apple paid back $9 billion to shareholders this quarter, through share buybacks and dividend payments. They have now paid out $153 billion of their $200 billion capital return program.

Looking forward to next quarter, the forecast is decidedly down, with Apple expecting revenue of $50-53 billion, and margins of 39-39.5%. In Q2 2015, Apple had revenue of $58 billion, so this is a big drop. As always, forecasts are just that, and we’ll have to wait for their actual numbers to see how they do.

Apple had a record quarter, but flat iPhone sales, and a drop in iPad and Mac sales are definite sour notes on this otherwise great quarter. Apple did say that currency rates have had a big impact this quarter, and “$100 of Apple’s non-U.S. dollar revenue in Q4’14 translates into only $85 U.S. dollars today”, which is going to be a big factor in earnings. Looking at a Constant Currency calculation, revenue would have been up 8% instead of 2%. Still, for a company with a net income higher than the revenue of many other players in the tech space, I think they will be OK.

Source: Apple Investor Relations

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  • Ken_g6 - Tuesday, January 26, 2016 - link

    I thought iPhone sales were always flat. I mean, they haven't developed a curved iPhone, have they? ;) Reply
  • ingwe - Wednesday, January 27, 2016 - link

    I'll admit it; I smiled. Reply
  • osxandwindows - Tuesday, January 26, 2016 - link

    China and india contributed to most of the iPhone sales, iPads are down compared to q1 2015, macs are down, sold more then any PC tho, apple TV and watch were strong, international market can help the iPhone grow even more, can also help company growth in general.
    Q2 2016 will see a drop in iPhone sales, I expect 39m sold.
    Good quarter for them overall.
    Reply
  • jjj - Tuesday, January 26, 2016 - link

    Record only if you insist on avoiding looking deeper.
    They increased inventory in the channel by 3.3million units. That makes sell-through 71.5 million units vs 74.65 in 2014.
    At the same time, this year the new models were available about 3 weeks sooner and Apple had far fewer shortages during the quarter. In Q1 they'll dump some more inventory in the channel but that won't be enough to mask much.
    All in all 2016 iphone units will be hard down vs 2015 and maybe down up to 10% over 2014.
    The ipad pro didn't even had a material impact on ASP, it harms the 10 incher, it harms the Mac and provides minimal upside due to it's poor price placement.
    The Watch did poorly , somewhere between 3.5 and 4 million units, likely closer to 3.5.

    Anyway, the key metric this year will be iphone sales, folks are yet to figure out how bad those will be. And the key question is can the iphone 7 deliver. Q1 results will be interesting , folks will start to better understand the year and then some will go with "the iphone 7 will save us" while others will just accept the new reality.
    Reply
  • iwod - Tuesday, January 26, 2016 - link

    Thx for the insight, I was thinking how the hell did they break the record, so i guess this record was pretty much self made. Reply
  • Speedfriend - Wednesday, January 27, 2016 - link

    Well someone on here can actually see through the Apple BS.
    What is interesting is the admission that higher prices in some markets have started to impact demand for iPhones. So much for the iPhone users aren't price sensitive and will never move to Android argument!
    One positive was the iPhone ASP being flat, seems to indicate the rumours that people were moving to the Plus models, both 6s and 6. Would explain the big discounts available on the normal 6s here in the UK as operators try to clear stocks.
    Reply
  • BMNify - Wednesday, January 27, 2016 - link

    In many markets outside USA, iphone sells in the price range $1000-$1500, so it is obvious that such astronomical prices will lead to some discounting to get sales going but still that's truckload of margin even with discounts as Samsung, LG etc sell their flagships for $600-$700 in those markets. Reply
  • Murloc - Wednesday, January 27, 2016 - link

    which markets are these really? Reply
  • kspirit - Wednesday, January 27, 2016 - link

    @Murloc: Pakistan for one. iPhone 6S (non-Plus) 64GB priced here at ~$1000 while the GS6/G4/M9/6P/950, etc are at half that price. Reply
  • Ammaross - Wednesday, January 27, 2016 - link

    Well, based on their overall margins (40%), you can get a sense of their product margins... Reply

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