Today Apple announced their earnings for the first quarter of their 2017 fiscal year. As is normally the case now that the iPhone has moved to a fall launch, Q1 tends to be their big quarter, and this one was the biggest yet for revenue, with Apple announcing $78.351 billion in revenue for the quarter. This is up 9% from a year ago. Gross margin was not as strong though, down $247 million despite the almost $2.5 billion more in revenue, but as a percentage it is still a strong 38.5%. Operating income was also down for the quarter, at $23.359 billion, compared to $24.171 billion a year ago. Net income was down 2.56% to $17.891 billion, but thanks to the share buyback program, Apple has less outstanding shares, meaning Apple set a record for earnings per diluted share of $3.36, despite the drop in net income. Apple has announced a dividend of $0.57 per share as well.

Apple Q1 2017 Financial Results (GAAP)
  Q1'2017 Q4'2016 Q1'2016
Revenue (in Billions USD) $78.351 $46.852 $75.872
Gross Margin (in Billions USD) $30.176 $17.813 $30.423
Operating Income (in Billions USD) $23.359 $11.761 $24.171
Net Income (in Billions USD) $17.891 $9.014 $18.361
Margins 38.5% 38.0% 40.1%
Earnings per Share (in USD) $3.36 $1.67 $3.28

With the launch of the latest iPhone 7, there was certainly controversy over the loss of the headphone jack, but that did not stop people from buying it. Apple sold 78.29 million iPhones this quarter, up 5% from a year ago. This is a new record for iPhone sales in the quarter, up about 3.5 million units, which is a good sign for Apple after had several quarters in a row of slowed iPhone sales. We’ll see if they can keep it up for fiscal year 2017. As far as revenue, iPhone is still the juggernaut of Apple’s financials with $54.378 billion in revenue for the quarter. That is 69.4% of all of the revenue for Apple.

iPad continues to struggle, at least compared to the rest of Apple, with sales dropping another 19% this quarter to 13.081 million, and despite the higher priced iPads in the lineup, revenue dropped even further to $5.533 billion, which is down 22%. That puts an average selling price of just $422 on the iPad, down from $439 a year ago, despite the addition of the 9.7-inch iPad Pro last year with it’s $100 higher asking price of $599. New iPad models haven’t really saved this segment from continuing to contract, but with the addition of the larger iPhone I suppose this makes some sense.

Mac sales for the quarter were up 1% only, despite the launch of the refreshed MacBook Pro models in October, but they were not shipping in volume until later in the quarter, so there may be some impact from that. Despite the sales only being up 1%, revenue was up 7% to a new record high of $7.244 billion this quarter, and the Mac has slowly worked itself back up to being the second largest source of revenue for Apple. But I don’t think that’s going to last for much longer.

Apple Q1 2017 Device Sales (thousands)
  Q1'2017 Q4'2016 Q1'2016 Seq Change Year/Year Change
iPhone 78,290 45,513 74,779 +72% +5%
iPad 13,081 9,267 16,122 +41% -19%
Mac 5,374 4,886 5,312 +1% +7%

Apple’s Services segment, which includes digital content from iTunes, app revenue, AppleCare, Apple Pay, and other services, is now the fastest growing segment of Apple, with revenues for the quarter of $7.172 billion, which is up 13% from last quarter and up 18% from last year. At this rate, it will overtake the Mac revenue next quarter, depending on how Mac sales go. This has been a very strong market for Apple over the last while, and I would think the addition of Apple Music must be helping as well.

Other Products include Apple TV, Apple Watch, Beats, and accessories, and although the segment overall is down 8% to $4.024 billion, Apple did announce they sold a record for Apple Watch revenue, although they’ve never announced numbers for that.

Apple is projecting revenue for next quarter of $51.5 to $53.5 billion, and margins between 38 and 39 percent.

Source: Apple Investor Relations

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  • TEAMSWITCHER - Wednesday, February 1, 2017 - link

    Android is dying and Google's Pixel is an iPhone wanna-be. Go look at their website and you'll recognize that it's a carbon copy of Apple.com. Too bad they didn't make enough devices to meet the demand. Because Apple was prepared to pick up the customers they lost. Reply
  • sorten - Wednesday, February 1, 2017 - link

    What, is Android down to only 80% of the market? Reply
  • Alexey291 - Wednesday, February 1, 2017 - link

    The message above was brought to you to your friendly Apple marketing department. Reply
  • prophet001 - Wednesday, February 1, 2017 - link

    lol

    Ya'll are nuts.

    Like "take me apple! take me! do whatever you want! i'm yours!" then looking around the room and asking "wut?"
    Reply
  • GlennHowes - Wednesday, February 1, 2017 - link

    I really wish people wouldn't write "less" when they should use "fewer". Reply
  • Ktracho - Wednesday, February 1, 2017 - link

    I've concluded the reason they do that is that it's fewer (less?) letters. When speaking it's fewer syllables. Multiplied over how many times you use it (and read it or hear it) over a lifetime, it really adds up. :-) As for print (ads, articles, etc.), it saves space, which can reduce the number of lines of print, and in the case of an ad, can allow for increased impact because each letter can be bigger for a given amount of space. I think it's the same reason the -ly suffix is usually omitted. (All this besides arguments related to grammatical correctness.) Reply
  • id4andrei - Wednesday, February 1, 2017 - link

    This record quarter has one extra week compared to the past one: 24-31 December. I've read on other sites that revenue would be slightly down, -3% actually, if we were to make a comparison for literally the same time frame. Reply
  • fanofanand - Wednesday, February 1, 2017 - link

    Interesting! I would have appreciated that context being placed in the article! Reply
  • BillBear - Thursday, February 2, 2017 - link

    Actually, from an accounting standpoint, the past quarter had that $548 Million Samsung judgement included in the numbers which obviously didn't happen again in this quarter. Reply
  • fanofanand - Wednesday, February 1, 2017 - link

    Beats may have been the dumbest acquisition in the history of tech acquisitions, but it looks like they have enough product/service diversity to mask their incompetence. Good for Apple, but it will be interesting to see what happens in the next year. Reply

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