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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  • Murloc - Wednesday, April 29, 2015 - link

    that's exactly why tablets are a waste of money, but I guess somebody has to make the market go round... Reply
  • name99 - Tuesday, April 28, 2015 - link

    You're totally misinterpreting the point. The issue is
    (a)if you are poor, the phone is the first device you buy. This covers iPhone vs iPad in China and suchlike.
    (b) an iPad is good enough to last for three years or more before it needs to be replaced (and when it is replaced, it moves down to become a kids tablet, or a car TV screen). There is not the artificial telco pricing behind iPads that encourages you to update them every two years. Phones are also somewhat more stressed (used in ways that are more likely to fall on hard surfaces, fall in water, get lost in restaurants, etc) but I don't know if this is a significant part of the turnover.

    Point is, it was always crazy to imagine that iPads would reach iPhone turnover rates. Anyone pushing that claim was simply an idiot who didn't understand the economics behind the devices. The tapering off in sales is what you'd expect after the first wave of accumulation. I expect it will now flatten off. Fewer sales in the US (because the iPad Air2 really is a good, long lived machine) balanced by slowly growing sales outside the US.

    I expect the watch to follow (in a few years) the same pattern. The first two or three models will sell like crazy to an empty market, and to people who really WANT the performance, battery life, and features of 2016 and 2017's models. After that (once again, no telcos forcing artificial pricing models) I expect turnover to slow down quite a bit as people find their model good enough and only replace it after four years or so, or when they somehow lose or destroy it.

    This is standard white goods theory.
    Reply
  • ASEdouardD - Wednesday, April 29, 2015 - link

    This mirrors my own usage patterns. I was pretty enthusiastic about tablets a few years ago, but since betting an 11 inch MBA in 2013 I pretty much never touch my tablet (s). Reply
  • bill5 - Wednesday, April 29, 2015 - link

    I just got a 8" Samsung tablet a (Galaxy Tab 4 8 or something, for 199) few weeks ago, this form factor is really perfect. a lot more screen area than a 7" tablet, very very thin and light per the usual by Samsung. Thing is like half the size of an ipad, yet still has a significantly larger screen than even a 7" tablet let alone a phablet (my phone is a 5.1" Galaxy S 5 and the tablet screen is in another size class).

    Anyways yeah, most people dont care but for me that 8" size is just perfect. Very very portable tablet, barely bigger than a large phone, you could throw it anywhere on the go, yet lots of screen estate.
    Reply
  • sonicmerlin - Monday, April 27, 2015 - link

    I wish they'd stop giving away their hard earned billions to shareholders in the form of dividends. What do they ever do? Apple could easily fund its operations without shareholder capital.

    They should just spend their money buying back as many shares as possible and limiting the amount of input/control the public has on them.
    Reply
  • chizow - Monday, April 27, 2015 - link

    LOL is this comment serious? A shareholder owns part of the company and lends the company their own capital and equity to go out and make more money. If you lent someone money, or bought a stake in a company, wouldn't you expect a return on your investment? How is being a stakeholder in Apple any different? Companies that DON'T pay dividends tend to see their stock prices drop, and thus, their ability to raise capital decreases as well... Reply
  • jjj - Monday, April 27, 2015 - link

    You keep saying sold or sales instead of shipped.There is a difference.
    They sold 60 million iphones, they shipped 61.1
    They sold 13.7 mil ipads, they shipped 12.6
    The iphone sales are not unseasonal really.
    The high demand in China was expected and it's on a few factors.
    The average screen size in China is at about 5 inch now so Apple users with their ridiculously tiny 4 inch screens really needed an upgrade, more so than in other regions.
    Unlike last year,they had a full quarter of China Mobile sales.
    China still had shortages in Q4 because Apple prioritized markets that celebrate xmas.
    The rest of the world was more or less seasonal in Q1.
    Apple could have easily shipped 63-65 million iphone actually. They need to up inventory in the channel but it looks like they postponed that to make Q2 look better.

    Not sure how you can be numb to good results when they have been bleeding share for years and results haven't been all that good.They are regaining now a bit of share on a huge upgrade cycle but that will end soon and Tim Cook is likely not smart enough for Apple to launch what it needs to. (guess there is a reason Apple''s results get covered but that's not the case for any other phone maker - M$ is not that).
    Also to note that Apple claims low margins on the watch and that can only mean huge production problems.
    Reply
  • bathotropic - Monday, April 27, 2015 - link

    Are you smarter than Tim Cook? Reply
  • jjj - Monday, April 27, 2015 - link

    It's not a difficult task given the deluge of mistakes he makes.
    Just take the watch, the hardware and software are utter garbage, the pricing is insane, they completely messed up the launch and now production. It's very very hard to do worse than that.
    Since he took over he messed up the ipad mini first gen specs and price, the iphone 5C was the wrong product , a bigger iphone was years late, they had a great number of logistics problems ( one so big that it killed margins), Apple Maps was launched, Siri is still poor , quality problems are persisting, Apple's designs have been poor and poorer.
    Plus he has no vision at all.
    Reply
  • beck2050 - Monday, April 27, 2015 - link

    Not to mention he's turned the Macbook Pro into an underpowered toy for college kids. Reply

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