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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  • BMNify - Thursday, January 28, 2016 - link

    Almost all the markets outside of USA, you cam check the pricing in many European countries and the BRIC and the other markets in Asia. Reply
  • iwod - Tuesday, January 26, 2016 - link

    I always wished someone could tell me why

    "They have now paid out $153 billion of their $200 billion capital return program."

    Because to me that is $153 Billion wasted. It never bought me any extra value as a shareholder ( may be it didn't dropped so much ), Apple didn't get stronger in its product line because of it, basically in the long term or the short/medium term, that $153 billion was worth nothing.
    Reply
  • Klug4Pres - Wednesday, January 27, 2016 - link

    As a shareholder, you should be grateful to have capital returned if the company has no decent investment ideas. This is the big problem in investment. There just aren't that many large opportunities that require a lot of capital, so if a company happens to have a very profitable product line (e.g. iphone), it will always have a problem knowing what to do with all the money.

    This is where companies can end up blowing a lot of cash on acquisitions, just trying to buy up ideas in the hope that some will turn out to be winners.
    Reply
  • FunBunny2 - Wednesday, January 27, 2016 - link

    -- As a shareholder, you should be grateful to have capital returned if the company has no decent investment ideas. This is the big problem in investment.

    it's global. the CxO class has run out of brains. the cries to have governments raise interest rates (note well: capitalists used to insist that government instruments "stole" capital from them; shoe fits neatly on the other foot these days) grow louder. the 1% just "deserve" 10% return on their cash piles. and only the little people deserve to pay taxes. :)
    Reply
  • Speedfriend - Wednesday, January 27, 2016 - link

    Is the tin foil hat not working today? Reply
  • brisskel - Wednesday, January 27, 2016 - link

    You did get a dividend every quarter for the last few years. And the share buybacks mean that you own more of the company. Reply
  • RBFL - Wednesday, January 27, 2016 - link

    Does this mean we will soon see curved iPhones to help offset the flat iPhone sales? Reply
  • BillBear - Wednesday, January 27, 2016 - link

    One of the more trippy numbers I saw mentioned on the web was that Apple lost more money to currency fluctuations this quarter than Facebook made in revenue the entire quarter. Reply

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