Apple Reports Record First Quarter Results

iPhone, Services, Mac and Apple Watch Set All-Time Records

CUPERTINO, Calif.--()--Apple® today announced financial results for its fiscal 2017 first quarter ended December 31, 2016. The Company posted all-time record quarterly revenue of $78.4 billion and all-time record quarterly earnings per diluted share of $3.36. These results compare to revenue of $75.9 billion and earnings per diluted share of $3.28 in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

“We’re thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch,” said Tim Cook, Apple’s CEO. “Revenue from Services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline.”

“Our outstanding business performance resulted in a new all-time record for earnings per share, and over $27 billion in operating cash flow,” said Luca Maestri, Apple’s CFO. “We returned nearly $15 billion to investors through share repurchases and dividends during the quarter, bringing cumulative payments through our capital return program to over $200 billion.”

Apple is providing the following guidance for its fiscal 2017 second quarter:
• revenue between $51.5 billion and $53.5 billion
• gross margin between 38 percent and 39 percent
• operating expenses between $6.5 billion and $6.6 billion
• other income/(expense) of $400 million
• tax rate of 26 percent

Apple’s board of directors has declared a cash dividend of $0.57 per share of the Company’s common stock. The dividend is payable on February 16, 2017 to shareholders of record as of the close of business on February 13, 2017.

Apple will provide live streaming of its Q1 2017 financial results conference call beginning at 2:00 p.m. PST on January 31, 2017 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), and tax rate. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 24, 2016 and its Form 10-Q for the fiscal quarter ended December 31, 2016 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

© 2017 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except number of shares which are reflected in thousands and per share amounts)

 
Three Months Ended
December 31,
2016
  December 26,
2015
Net sales $ 78,351 $ 75,872
Cost of sales (1) 48,175   45,449
Gross margin 30,176   30,423
 
Operating expenses:
Research and development (1) 2,871 2,404
Selling, general and administrative (1) 3,946   3,848
Total operating expenses 6,817   6,252
 
Operating income 23,359 24,171
Other income/(expense), net 821   402
Income before provision for income taxes 24,180 24,573
Provision for income taxes 6,289   6,212
Net income $ 17,891   $ 18,361
 
Earnings per share:
Basic $ 3.38 $ 3.30
Diluted $ 3.36 $ 3.28
 
Shares used in computing earnings per share:
Basic 5,298,661 5,558,930
Diluted 5,327,995 5,594,127
 
Cash dividends declared per share $ 0.57 $ 0.52
 
(1) Includes share-based compensation expense as follows:
Cost of sales $ 229 $ 204
Research and development $ 589 $ 466
Selling, general and administrative $ 438 $ 408
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares which are reflected in thousands and par value)

   
December 31,
2016
September 24,
2016
ASSETS:
Current assets:
Cash and cash equivalents $ 16,371 $ 20,484
Short-term marketable securities 44,081 46,671
Accounts receivable, less an allowance of $53 in each period 14,057 15,754
Inventories 2,712 2,132
Vendor non-trade receivables 13,920 13,545
Other current assets 12,191   8,283
Total current assets 103,332 106,869
 
Long-term marketable securities 185,638 170,430
Property, plant and equipment, net 26,510 27,010
Goodwill 5,423 5,414
Acquired intangible assets, net 2,848 3,206
Other non-current assets 7,390   8,757
Total assets $ 331,141   $ 321,686
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 38,510 $ 37,294
Accrued expenses 23,739 22,027
Deferred revenue 7,889 8,080
Commercial paper 10,493 8,105
Current portion of long-term debt 3,499   3,500
Total current liabilities 84,130 79,006
 
Deferred revenue, non-current 3,163 2,930
Long-term debt 73,557 75,427
Other non-current liabilities 37,901   36,074
Total liabilities 198,751   193,437
 
Commitments and contingencies
 
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,255,423 and 5,336,166 shares issued and outstanding, respectively 32,144 31,251
Retained earnings 100,001 96,364
Accumulated other comprehensive income/(loss) 245   634
Total shareholders’ equity 132,390   128,249
Total liabilities and shareholders’ equity $ 331,141   $ 321,686
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 
Three Months Ended
December 31,
2016
  December 26,
2015
Cash and cash equivalents, beginning of the period $ 20,484   $ 21,120  
 
Operating activities:
Net income 17,891 18,361
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 2,987 2,954
Share-based compensation expense 1,256 1,078
Deferred income tax expense 1,452 1,592
Other (274 ) 110
Changes in operating assets and liabilities:
Accounts receivable, net 1,697 3,896
Inventories (580 ) (102 )
Vendor non-trade receivables (375 ) 1,826
Other current and non-current assets (1,446 ) (1,058 )
Accounts payable 2,460 (852 )
Deferred revenue 42 (29 )
Other current and non-current liabilities 1,946   (313 )
Cash generated by operating activities 27,056   27,463  
 
Investing activities:
Purchases of marketable securities (54,272 ) (47,836 )
Proceeds from maturities of marketable securities 6,525 3,514
Proceeds from sales of marketable securities 32,166 28,262
Payments made in connection with business acquisitions, net (17 ) (86 )
Payments for acquisition of property, plant and equipment (3,334 ) (3,612 )
Payments for acquisition of intangible assets (86 ) (394 )
Payments for strategic investments (126 )
Other (104 ) (172 )
Cash used in investing activities (19,122 ) (20,450 )
 
Financing activities:
Proceeds from issuance of common stock 1
Excess tax benefits from equity awards 178 224
Payments for taxes related to net share settlement of equity awards (629 ) (597 )
Payments for dividends and dividend equivalents (3,130 ) (2,969 )
Repurchases of common stock (10,851 ) (6,863 )
Change in commercial paper, net 2,385   (1,240 )
Cash used in financing activities (12,047 ) (11,444 )
 
Increase/(Decrease) in cash and cash equivalents (4,113 ) (4,431 )
Cash and cash equivalents, end of the period $ 16,371   $ 16,689  
 
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 3,510 $ 3,398
Cash paid for interest $ 497 $ 396
 
Apple Inc.
Q1 2017 Unaudited Summary Data
(Units in thousands, Revenue in millions)
                     
     
Q1 2017 Q4 2016 Q1 2016 Sequential Change Year/Year Change
 
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $31,968 $20,229 $29,325 58% 9%
Europe 18,521 10,842 17,932 71% 3%
Greater China 16,233 8,785 18,373 85% - 12%
Japan 5,766 4,324 4,794 33% 20%
Rest of Asia Pacific 5,863 2,672 5,448 119% 8%
Total Apple     $78,351 $46,852 $75,872 67% 3%
 
     
Q1 2017 Q4 2016 Q1 2016 Sequential Change Year/Year Change
 
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (1) 78,290 $54,378 45,513 $28,160 74,779 $51,635 72% 93% 5% 5%
iPad (1) 13,081 5,533 9,267 4,255 16,122 7,084 41% 30% - 19% - 22%
Mac (1) 5,374 7,244 4,886 5,739 5,312 6,746 10% 26% 1% 7%
Services (2) 7,172 6,325 6,056 13% 18%
Other Products (1)(3) 4,024 2,373 4,351 70% - 8%
Total Apple     $78,351 $46,852 $75,872 67% 3%

(1)

 

Includes deferrals and amortization of related software upgrade rights and non-software services.

(2)

Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services.

(3)

Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.

Contacts

Apple
Press:
Kristin Huguet, 408-974-2414
khuguet@apple.com
or
Investor Relations:
Nancy Paxton, 408-974-5420
paxton1@apple.com
Joan Hoover, 408-974-4570
hoover1@apple.com

Contacts

Apple
Press:
Kristin Huguet, 408-974-2414
khuguet@apple.com
or
Investor Relations:
Nancy Paxton, 408-974-5420
paxton1@apple.com
Joan Hoover, 408-974-4570
hoover1@apple.com