Apple Releases FY 2015 Q2 Earnings Results: Strong Growth In China Fuel Large Sales
by Brett Howse on April 27, 2015 6:30 PM EST- Posted in
- Smartphones
- Mac
- iPhone
- Financial Results
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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webdoctors - Monday, April 27, 2015 - link
Wow, big drop in tablets of 20%. Makes sense, most ppl just use their phones or laptops. Tablets try to fill a gap now that no one needs/wants.Thermogenic - Monday, April 27, 2015 - link
The Surface line is gaining momentum, but still no where near the iPad in terms of sales. I do agree though that a "tablet" won't be a thing in five years. It will just be another form factor of a notebook or phone.solipsism - Monday, April 27, 2015 - link
You're saying that there will be no iPad in 5 years time, as in April 2020? Really?!Impulses - Tuesday, April 28, 2015 - link
Tablets were always a luxury, they never developed a killer usage case or app, they're just nicer to use on the couch than your phone or laptop... That's enough of a thing to carry them forward, just not for them to explode into a must have device.kmmatney - Tuesday, April 28, 2015 - link
Tablets don't need to be replaced as often as phones - they take far less abuse. We have three iPads at the house - iPad3, iPad4, and an iPad Air, and the old iPad 3 plenty fast enough for anything you can do on an iPad. I'm sure when iPad sales start to really fall, Apple will come up with a new model to spur interest - maybe a larger screen, or OSX integration. The screen size of the Surface Pro 3 is really nice, but I'm not sure if the Microsoft tablet will cut into iPad sales, or cut into Windows laptop sales.Brakken - Tuesday, April 28, 2015 - link
I also think the Surface will become more popluar as MS rolls out Win10. If they could simply get Win7 running smoothly on it, I reckon it would sell. But I also think the Surface is a laptop. To me, a tablet is something that can be operated with fingers, not something that simply works better with keyboards and a mice.MarcSP - Wednesday, April 29, 2015 - link
I have a Surface 2, and I use it 99% of the time with my fingers. I don't even have a type or touch cover. Web browsing works great with IE, and email, and messaging, and games...Really, it can be used perfectly as a tablet with no other accesory.
The difference with iPad is that, if YOU want or need, with Surface you can have MORE, add keyboard and mouse, and increase productivity.
danjw - Tuesday, April 28, 2015 - link
There are places where tablets make sense, but not always usually with consumers. Cockpits as electronic flight bags (EFB), on warehouse floors, ...So I don't see them going away entirely, but they do seem to be struggling in the consumer space. I expect that transformable tablet/laptops have a place in the consumer space. Some want more power or just a bigger screen than a phablet.
Either way it will be interesting to see where mobile devices go over the next few years.
solipsism - Monday, April 27, 2015 - link
Your weirdly pessimistic view of tablets is common on tech sites, especially the one that seem to have an excessive amount of posters that think Apple shouldn't exist and that if you don't build your own PC you're a tool, but your understanding of the tablet market is incorrect.Despite YoY unit sales loses (for about 2 years now?) the iPad has still a few dozen million units ahead of the iPhone for the same duration on the market since launch. Let's remember that Apple has some over 130 MM iPhone in the last 6 months alone. That should tell you just how impressive the iPad's meteoric rise has been.
If you also consider that most iPad users tend to use them for years and then hand them down to others you would see that the iPad has a very different lifecycle than that of the "PC" and smartphone. Believe me when I tell you that it's not going to vanish.
seapeople - Monday, April 27, 2015 - link
Excellent comment. My fourth generation retina display iPad is 2.5 years old and works just as well as when it was new.In a similar vein, my iPod classic from 2007 still works like a charm despite nearly constant use these last 8 years.
Meanwhile, my iPhone 4 feels slow and ancient and is due for an upgrade very soon.
There is no way the iPad can keep up with the iPhone's sales pace now that market saturation has been reached. Sales will likely continue to decline to since the product life cycle is much longer.