apple q2'15 commentary intro
TRANSCRIPT
Aquilla
Apple Results Q2 2015Summary and Commentary
Note: Apple Q2 = Calendar Q1
These data are derived from results published by Apple, Inc., from the published results
of other companies, and from assorted independent analysts, as identified in the slides.
The opinions are those of the author, and should in no way be interpreted as
investment advice.
AquillaSource: Apple Results
Quarterly RevenueExtraordinary Growth •Wall Street was bullish,
but revenues of $58.0B left analysts on the earnings call stunned
•These numbers are leaving competitors in the dust, as Samsung Electronics saw revenues fall by 12% in Q4 (15% in USD), and Samsung Mobile, which fell by 20% (23% in USD)
•Apple’s continued strong growth is all the more remarkable considering the size of the company today - the laws of large numbers do not seem to apply.
Comparative Revenues CQ1 2015
Sam
sung
Ele
ctro
nics
Mic
roso
ft
Goo
gle
Sam
sung
Mob
ile
0%
15%
30%
45%
60%
75%
90%
0
15
30
45
60
75
90
Q1 '09
Q2 '09
Q3 '09
Q4 '09
Q1 '10
Q2 '10
Q3 '10
Q4 '10
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
Revenue Growth
(%)
Revenue (B$)
Apple Revenue
Revenue B$ Revenue YoY Growth
AquillaSource: Apple Results
Cash, Investments & Capital ReturnCapital Return Program Grows •Apple generated $19.1B of cash from
operations in the Quarter, another huge jump from the year-ago quarter
•The company returned $9.7B to shareholders during the quarter, mostly through Stock Repurchases ($7B), which offer Apple greater flexibility than dividends
•Long and short term cash holdings grew by $16B in the quarter, and the company now has over $194B in cash
•This is enough to pay off the national debt of Malaysia or Switzerland (and nearly that of Russia), and is more than the GDP of New Zealand
•Cash held outside the US, for tax reasons, is increasingly an issue: Apple is borrowing in the US to fund the capital return programme, while the offshore cash approaches 90% of the total ($171B)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
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160
180
200
Q1 '09
Q2 '09
Q3 '09
Q4 '09
Q1 '10
Q2 '10
Q3 '10
Q4 '10
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
Ex-US (B$)
Cash & Capital Return
Short Term Cash B$ Long Term Cash B$
Cash Generated B$ Capital Return B$
Non-US Held Cash %
AquillaSource: Apple Results
Revenue Mix by Product LineiPhone dominates •iPhone’s dominance
was massive, with 69% of the revenues, and probably nearer 75-80% of the profit in the quarter
•10% unit growth for Mac, but declining ASPs saw it gain only 2% in $ to a 9% share of the mix
•iPad was the big loser, declining a further 29%, and slipping behind Mac in $
•Services continues to grow (but needs subscription audio)
•Other Products declined with iPod, which was about a quarter of this category in Q2 2014 - Beats seems unable to reverse this trend
Most recent$ Share $ YoY
3% -10%
9% 9%
10% 2%
9% -29%
69% 55%
Services: iTunes, App, Mac App & iBooks Stores, AppleCare, Apple Pay, licensing, other services
Other Products: iPod, Apple TV, Beats Electronics and Apple-branded and third-party accessories
iPhone M$
iPad M$
Mac M$
Services M$
Other Products M$
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 '09
Q2 '09
Q3 '09
Q4 '09
Q1 '10
Q2 '10
Q3 '10
Q4 '10
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Q4 '14
Q1 '15
Q2 '15
Product Line Revenue Mix
Aquilla
Services - SlowingTracking the trailing 12 months (current and 3
previous Quarters) eliminates seasonality, and
gives a better indication of the longer term trends
Source: Apple Results
Services: iTunes, App, Mac App & iBooks Stores, AppleCare, Apple Pay, licensing, other services
0
4,000
8,000
12,000
16,000
20,000
24,000
0
1,000
2,000
3,000
4,000
5,000
6,000
Q1 '09
Q2 '09
Q3 '09
Q4 '09
Q1 '10
Q2 '10
Q3 '10
Q4 '10
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
Trailing 12m Revenue
($M)
Revenue ($M)
Services Revenue
Services M$ Services Trailing 12m M$
AquillaSource: Apple Results
Geo Revenue and 12m TrailingAmericas/China Ticked Up •Trailing 12 months shows clearly
where Apple’s growth is coming from - Americas, China and APAC
•China was on fire, and also benefitted from the Chinese New Year holiday during the quarter, which is increasingly a sales driver
•EMEIA appears to be slowing, reflecting the developed nature of the region and its sluggish economy
•Japan was the one weaker region, the causes of which were not touched on during the call.
•APAC is still small, but ticking up strongly
Tracking the trailing 12 months (current and 3
previous Quarters) eliminates seasonality, and
gives a better indication of the longer term trends
0
20,000
40,000
60,000
80,000
100,000
Q1 '09
Q2 '09
Q3 '09
Q4 '09
Q1 '10
Q2 '10
Q3 '10
Q4 '10
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
Revenue $M
Geo Revenue and 12m Trailing Revenue
Americas EMEIA Greater China Japan APAC
Americas 12m Trailing EMEIA 12m Trailing Greater China 12m Trailing Japan 12m Trailing APAC 12m Trailing
AquillaSource: Apple Results
Competitive Landscape - TabletsApple still leads in declining market •Apple still leads, but lost 6% of share YoY •Cook identified cannibalisation by both Mac and
iPhone, and was relaxed about this •The IBM partnership has still to bring a major impact,
but remains promising - sales cycles are long. First major such deal (in Japan) just announced (hits Q3 onwards)
Q1’15 M Q1’15% Q1’14 M Q1’14% Change
Apple 12.6 26.8% 16.4 32.7% -22.9%
Samsung 9.0 19.1% 10.8 21.6% -16.7%
Lenovo 2.5 5.3% 2.0 4.1% 23.0%
ASUS 1.8 3.8% 2.6 5.2% -30.7%
LG 1.4 3.1% 0.1 0.2% 1423.7%
Others 19.7 41.9% 18.1 36.3% 8.6%
Total 47.1 100.0% 50.0 100.0% -5.9%
Q1 2015 Tablet Units (IDC)
Source: IDCSource: IDC
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Apple’s Q2 Results Analysis
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