Apple Q2 2014 Fiscal Results
by Brett Howse on April 23, 2014 7:50 PM EST- Posted in
- Apple
- Mac
- Smartphones
- Mobile
- Tablets
Today Apple announced its Q2 results, and sales of the iPhone continue to dominate revenue and earnings for the company.
Revenue for the quarter came in at $45.6B – a 4.7% increase year over year, and a down sequentially from the always strong holiday season.
Net profit came in at $10.2B for the quarter, resulting in Earnings per Share of $11.62 – beating the consensus of $10.41. This was an increase of 7.3% over Q2 last year.
| Apple Q2 2014 Financial Results (Non-GAAP) | |||||
| Q2'2014 | Q1'2014 | Q2'2013 | |||
| Revenue | $45.646B | $57.594B | $43.603B | ||
| Net Income | $10.2B | $13.1B | $9.5B | ||
| Margins | 39.9% | 37.9% | 37.5% | ||
iPhone is far and away the largest product at Apple, with unit sales of 43.7 million for the quarter. This is a 17% increase over the same time last year, and a 14% increase in revenue. iPhone sales accounted for 57% of Apple’s Q2 revenue. The large increase in iPhone sales can be at least partially attributed to increases in sales in both Japan and China, though revenue from the rest of the Asia Pacific region was down.
Software, Services, and App/Music store sales came in at $4.6B for the quarter – up both year over year (11%) and sequentially (4%).
Mac sales were up 5% year over year with 4.1 million Macs sold, but down from 4.8 million last quarter.
iPad sales were down 16% year over year, and 37% sequentially, tempering the increase in iPhone sales. Some of the drop was explained by channel inventory changes, but in the end Apple reports how many devices it sells to the channel every quarter so that is the number that matters. If there was a strong demand for the product, then it’s unlikely there would be a large number unsold in the channel to worry about.
Finally, iPod sales continued their decline with 2.761 million devices sold – down 51% year over year and 54% sequentially. iPod is no longer a billion dollar business for Apple, with only $461M in revenue from the once loved device.
| Apple Q2 2014 Device Sales (millions) | |||||
| Q2'2014 | Q1'2014 | Q2'2013 | |||
| iPhone | 43.719 | 51.025 | 37.430 | ||
| iPad | 16.350 | 26.035 | 19.477 | ||
| Mac | 4.136 | 4.837 | 3.952 | ||
| iPod | 2.761 | 6.049 | 5.633 | ||
| Apple Q2 2014 Revenue by Product (billions) | |||||
| Q2'2014 | Q1'2014 | Q2'2013 | Revenue for current quarter | ||
| iPhone | $26.064 | $32.498 | $22.955 | 57.1% | |
| iPad | $7.610 | $11.468 | $8.746 | 16.7% | |
| Mac | $5.519 | $6.395 | $5.447 | 12.1% | |
| iPod | $0.461 | $0.973 | $0.962 | 1% | |
| iTunes/Software/Services | $4.573 | $4.397 | $4.114 | 10% | |
| Accessories | $1.419 | $1.863 | $1.379 | 3.1% | |
Apple CEO Tim Cook also announced more changes to the Capital Return Program. From August 2012 to March 2014, Apple has given $66 billion back to shareholders through the program. As part of this program, Apple’s board has approved an increase in the share repurchasing program from $60B to $90B. On top of this, the quarterly dividend has increased by about 8%, and they have plans to increase the dividend annually going forward.
Finally, Apple announced a stock split of 7-1. Each Apple share at the close of business June 2, 2014 will receive six extra shares for each share held. Trading will begin again on June 9th, 2014.
Overall, it was another solid quarter for Apple. iPhone sales keep providing them strong revenue, but it is slightly worrisome that the iPad sales have not continued at the same pace. There are likely many reasons for this including strong competition in the space, and people less likely to upgrade their iPads annually or semi-annually like the phone market. It’s obviously too early to call any trends here though, so we’ll have to wait and see how the numbers look in a few months.
Source: Apple Inc
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solipsism - Thursday, April 24, 2014 - link
If you compare it to the iPhone unit sales I suppose it doesn't look great but consider that the iPad is a "PC" supplement and even a "PC" replacement for a segment of the population not likely to frequent this site. It's not going to be replaced every year or even two years like a smartphone, especially in markers where subsidies exist.Also note the iPad may have plateaued but it's growth was extremely strong out the gate. For comparison, it took the iPhone twice as long to get to the same 210 MM units sold.
Finally, look at the iPad in comparison to the "PC" market. It's the trouncing them in unit sales so even if it's hit its wall it's because the market is saturated with active users, not because the users are moving on to another product or product category, which is noted by Apple's mention that 2/3rd of iPad buyers are new to Apple.
BSMonitor - Thursday, April 24, 2014 - link
Tablets will quickly reach the saturation point PC's did in the consumer space. The latest and greatest adds very little value to most buyers. The 3rd gen one is about the same as the Air in every way in terms of its capabilities. What will the next one bring? Thumb print scanner? Ask Intel how difficult it is to sell processing performance as a reason to buy a whole new machine/tablet.Add to the fact, tablets do not break at any where near the rate phones do. The miles they travel are much different.
darkich - Thursday, April 24, 2014 - link
Also worth pointing out is the rise of palmtop ( phablet).Me for example, I find a Galaxy Note 3 to be a better choice than a high quality smartphone + high quality tablet.
It is a much cheaper option yet it gives me premium specs and performance, a stylus and great camera.
It keeps all apps I need in one device, is compact enough to not feel cumbersome as a smartphone at all.
Sure, a tablet sized screen is great, but even 5.7" can give a satisying experience and makes the device easier to handle than a 8" tablet.
This being said I hope in the future one new category will retire all of them - a foldable/flexible personal pocket computer.
TiGr1982 - Thursday, April 24, 2014 - link
So, the average sale price of a Mac is $5.519B / 4.136M = $1334.This, I guess, means that the majority of Mac sales are somewhat cheaper Macs, and the truly expensive >$2000 MacBook Pro and iMac versions sell in much smaller quantities.
melgross - Thursday, April 24, 2014 - link
But interestingly enough, MSRP for macs has actually risen $20 over the years as sales have risen. This shows that Apple isn't feeling pricing pressure in the markets in which it competes. His is good.This is in opposition to Windows manufacturers whose increasing price pressure causes them to sell models for which they make no profit, other than from the crapware loaded on the machine. That is bad.
It's an interesting dichotomy.
tipoo - Friday, April 25, 2014 - link
Yeah, by far the most popular mac is the 13" base Pro. The Airs are quickly following.