MacDailyNews presents live notes from Apple’s Q218 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple will provide live audio streaming of its Q118 Results Conference Call using Apple’s industry-leading QuickTime multimedia software.

The live webcast will begin at 2pm PDT/ 5pm EDT today here.

The company posted quarterly revenue of $61.1 billion, an increase of 16 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.73, up 30 percent. International sales accounted for 65 percent of the quarter’s revenue.

For Q318, Apple guided for revenue between $51.5 billion and $53.5 billion.

Live notes from Apple’s Q218 Conference Call in reverse chronological order:

• AAPL after hours: $174.79, +$5.69 (+3.36%) @ 5:59PM EDT

• End of conference call.

• Cook: We’re very happy to be a part of the smartphone market (Of course they are since they take the lion’s share of the profits! – MDN Ed.)
• Cook: The smartphone market is the best market in the world
• Cook: I don’t buy the view that the smartphone market is saturated and, certainly, the “iPhone market” is not saturated
• Cook: iPhone market share [unit share] is low compared to the smartphone market; our job is to convince people to buy iPhones
• Cook on smartphone market: There were still half a billion feature phones sold

• Luca: We feel that NAND and DRAM component pricing will turn into positives soon
• Cook: iPhone X surprised us by being the best-selling iPhone for every week since it launched
• Cook: We price iPhones for the value that we are delivering. iPhone X is jam-packed with technologies that set up smartphones for the next decade

• Cook: We feel very bullish on China; the market is more than just iPhone. Mac gained share in China last quarter. Services are growing, too.
• China has nearly 2 million iOS app developers
• Cook: India set a new first half record; Apple continues to put great energy into India; It’s a huge market and many people will be moving into the middle class over time
• Cook: Health is an area of great interest and Apple thinks they can make a real difference

• We want to buy back the stock at the right time. We will update at the end of every quarter and update the entire program annually at this time of the year
• Luca: We believe AAPL is undervalued so we prefer to spend on buybacks primarily vs. dividends

• AAPL after hours: $174.80, +$5.70 (+3.37%) @ 5:41PM EDT

• Cook on user privacy: “You’re not our product. Privacy is a fundamental human right.”
• Luca: Gross margin is guided flat due to more difficult cost environment in memory components

• The top three best-selling smartphones in China in the quarter were iPhones
• Greater China grew 21% YOY thanks to iPhone, Mac, wearables, services
• Cook: iPhone X was the most popular smartphone is all of China last quarter
• Cook: I think Services business is a huge opportunity
• Installed base is growing at double digit levels YOY
• Services includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services

• Cook: China and the U.S. have this unavoidable mutuality. “I’m optimistic… Both countries can win and grow the pie, not just allocate it differently.”
• Cook: We are on target toward our 2020 goal of doubling 2016 Services revenue
• Cook: Services is very broad based
• Cook: Services grew 31%, all time record of $9.2 billion; each of the geos grew at least 25%

• Cook: “I could not be prouder of the product [iPhone X].”
• Cook: “iPhone X is a beloved product.”
Cook: Customers chose iPhone X for each and every week more than any other iPhone since launch
• We have a variety of iPhone customers, so Apple will provide a variety of iPhone models for different customers
• Cook: iPhone revenues up 14% YOY, driven mainly by iPhone X

• Analysts’ questions begin 

• Apple is providing the following guidance for its fiscal 2018 third quarter:
– revenue between $51.5 billion and $53.5 billion
– gross margin between 38 percent and 38.5 percent
– operating expenses between $7.7 billion and $7.8 billion
– other income/(expense) of $400 million
– tax rate of approximately 14.5 percent

• Apple continues to plan for dividend increases annually
• Apple’s Board has declared a cash dividend of $0.73 per share of Apple’s common stock payable on May 17, 2018 to shareholders of record as of the close of business on May 14, 2018
• Apple will complete the execution of the previous $210 billion share repurchase authorization during the third fiscal quarter
• From the inception of its capital return program in August 2012 through March 2018, Apple has returned $275 billion to shareholders, including $200 billion in share repurchases
• Apple returned $27 billion to shareholders in dividends and buybacks during the quarter
• Apple has $267 billion in cash and marketable securities; net cash of $145 billion
• 502 Apple Retail Stores now open worldwide

• AAPL after hours: $174.08, +$4.98 (+2.95%) @ 5:21PM EDT

• 73% of enterprise buyers plan to purchase iPads
• Wearables includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories
• Wearables (Apple Watch, AirPods, Beats) accounted for 90% of all “Other Products” revenue
• iCloud storage up 50% YOY, setting a new record
• 78% of enterprise buyers plan to purchase iPhones
• With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure
• iPhone ASP: $728
• Maestri: $15.1 billion in operating cash flow

• Apple’s Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend
• Cook: U.S.Tax reform makes it possible to execute our capital return program more efficiently
• Cook: Recent corporate tax reform allows us to utilize our earnings more effectively

• Cook: “We have the best pipeline of products and services that we’ve ever had.”
• Cook: Double digit growth is all geographic segments
• Cook: “We believe privacy is a fundamental human right.”

• AAPL after hours: $172.65, +$3.55 (+2.10%) @ 5:11PM EDT

• Cook talking up quarter’s product and software releases

• Q218 data summary:
iPhone: 52.217 million units (vs. 50.763 million units, +3% YOY), $38.032 billion revenue (vs. $33.249 billion, +14% YOY)
Mac: 4.078 million units (vs. 4.199 million units, -3% YOY), $5.848 billion revenue (vs. $5.844 billion, 0% YOY)
iPad: 9.113 million units (vs. 8.922 million units, +2% YOY), $4.113 billion revenue (vs. $3.889 billion, +6% YOY)
Services: $9.190 billion revenue (vs. $7.041 billion revenue, +31% YOY)
Other Products: $3.954 billion revenue (vs. $2.873 billion, +38% YOY)

“Services” includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services.
“Other Products” includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories.

• HomePod widely recognized for having the best quality sound for a product in its class; coming to more markets soon
• Apple Watch is the best selling watch in the world
• Apple’s wearables business now the size of a Fortune 300 company
• Apple grew revenue in all of geographic segments, with over 20% growth in Greater China and Japan
• Apple Pay active users more than doubles, transactions more than tripled YOY
• Cook: This is the first cycle in which the top-of-the-line iPhone has also been the most popular
Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter.
• Quarterly earnings per diluted share of $2.73, up 30 percent
• Wearables up nearly 50%
• Quarterly revenue of $61.1 billion, an increase of 16 percent from the year-ago quarter
• New March quarter records for revenue and earnings
• Tim Cook introductory remarks
• Apple’s fiscal 2018 second quarter ended March 31, 2018

• Start of conference call

• AAPL after hours: $175.49, +$6.39 (+3.78%) @ 4:59PM EDT
• AAPL after hours: $175.69, +$6.59 (+3.90%) @ 4:49PM EDT

• Awaiting start of conference call

SEE ALSO:
Apple beats Street with best Q2 ever – May 1, 2018