MacDailyNews presents live notes from Apple’s Q115 Conference Call

MacDailyNews presents live notes from Apple’s Q115 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple today announced financial results for its fiscal 2015 first quarter ended December 27, 2014. The Company posted all-time record quarterly revenue of $74.6 billion and quarterly net profit of $18 billion, or $3.06 per diluted share. These results compare to revenue of $57.6 billion and net profit of $13.1 billion, or $2.07 per diluted share, split-adjusted, in the year-ago quarter.

Gross margin was 39.9 percent compared to 37.9 percent in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue vs. 63 percent YOY.

Thomson Reuters‘ analysts consensus called for Apple to report net income of $2.60 per share on revenue of $67.7 billion.

Apple Unit Sales Q115:
iPhone: 74.468 million (vs. 51.025 million YOY, +46% YOY)
iPad: 21.419 million (vs. 26.035 million YOY, -18% YOY)
Mac: 5.519 million (vs. 4.837 million YOY, +14% YOY)

Live notes from Apple’s Q115 Conference Call in reverse chronological order:

• End of conference call.

• After Hours : 114.65 Up 5.51 (5.05%) 6:01PM EST

• Cook: We view Apple Pay rollout to new countries as a big opportunity
• Cook: We saw more new customers and more new Android upgraders to iPhone than ever before.

• Cook: We really believe in our partnership with IBM
• Cook: If you look at Fortune 500, we are in essentially all of them. The issue is that enterprises are only deploying iPads to a small percentage of their workforce currently. The real opportunity is the change the way people work. So specific apps need to exist. This is one of the things working with IBM helps Apple deliver. The opportunity is enormous.

• AAPL After Hours : 114.51 Up 5.37 (4.92%)

• Cook: I see much headroom for iPhone sales
• Cook: iPhone base who’ve upgraded to iPhone 6/Plus is “barely in the mid-teens.” Many Android upgraders out there (wandering in the wilderness – MDN Ed.)

• Cook: This is the year of Apple Pay.
• Cook absolutely shocked at how many merchants activated Apple Pay during the holiday season
• Apple Pay – new functionality and new countries, merchants coming
• Cook: Apple Pay contactless vs. in-app purchase will play out differently over time.

• Cook: Apple TV is something that we continue to look at and work on
• Cook: Over 25 million Apple TVs sold to date
• Munster asks Cook about Apple TV (of course)

• Cook: iPad has a very, very bright future
• Cook: I think the partnership with IBM is profound. We are going to change how people work.
• Cook: iPad upgrade cycle is longer than an iPhone. Perhaps in between and iPhone and a Mac. Still too early to say for sure.
• Cook: I believe that over the long arc of time, iPad is a very strong market
• Cook: iPad customer sat is off the charts. 100% in some surveys. Unheard of.
• Cook: 1st time iPad purchaser rates are very high; so no saturated market
• Cook: In the short run, I don’t think you’re going to see a miraculous change YOY
• Cook: I am very optimistic and bullish on iPad over the long run

• Once again, foreign exchange headwinds are a negative impact on Q215 guidance.

• Cook: Online revenues in China last quarter were more than the sum of the previous 5 years.
• Cook: We are a big believer in China. Retail stores will hit 20 soon.
• Cook: China local competition isn’t new. Apple did very well. Excitement around iPhone 6/Plus was absolutely phenomenal.

• Cook: We are going to be thrilled to begin shipping Apple Watch in April.
• Cook: I use and love my Apple Watch every day. “I can’t live without it.”
• Cook: Emerging markets growth in iPhone sales was absolutely stunning, 2X, 3X, 4X or more in BRIC countries
• Cook: Higher number of customers new to iPhone, highest Android upgrade rate in the last three years, at least.
• Cook: We are incredibly bullish about iPhone going forward. We are doing well in virtually every corner of the world. Only a small fraction of the install base has upgraded.

• Cook: We have now achieved, in January after Q115 ended, supply/demand balance on iPhone 6 and iPhone 6 Plus
• Cook: iPhone 6 the most popular iPhone last quarter. All did well. iPhone 6 Plus popularity depends on geography.

• Maestri: We prefer to adjust product pricing at times of new product launches. When currencies move strongly (Russia) Apple is sometimes forced to adjust prices in mid-cycle.

• Maestri: We remain very, very confident in the pipeline of products and services
• Strong U.S. dollar has a negative impact on Apple’s international business
• Gross margin percentage will be impacted by over 100 basis points. We have factored that impact into our Q215 guidance
• Foreign currency exchange headwinds will grow stronger in Q215
• Maestri: Q1 saw unprecedented movements in currencies. Our Q115 revenue growth would have been 4 percentage points higher without such volatile headwinds.

• 26.3% tax rate expected in Q215
• Apple will report an update to the capital return program in April when they report Q215 results
• Apple has returned over $57 billion to investors in the last 12 months alone
• 46 million AAPL shares repurchased

• Opened 10 new Apple retail Stores. 447 retail stores, 182 of which are outside the U.S.
• iTunes total sales for quarter $2.9 billion
• App Store revenue grew 41% YOY
• iPad users generate over 6X the Web traffic vs. other tablets
• iPad: 21.419 million units. Nov. ChangeWave survey: 98% iPad Air satisfaction rate

• Apple continue to gain market share on PC market as a whole and have done so for 34 or 35 quarters
• 5.5 million Macs, 14% growth rate, Mac ASPs up $58, $6.9 billion all-time record
• Dec. ChangeWave survey: 97% iPhone satisfaction rate

• AAPL After Hours : 114.49 Up 5.35 (4.90%) 5:17PM EST

• Quarterly iPhone sales over $50 billion for the first time ever
• iPhone 6 Plus drove ASPs to $687 and increase of $50 YOY

• Apple is providing the following guidance for its fiscal 2015 second quarter:
– revenue between $52 billion and $55 billion
– gross margin between 38.5 percent and 39.5 percent
– operating expenses between $5.4 billion and $5.5 billion
– other income/(expense) of $350 million
– tax rate of 26.3 percent

• Apple built and shipped 7 million more iPhone 6/Plus units than they expected would be possible back in October
• Luca Maestri: Records achieved despite significant foreign exchange headwinds

• We’d like to thank our customers for an incredible quarter, which saw demand for Apple products soar to an all-time high
• Cook: Apple contributed a new record donation to Product(RED) for World AIDs Day.
• Cook: Apple’s work with ConnectED: 114 schools in 29 states received an Apple ConnectED grant

• IBM is engaged with over 130 companies over iOS use and the list keeps growing
• Collaboration with IBM in the enterprise is progressing with over 100 enterprise-class apps coming by year end

• Apple Watch to begin shipping in April.

• Cook: With all of this momentum in these early days, we are convinced that 2015 is the year of Apple Pay

• Whole Foods has seen mobile purchases increase over 400% since launch of Apple Pay
• 2/3 contactless payments come from Apple Pay
• 750 banks and credit unions have signed on to Apple Pay
• Cook: HomeKit and CarPlay are also continuing to progress. Amazing HomeKit products and over 30 vehicle brands with CarPlay coming this year
• Cook: Incredible interest in HealthKit with over 600 developers incorporating it into their apps
• Cook: We’ve been blown away by the reaction to Swift. Inventing a new programming language is something very few companies can do.
• AAPL After Hours : 114.36 Up 5.22 (4.78%) 5:06PM EST
• Gross margin was 39.9 percent compared to 37.9 percent in the year-ago quarter.

• Cook: One December 22nd, Apple shipped the one billionth iOS device, a space gray 64GB iPhone 6 Plus which we’ve saved here at Apple.

• Cook App Store revenues up a remarkable 41%
• Cook: Demand for iPhone has been staggering. Unprecedented demand for iPhone 6 and iPhone 6 Plus. 34,000 iPhones every hour, 24 hours per day, every day of the quarter
• Tim Cook: Today we are reporting an historic quarter.

• Record quarterly net profit of $18 billion vs. $13.1 billion YOY
• Record quarterly revenue of $74.6 billion vs. $57.6 billion YOY ($3.06 per diluted share vs. $2.07 YOY)
• Q115 quarter ended December 27, 2014

• — Start of Conference Call —

• AAPL After Hours : 114.69 Up 5.55 (5.09%) 4:58PM EST

• Apple’s board of directors has declared a cash dividend of $.47 per share of the company’s common stock. The dividend is payable on February 12, 2015, to shareholders of record as of the close of business on February 9, 2015.

• AAPL After Hours : 114.82 Up 5.68 (5.20%) 4:48PM EST
• AAPL After Hours : 114.97 Up 5.83 (5.34%) 4:40PM EST
• Awaiting start of conference call scheduled for 5pm EDT/2pm PDT.

Related article:
Apple destroys Street with all-time record earnings – January 27, 2015

24 Comments

  1. Gotta say my number was $305 and 72-73.5 million iPhones with ASP increasing, as it did …..

    Thought we should trade in the upper $130 range, appears I was off on that number …..

    3rd Quarter will be a nice surprise (not next quarter one after that) when we will see another nice year over year gain and a nice increase in notebook and iMac sales along with unexpected rise in iPad sales as well.

    1. The increase in gross margins is a big deal. When they shrink the street goes nuts with the Apple Doom stuff. They went up because of the big iPhone 6+ sales. Should stay up with sales in China, where the 6+ is especially popular.

      1. Which is rather silly that Wall Street freaks out about the gross margins, because it fluctuates every quarter but is always right around 40% (usually slightly less).

        1. The street keeps thinking that Apple’s margins must get squeezed, since after all, everyone else’s margins are tiny, that Apple must chase market share at the expense of margins, all the same BS that gets discussed here over and over. They shrank when the iPad mini came out and was popular, and Wall Street hated it, if I remember correctly, ignoring the overall increase in profits. Correct me if I am wrong.

  2. Hopefully Apples dream-machine, the new MBA, will be out in time to make a difference in next quarter. It will sell well not the least considering all the promoting done by M$…

  3. Surprised to see the decline on the iPad side of the house. I thought there was a lot of pent-up demand for TouchID on the original iPad Air (that’s why I held off). Having just purchased an Air 2, I can say it’s a fantastic machine that is well ahead of anything else in this class.

    1. big iPhones cutting into iPad mini sales?

      with big iPhones and the insane amount of money Msft is throwing at Surface advertising (it’s NFL tie in alone cost near half of Apple’s entire 2013 ad budget for all products) I am not too disappointed with 20 m plus iPads sold.

      1. Nothing to worry about when Cook said iPad saw great numbers of first time iPad buyers. I still have my iPad 2 (although it seems very slow these days on iOS 8). While I would like to upgrade, I can’t justify the expense at this time.

        My son has a 6+, and he says he will not buy an iPad now. Mac and a BAP (Big Ass iPhone) is all he needs. Personally I think the 6+ is too large, and I like the full-size iPad for a lot of uses, but he’s a 6’5″ football player with big hands, so the 6+ is perfect for him.

  4. I just posted something similar in MacRumors. I think the iPad would benefit from a bit more multitasking. I’d love to run a video program (youtube, Videos, etc) in a iPhone-sized window that can sit on top of Safari while I’m surfing the web.

    Accordingly, more system file access would be nice. I’d like the ability to treat the iPad a bit more like a traditional computer, when the mood strikes. I don’t necessarily need this for the iPhone (but I wouldn’t complain).

    1. yes. Macs are an important part of the eco system.

      —–
      iPhone sales went up because of big phones which lots of people had wanted

      Likewise lots of people want more powerful upgradeable ram mac minis and for years yearned for a mid tower mac (gap between $500 mini and 3000 Mac Pro is huge) so I believe if Apple made them AND do more mac marketing (anybody see an iMac ad?) Mac sales would even be higher.

  5. I’ve made some big mistakes in my lifetime. Here is one:

    At Christmas 2003, my nephew brought home from college an iPod. He was sitting on the couch listening to it. I said: what is that? An iPod. Let me see that thing! I started listening to it. He explained it. Within 3 minutes, I went upstairs and bought one for about $300. The iPod coupled with iTunes (then recently available for windows) changed my music listening habits for the very much better.

    My mistake? I should have bought $3000 or $10,000 worth of APPLE STOCK. At that time the share price adjusted for splits was about $1.50 per share. Said another way: if I had invested that $300 in Apple Stock, today that would be worth about $225,000. oops…..

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