MacDailyNews presents live notes from Apple’s Q315 Conference Call

MacDailyNews presents live notes from Apple’s Q315 Conference Call with analysts starting at 5pm EDT/2pm PDT today. Apple will provide live audio streaming of its FY 15 Third Quarter Results Conference Call using Apple’s industry-leading QuickTime multimedia software. The live webcast will begin at 2pm PDT/ 5pm EDT on Tuesday, July 21, 2015 at www.apple.com/quicktime/qtv/earningsq315

Apple today announced financial results for its fiscal 2015 third quarter ended June 27, 2015. The Company posted quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion, or $1.85 per diluted share. These results compare to revenue of $37.4 billion and net profit of $7.7 billion, or $1.28 per diluted share, in the year-ago quarter. Gross margin was 39.7 percent compared to 39.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

Wall Street analysts’ consensus estimates called for Apple to report EPS of $1.81 on revenue of $49.31 billion for 31.70% YOY growth.

The growth was fueled by record third quarter sales of iPhone and Mac, all-time record revenue from services and the successful launch of Apple Watch.

“We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,” said Tim Cook, Apple’s CEO. “The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.”

Apple Inc. Q3 2015 Unaudited Summary Data
(Units in thousands, Revenue in millions)

(1) Includes deferrals and amortization of related non-software services and software upgrade rights.
(2) Includes revenue from iTunes, AppleCare, Apple Pay, licensing and other services.
(3) Includes sales of Apple TV, Apple Watch, Beats Electronics, iPod and Apple-branded and third-party accessories.

Live notes from Apple’s Q315 Conference Call in reverse chronological order:

• End of conference call.

• AAPL After Hours: $122.05, down $8.70 or -6.65% @ 5:59PM EDT

• Cook: Apple Watch’s June sales were higher than sales in April or May (thanks, we assume, to having actual supply to begin to satisfy demand – MDN Ed.)
• iPhone has increased in all geographies around the world despite price increases due to those blasted currency headwinds
• Luca hates currency headwinds. No really, he does. Remarkably, Apple would be doing even better without them

• AAPL After Hours: $122.18, down 8.57 or -6.55% @ 5:55PM EDT

• Apple is very focused on growing iPhone around the world
• Cook: I think China is an incredible, unprecedented opportunity
• Cook sees an an incredible rise of the middle class in China and tremendous opportunity for Apple
• China worry, for Apple, is overstated and we’re not changing anything with our plans for China
• China volatility on the markets may create some speed bumps in the near term, but stock market participation among households in narrow (vs. the U.S., for example)
• Cook: We remain extremely bullish on CHian and we continue to invest. China will be Apple’s largest market at some point in the future.

• Cook: I believe that the iPad consumer upgrade cycle will eventually occur. Usage remains unbelievably great. iPad usage is 6x greater the next tablet competitor
• Cook: I am still bullish on iPad. We have incredible new features coming with iOS 9 for iPad, especially.
• Cook: We think the iPhone has a lot of legs to it. Many, many years. There is much innovation left to do. We’re in the early innings here.

• AAPL After Hours: $121.75, down $9.00 or -6.88% @ 5:44PM EDT

• Cook: New “upgrade anytime” cellphone plans could help the upgrade rate, shorten the upgrade cycle, for iPhone
• Cook: If we do a great job on our products, people will be willing to pay more because the products offer so much more

• Cook: Apple Watch customer sat is off the charts and, when we see such high customer sat for other products, they are blockbusters
• Cook: I feel fantastic about Apple Watch
• Cook: We expect Apple Watch to be one of the holiday’s hottest gifts
• Cook: We are very excited with the positioning of Apple Watch. Native apps are “going to be killer.”
• Cook: Through the end of the quarter, the Apple Watch sell-through is higher than the original iPhone and iPad – at just 680 points of sale (mostly online).
• Cook: Look at “Other products” category. The aggregate in that category are shrinking.
• Cook: We will not disclose the shipments of Apple Watch in order to not give competitors that insight

• Maestri: iPhone 6 Plus is doing particularly well in Greater China and Asia
• Maestri: As Apple prepares for “a busy fall,” gross margins will decline
• Maestri: Currency headwinds continue to be strong

• Apple expects another stellar quarter (fiscal Q415; this current quarter) for iPhone sales
• Apple has seen the highest rate of Android to iPhone switchers that the company have ever measured
• 73% of iPhone customers have not yet upgraded to iPhone 6 or iPhone 6 Plus. There is a lot of headroom left for iPhone upgraders – Cook
• iPhone growth is nearly 3x the smartphone market
• iPhone channel inventory down by over 600,000 units. Apple sold more than they expected to sell – Cook

• The dividend is payable on August 13, 2015, to shareholders of record as of the close of business on August 10, 2015
• Apple’s board of directors has declared a cash dividend of $.52 per share of the Company’s common stock

• Apple is providing the following guidance for its fiscal 2015 fourth quarter:
– revenue between $49 billion and $51 billion
– gross margin between 38.5 percent and 39.5 percent
– operating expenses between $5.85 billion and $5.95 billion
– other income/(expense) of $400 million
– tax rate of 26.3%

• Apple returned over $13 billion to shareholders during the quarter
• Global Apple Retail Stores 456; 40 in Greater China by the middle of next year
• Appel will not disclose Apple Watch unit sales in order to not provide competitors with that information
• Revenue from “Other Products” grew sharply, up 56% YOY. Category includes sales of Apple TV, Apple Watch, Beats Electronics, iPod and Apple-branded and third-party accessories

• AAPL After Hours: $122.38, down $8.37 or -6.40% @ 5:20PM EDT

• IBM MobileFirst for iOS released 13 new apps (35 total) for enterprise. On track for over 100 apps by end of the year
• iPad has 76% share of U.S. tablet market for tablets over $200 (APple does not compete in the low-end tablet market)
• Apple thrilled with reception to the new MacBook
• Mac quarterly unit sales: 4.796 million
• iPad quarterly unit sales: 10.931 million
• iPhone quarterly unit sales: 47.534 million
• $15 billion cash flow from operations
• China revenue doubled YOY to over $13 billion
• Luca Maestri: Another record quarter

• Apple Pay acceptance on track for over 1.5 million locations by end of 2015
• American Express to add Apple Pay support next month; 700 colleges and universities will accept Apple Pay
• Apple Pay in US has much momentum
• Apple Pay launched in the UK with over 250,000 locations
• Over 15,000 artists have signed up to use Apple’ Music’s Connect
• Millions and millions of peopel are already enjoying Apple Music every day
• Customers and reviewers love the human curation of Apple Music
• Apple thrilled with launch of Apple Music
• Apple very excited about Apple News app. Have signed many top publishers already

• AAPL After Hours: $121.11, down $9.64 or -7.37% @ 5:10PM EDT

• Cook: It is a rare and special privilege to launch a new platform like Apple watch
• Over 8,500 apps for Appel Watch already, with watchOS 2 and native apps coming soon
• Hospitals using Apple Watch into health care
• “We can easily imagine Luca Maestri and/or Tim Cook mentioning this [Wristly] Apple Watch customer sat number tomorrow during Apple’s Q315 conference call.” – MacDailyNews, July 20, 2015
• Wristly measured a 97% customer satisfaction rate for Apple Watch
• Cook: Apple Watch in 19 countries currently with 3 more coming by the ned of the month
• Cook: Apple Watch production ramp made huge progress over the quarter

• China results were outstanding for iPhone and Mac
• App Store produced its best quarter ever with revenue growing 24%
• Mac sales defy the industry trend with 9% growth in a market that IDC says contracted by 12%
• Apple experiences the highest switcher rate from Android that Apple has ever recorded
• Tim Cook: Apple today posted record quarterly revenue of $49.6 billion and record quarterly net profit of $10.7 billion
• Conference call begins.

• Apple shares plunge after ‘disappointing’ record third quarter results
• Apple posts record third quarter results, shares down $9.64, -7.37%
• Microsoft reports biggest-ever quarterly loss, shares down $1.97, -4.17%

• AAPL After Hours: $122.22, down $8.53 or -6.52% @ 4:42PM EDT