Apple today announced financial results for its fiscal 2016 third quarter ended June 25, 2016. Apple posted quarterly revenue of $42.4 billion and quarterly net income of $7.8 billion, or $1.42 per diluted share. These results compare to revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.7 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.

“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” said Tim Cook, Apple’s CEO, in a statement. “We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”

“Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,” said Luca Maestri, Apple’s CFO, in a statement. “We returned over $13 billion to investors through share repurchases and dividends, and we have now completed almost $177 billion of our $250 billion capital return program.”

Operating Segments:
• Americas: $17.953 billion (-11% YOY)
• Europe: $9.643 billion (-7% YOY)
• Greater China: $8.848 billion (-33% YOY)
• Japan: $3.529 billion (+23% YOY)
• Rest of Asia Pacific: $2.375 billion (-20% YOY)

Product Summary:
• iPhone: 40.399 million units, $24.048 billion revenue (-15% units, -23% revenue YOY)
• iPad: 9.950 million units, $4.876 billion revenue (-9% units, +7% revenue YOY)
• Mac: 4.252 million units, $5.239 billion revenue (-11% units, -13% revenue YOY)
• Services: $5.976 billion revenue (+19% YOY)
• Other Products: $2.219 billion revenue (-16% YOY)

1. Services includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.
2. Other Products includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.

Apple is providing the following guidance for its fiscal 2016 fourth quarter:
• revenue between $45.5 billion and $47.5 billion
• gross margin between 37.5 percent and 38 percent
• operating expenses between $6.05 billion and $6.15 billion
• other income/(expense) of $350 million
• tax rate of 25.5 percent

Apple’s board of directors has declared a cash dividend of $.57 per share of Apple’s common stock. The dividend is payable on August 11, 2016 to shareholders of record as of the close of business on August 8, 2016.

Apple will provide live streaming of its Q3 2016 financial results conference call beginning at 2:00 p.m. PDT on July 26, 2016 at . This webcast will also be available for replay for approximately two weeks thereafter.

Analysts expected:
• EPS of $1.38 (Thomson Reuters) – $1.40 (FactSet) – $1.42 (Estimize)
• Revenue of $42.09 billion (Thomson Reuters) – $42.2 billion (FactSet) – $42.1 billion (Estimize)

MacDailyNews Take: Solid.


UPDATE: AAPL After hours: $101.56, up $4.89 (+5.06%) as of 4:53PM EDT.