Apple Q217 earnings beats on EPS, misses on revenue

Apple today announced financial results for its fiscal 2017 second quarter ended April 1, 2017. The Company posted quarterly revenue of $52.9 billion and quarterly earnings per diluted share of $2.10. These results compare to revenue of $50.6 billion and earnings per diluted share of $1.90 in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue.

Services revenue was $7.041 billion (includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services) vs. $5.991 billion YOY, or +18%. Other Products revenue was $2.873 billion (includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories) vs. $2.189 billion YOY, or +31%.

Unit sales:
• iPhone: 50.763 million (vs. 51.193 million YOY, -1%)
• iPad: 8.922 million (vs. 10.251 million YOY, -13%)
• Mac: 4.199 million (vs. 4.034 million YOY, +4%)

“We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus,” said Tim Cook, Apple’s CEO, in a statement. “We’ve seen great customer response to both models of the new iPhone 7 (PRODUCT)RED Special Edition and we’re thrilled with the strong momentum of our Services business, with our highest revenue ever for a 13-week quarter. Looking ahead, we are excited to welcome attendees from around the world to our annual Worldwide Developers Conference next month in San Jose.”

Apple also announced that its Board of Directors has authorized an increase of $50 billion to the Company’s program to return capital to shareholders and is extending the program timeframe by four quarters. Under the expanded program, Apple plans to spend a cumulative total of $300 billion by the end of March 2019.

“We generated strong operating cash flow of $12.5 billion and returned over $10 billion to our investors in the March quarter,” said Luca Maestri, Apple’s CFO, in a statement. “Given the strength of our business and our confidence in our future, we are happy to announce another $50 billion increase to our capital return program today.”

As part of the latest update to the program, the Board has increased its share repurchase authorization to $210 billion from the $175 billion level announced a year ago. The Company also expects to continue to net-share-settle vesting restricted stock units.

The Board has approved a 10.5% increase to the Company’s quarterly dividend, and has declared a dividend of $0.63 per share of the Company’s common stock, payable on May 18, 2017 to shareholders of record as of the close of business on May 15, 2017.

From the inception of its capital return program in August 2012 through March 2017, Apple has returned over $211 billion to shareholders, including $151 billion in share repurchases.

The Company plans to continue to access the domestic and international debt markets to assist in funding the program. The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.

Apple is providing the following guidance for its fiscal 2017 third quarter:
• revenue between $43.5 billion and $45.5 billion
• gross margin between 37.5 percent and 38.5 percent
• operating expenses between $6.6 billion and $6.7 billion
• other income/(expense) of $450 million
• tax rate of 25.5 percent

According to a Thomson Reuters analysts’ consensus estimates called for EPS of $2.02, revenue of $53.02 billion, and Q317 guidance of $45.6 billion. FactSet consensus estimate expected iPhone unit sales of 52 million.

MacDailyNews Take: Meh. iPhone miss is not good, but could be expected given the hype already for the tenth anniversary iPhone coming later this year. Somewhat weak guidance. Nice to see the dividend increase near the top of our expectation at 10.5%.


  1. It’s a good thing Apple will be introducing the iMac Pro in their June WWDC even though it won’t ship till late this year. They should also show something about the new Mac Pro even though it won’t ship till 2018, sometime.

    The iPhone alone isn’t going to cut it anymore. I believe Apple knew this hence the announcement of the iMac Pro and mod new Mac Pro.

  2. Sell, sell, sell…Apple just sold 50 million iPhones while most 6/6S owners are smart and are waiting for the iPhone 8 in the fall. Headlines…emotion…millenials…all go hand in hand with the world today.
    As always, I’ll stay put, sit, and wait.

  3. Not a bad miss considering the sales were probably boosted in 2016 by preorders for the SE. As it went on sale March 31, I think all the preorders and initial shipments to retail would have been counted in that quarter. I’d have to go back to the 10Q for last year to check this but I’m too busy right now.

    1. Apple’s second financial quarter last year included the busy week between Christmas and New Year. This year it did not. That in itself could more than account for the 1% decline in iPhone revenue year over year.

      1. There are several types of analyst estimates. You and I see the free, published estimates designed to influence the behavior of individual investors (the Wall Street “prey”). There are also secret “whisper” numbers that truly drive the market response following an earnings announcement. The major investors know how to react to these announcements immediately. The rest of us generally just absorb the volatility and the short-term losses.

  4. Yup. It just shows Apple doesn’t belong in the FANG stock group. Those FANG dudes never miss. Apple misses quite often. That’s OK because it’s pretty much what I expected this quarter and I’ll get my increased dividend. The quarter is done and that’s that. There will be a couple of more days of reading about a struggling and dying Apple and then it will be business as usual.

    Apple absolutely has to find some other revenue stream. Living and dying by the iPhone doesn’t make much sense with as much money Apple has to spend on acquiring an additional revenue stream.

  5. Maybe it’s just me..but with subsidies..I gave no thought to rolling over in bed and dumping $200 for the latest iPhone. Now (I’m with ATT)…I have to give my decision a lot more thought…and that has kept me from updating since the 6. I know that’s lazy…but it was so much easier with subsidies. Wonder if that is keeping sales down.

    1. You poor, deluded, collectivist fool. Apple’s cache horde is NOT “THEIRS” TO KEEP. They are a publicly owned and traded company, not privately owned, managed, and controlled by its employees. My family purchased an initial lot of 1400 shares of AAPL in the late 80’s for approximately $41,000, our very hard-earned savings. That lot has split and re-split three times since then to the point that our investment now totals almost $6 million. We put our money where our mouths were almost 30 years ago, sir or madam, at great risk to ourselves and our future–and have held this equity CONTINUOUSLY, through some thick and VERY THIN times. So, “how did we help Apple in any way”? If you cannot answer that question, you need some serious psychiatric help.

  6. To me, for those who want in or want to add more ..u just got a 2% discount..

    Never the less… , Wwdc is very crucial. … we need a bomb that sets an additional path forward beyond iPhoneX ..

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