MacDailyNews presents live notes from Apple’s Q118 conference call

MacDailyNews presents live notes from Apple’s Q118 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 $88.3 billion, an increase of 13 percent from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $3.89, up 16 percent, also an all-time record. International sales accounted for 65 percent of the quarter’s revenue.

For Q218, Apple guided for revenue between $60 billion and $62 billion.

Live notes from Apple’s Q118 Conference Call in reverse chronological order:

• End of conference call
• AAPL after hour: $173.50 +$5.72 (3.41%) @ 6:01PM EST

• Luca on M&A: On calendar 2017, we acquired 19 companies and we will continue that ongoing
• AAPL after hours: $173.40 +$5.62 (3.35%) @ 5:58PM EST

• Cook: All-time quarterly revenue record in mainland China in Q118

• MDN Ed: Are you getting it, yet?
• Cook: Keep in mind that this was a 13-week first quarter in 2018 vs. 14-week first quarter in fiscal Q1 2017

• Cook: You can have Siri make phone calls for you, get an Uber or Lyft
• Cook: HomePod offers a quality audio experience along with Siri including home automation. You can say “Hey Siri, I’m reading” and your room lighting, fireplace, etc. can change via Apple’s Home app

• “Any person who sells their AAPL shares based on quarterly projections of iPhone unit sales does not even remotely understand the company.” – MacDailyNews, February 1, 2018, 11:00 am EST

• Cook: A 90-day look at unit sales is not the proper way to look at Apple
• Active device count is hugely important; that number speaks to the strength of the product, the ecosystem and the loyalty of the customer; it also fuels the Services business
• Cook: With iPhone X, we do not have data regarding switchers; it is too early; next quarter Apple should know more
• Cook: We do not release a user number; we look at active devices as it’s the most accurate for Apple to measure
• Cook: iPhone replacement cycle is longer in markets where subsidies hid the true cost of the device at the time of purchase

• AAPL after hours: $172.87 +$5.09 (3.03%) @ 5:47PM EST

• On the iPhone replacement battery price reduction, we did not consider impact on upgrade rate; we did it be because we thought it best for the customers
• Cook: Every major product hit records on install base (iPhone, Mac, iPad)
• Cook: The more people on iPhones, the better
• Cook: Reliability of iPhone is fantastic and the used iPhone market has expanded; this is incredibly positive
• Cook: I see AR as being profound. We are putting a lot of energy behind AR. I could no the happier with how things are going with AR right now
• Cook: With iPhone X, chock full of incredible innovation, we are setting up iPhone for the next decade
• Cook: Apple thrilled with reception to iPhone X
• Difficult memory pricing environment currently. Apple hopes to see this improve in 2H of 2018 fiscal year
• Apple’s entirety of new iPhone channel fill was achieved in Q1
• Luca: We believe iPhone revenue will growth double digits vs. March 2017 quarter and acceleration of sell-thru growth on a YOY basis

• AAPL after hours: $172.07 +$4.29 (2.56%) @ 5:34PM EST

• In urban China and in the U.S, the Top 5 smartphones were all Apple iPhones
• Many new technologies and UI changes – very well received
• iPhone X customer satisfaction is off the charts
• Cook: Stellar quarter for iPhone. iPhone X was the most popular iPhone in December quarter for every week – that continues through to today, as well
• Luca: U.S. “Tax Cuts and Jobs Act” give Apple more latitude in operating the business

• Apple’s board of directors has declared a cash dividend of $0.63 per share of the Company’s common stock payable on February 15, 2018 to shareholders of record as of the close of business on February 12, 2018
• Apple will update capital return program with earnings report next quarter
• Apple exited the quarter with $163 billion in net cash

• Guidance:
– revenue between $60 billion and $62 billion
– gross margin between 38 percent and 38.5 percent
– operating expenses between $7.6 billion and $7.7 billion
– other income/(expense) of $300 million
– tax rate of approximately 15 percent

• 25.8% tax rate paid during quarter
• Apple estimates $38 billion tax payment to U.S. government on repatriated funds
• 30.2 million Apple shares bought back during the quarter
• $7 billion in debt

• First Apple Store in Austria opening within a few weeks
• 200,000+ “Today at Apple” sessions conducted during quarter
• 538 million visitores in Apple Stores worldwide
• More businesses embracing iPad and other Apple products
• 72% of consumers and 68% of business users who plan to buy a tablet within 90 days, plan to purchase iPad

• AAPL after hours: $170.98 +$3.20 (+1.91%) @ 5:21PM EST

• Wearables revenue up nearly 70% YOY (Apple Watch, AirPods, Beats headphones)
• Apple’s App Store generates nearly twice the revenue of Google Play
• App Store set a new all-time quarterly revenue record
• Services growth is accelerating
• 96% iPhone loyalty rate, the highest ever measured
• Customer sat with iPhone very strong with consumers and enterprise
• iPhone ASP: $796

• iPhone: 77.316 million units, $61.576 billion revenue (YOY change: – 1% units, +13% revenue)
• iPad: 13.170 million units, $5.862 billion revenue (YOY change: +1% units, +6% revenue)
• Mac: 5.112 million units, $6.895 billion revenue (YOY change: -5% units, -5% revenue)
• Services: $8.471 billion (YOY change: +18% revenue)
• Other Products: $5.489 billion (YOY change: +36% revenue)
• Cash flow from operations was very strong at $28.3 billion
• Net income: $20.1 billion
• All-time quarterly records in most every geo we track
• Luca Maestri: 13 week first quarter in 2018 vs. 14 week first quarter in 2017

• Cook: Business can be a “force for good in the world.”
• Everyone Can Code and Swift expanding worldwide
• Cook: Very happy with initial response of early reviewers for HomePod

• Worldwide, 60% of Mac sales were to first-time Mac buyers, 90% in China
• All new iMac Pro is the fastest most powerful Mac ever made

• AAPL after hours: $168.07 +$0.29 (+0.17%) @ 5:11PM EST

• Third consecutive quarter of revenue growth for iPad
• Apple Watch over 50% revenue and shipment growth for 4th consecutive quarter

• Apple Pay coming to Brazil this year
• Global Apple Pay purchasing more than tripled YOY
• Apple Music, iCloud, and Apple Pay all posted record revenue
• Cook: AR is going to revolutionize many of the experiences we have with mobile devices
• Cook talks up ARKit and augmented reality

• Apple returned $14.5 billion to investors through the company’s capital return program
• 1.3 billion active installed base is an increase of 30% in just two years
• Cook congratulates Apple team on iPhone X innovations

• iPhone 8 and iPhone 8 Plus rounded out the top three iPhones for the quarter
• Cook: iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November
• International sales accounted for 65 percent of the quarter’s revenue.
• Again, for analysts: 13 week first quarter in 2018 vs. 14 week first quarter in 2017
• Quarterly earnings per diluted share of $3.89, up 16 percent, also an all-time record
• Apple posted quarterly revenue of $88.3 billion, an increase of 13% from the year-ago quarter and an all-time record
• Cook: Active installed base of devices reaches 1.3 billion in January, fueling tremendous growth in Services business

This was a 13-week first quarter in 2018 vs. 14-week first quarter in fiscal Q1 2017
• Apple today announced financial results for its fiscal 2018 first quarter which ran October 1 – December 30, 2017
• Start of conference call

• AAPL after hours: $169.93, +$2.15 (+1.28%) @ 4:58PM EST

• “Any person who sells their AAPL shares based on quarterly projections of iPhone unit sales does not even remotely understand the company.” – MacDailyNews, February 1, 2018, 11:00 am EST

• AAPL after hours: $168.22, $+0.44 (+0.26%) @ 4:55PM EST
• AAPL after hours: $166.31, -$1.47 (-0.88%) @ 4:49PM EST

• Awaiting start of conference call

SEE ALSO:
Apple smashes Street with biggest quarter in company history – February 1, 2018

11 Comments

    1. Differance equates to 21% growth yoy instead 13% .
      And would beat street expectations above and beyond Apples own guidance.

      Once all this is digested by all the Analcyts out there and also tomorrow’s option are rendered dead.. (max pain of 170) it will start its climb to new all time highs next week .

    2. Exactly the problem. Apple investor relations should make a page with graphs showing Apple’s adjusted for 13/14 week performance and also show graphs relative to competitors who always are spun positive.
      The true story can be illustrated, but you can’t rely on the media to do it.

  1. “Worldwide, 60% of Mac sales were to first-time Mac buyers, 90% in China”
    I’d guess it means primarily MacBook? Doesn’t this demand scream for the MP and revised mini?

  2. Babying the AnalCysts isn’t working.

    This was a 13-week first quarter in 2018 vs. 14-week first quarter in fiscal Q1 2017….
    Again, for analysts: 13 week first quarter in 2018 vs. 14 week first quarter in 2017….
    Luca Maestri: 13 week first quarter in 2018 vs. 14 week first quarter in 2017….
    Cook: Keep in mind that this was a 13-week first quarter in 2018 vs. 14-week first quarter in fiscal Q1 2017

    Solution: Provide the AnalCysts with an “Estimated Equivalent 14-Week First Quarter” number. Then you’ve done the math for them, preventing them from, ahem, misunderstanding.

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