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