MacDailyNews presents live notes from Apple’s Q318 conference call

MacDailyNews presents live notes from Apple’s Q318 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple will provide live audio streaming of its Q318 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 $53.3 billion, an increase of 17 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.34, up 40 percent. International sales accounted for 60 percent of the quarter’s revenue.

For Q418, Apple guided for revenue between $60 billion and $62 billion.

Live notes from Apple’s Q318 Conference Call in reverse chronological order:

• End of the conference call

• AAPL after hours: $197.05, +6.76 (+3.55%) @ 6:00PM EDT

• Cook: It is clear from my communications with customers that some are attracted to iPhone thanks to Apple Watch and AirPods; the reverse of that is also true
• Cook: A lot of people that buy Apple products buy for the whole ecosystem even if they do not utilize the entire ecosystem to start

• Apple has not conducted an analysis of how many people opted for low-cost battery replacement vs. buying a new iPhone
• iPhone X shows that when you deliver a great innovative product, people want it
• Cook: Some smartphone replacement cycles are lengthening due to subsidy plans becoming a much smaller percentage of sales
• Cook: Smartphone market is a great market because it’s just huge.
• Cook: I think the smartphone market is very healthy
• Luca: We expect strong growth to come from iPhone, Services and Wearables

• Cook: Our revenues on Apple Music grew over 50% during Q3
• There is an extraordinary opportunity to grow streaming music
• Apple took leadership position in streaming music in the U.S. and Japan
• Apple Musc has well over 50 million listeners (paid and trial users)
• Cook: We’re really happy to be working on something that we’re not ready to talk about yet
• Apple TV 4K units and revenue grew by very strong double-digits in Q318
• Cook: Cord-cutting is only going to accelerate
• We are not ready to talk about it yet, but we are very excited about what we’ll eventually offer
• We hired two very respected TV executives last year (Jamie Erlicht and Zach Van Amburg – MDN Ed.)
• We think we can do some great original content with Oprah
• Cook: We’re very excited to work with Oprah

• Cook: Apple is optimistic about U.S.- China trade relations
• Risk associated due to tariffs is very difficult to quantify and Apple is not even trying to quantify it
• None of our products are directly affected by current tariffs; we are evaluating a fourth tariff which is in the comment period
• Cook: Our view on tariffs is that they show up as a tax on consumers, but the trade agreements that the U.S. has with China and several other countries are in need of modernizing
• Cook: This is the 4th consecutive quarter that Apple has had double-digit growth in China
• Cook: It’s clear that Apple picked up global smartphone and tablet market share in the quarter
• Cook: iPhone X is the most innovative smartphone on the market and we could not be happier that it’s been the top-selling iPhone since its launch
• Cook: We feel great about iPhone results

• Foreign exchange has been a very significant headwind over the past 3-4 years, but we’ve been able to manage that
• Luca: We are very happy to see gross margin sequentially flat for June
• Cook: We are thrilled about our pipeline that has some new Services in it as well (streaming content – MDN Ed.)
• Cook: Services results were very broad based. We couldn’t be happier with how things are going.

• The dividend is payable on August 16, 2018 to shareholders of record as of the close of business on August 13, 2018
• Apple’s board of directors has declared a cash dividend of $0.73 per share of the Company’s common stock

• Apple is providing the following guidance for its fiscal 2018 fourth quarter:
– revenue between $60 billion and $62 billion
– gross margin between 38 percent and 38.5 percent
– operating expenses between $7.95 billion and $8.05 billion
– other income/(expense) of $300 million
– tax rate of approximately 15 percent before discrete items

• 112.8 million shares repurchased during the quarter
• Apple plans to reach a net cash neutral position over time
• Net cash position $129.1 billion
• Apple opened 50th retail store in China during the quarter
• Retail and Onlie Stores had a great quarter; over 250K Today at Apple sessions
• Business Chat for iMessage seeing strong adoption
• Enterprises are are deploying Macs due to employee choice programs
• Apple is making great headway in the enterprise with iPhone and iPad
• NPD: iPad has 60% share, up from 51% YOY, in U.S. tablet market

• Almost half of iPad purchases in quarter were new to iPad
• Double digit iPad unit growth in China
• Different timing of MacBook pro launch caused unfavorable YOY comparison
• Mac: Double digit YOY growth; nearly 60% of purchase coming from customers who are new to Mac
• Other Products set a new record for the June quarter; great sales momentum for both Apple Watch and AirPods
• Services: Best results ever (double digit Services growth in every market)
• U.S. consumers (451 Research) top end iPhone customer sat was 98%
• iPhone channel inventory reduced by 3.5 million units during the quarter

• iPhone: 41.3 million units (+1% YOY), $29.906 billion revenue (+20% YOY)
• iPad: 11.553 million units (+1% YOY), $4.741 billion revenue (-5% YOY)
• Mac: 3.720 million units (-13% YOY), $5.330 billion revenue (-5% YOY)
• Services: $9.548 billion (+31% YOY)
• Other Products: $3.740 billion (+37% YOY)

• Apple grew in each of Apple’s top 15 markets
• Quarterly revenue of $53.3 billion
• Luca Maestri: We’re very happy to report Apple’s best June quarter ever

• Apple teaming with leading educators in blind and deaf schools for Everyone Can Code
• Great momentum in Everyone Can Code and Everyone Can Create projects
• Cook: First of its kind investment fun in China; $300 million China Clean Energy Fund
• Cook: We are always workign to leave the world better than we found it

• Apple TV 4K has seen major growth as cable companies adopt Apple TV 4K to deliver their content
• Cook: Apple Watch will receive major improvements with watchOS 5
• Cook: Privacy is one of the most important issues of the 21st century

• Mac App Store getting a full redesign this fall
• Cook: iOS and macOS has shared a common foundation from the very beginning; now some iOS apps will be available on the Mac with macOS Mojave
• Cook: Apple is uniquely positioned in AR because of control of both hardware and software

• AAPL after hours: $196.08, +5.79 (+3.04%) @ 5:12PM EDT

• iOS 12 adds tools to help customers understand and take control of the time spent with iOS devices
• With iOS 12, Siri will take a major step forward with Siri Shortcuts
• WWDC 2018 previewed many advancements coming this year to macOS, tvOS, iOS, and watchOS
• Wearables up over 60% YOY (Apple Watch grew in mid 40% range YOY); AirPods sales are strong

• CVS and 7-11 will roll out Apple Pay across the U.S. this year
• Apple Pay over 1 billion transactions last quarter
• All-time highs for number of FaceTime calls and Siri requests
• Apple seeing strong growth in services; Appel Music grew over 50% YOY
• Rapid growth in App Store search ad business
• Apps are generating tens of millions of jobs around the world
• App Store generated nearly twice the revenue of Google Play so far in 2018
• App Store turned 10 years old this quarter
• Cook: Paid subscriptions have now surpassed $300 million; revenue from subscriptions counts for a significant portion of Services

• AAPL after hours: $195.89, +5.60 (+2.94%) @ 5:04PM EDT

• iPhone X was the most popular iPhone in the quarter as it has been since it’s release

• This is Apple’s fourth consecutive quarter of double-digit revenue growth
• Apple CEO Tim Cook: We’re proud to report our best June quarter ever driven by continued strong sales of iPhone, Services, and Wearables.

• Conference call begins

• AAPL after hours: $196.45, +6.16 (+3.24%) @ 4:55PM EDT

• Apple revenue by segment:
 – Americas: $24.542 billion (+20% YOY)
 – Europe: $12.138 billion (+14% YOY)
 – Greater China: $9.551 billion (+19% YOY)
 – Japan: $3.867 billion (+7% YOY)
 – Rest of Asia Pacific; $3.167 billion (+16% YOY)

• AAPL after hours: $195.19, +4.90 (+2.58%) @ 4:50PM EDT
• AAPL after hours: $195.05, +4.76 (+2.50%) @ 4:45PM EDT

SEE ALSO:
Apple beats Street with best June quarter ever – July 31, 2018

10 Comments

    1. It’s not just the lack of the true Mac Pro.

      Virtually the entire Mac line is using technologies and components that are anywhere from 3 months to 5 years behind the leading edge. (Even the new MacBook Pro shipped 3-4 months after the chips in it started shipping!)

      Why buy year old (or five year old) technology? Apple has all but abandoned the Mac.

        1. As some of you know, I’ve been a purchaser of Apple equipment since the late 70s. I started using my first Mac within weeks after the Thin Man started shipping. I’ve negotiated purchases of several thousand Macs. In my home I’ve had nothing but Macs (except for an occasional machine with which to experiment).

          It is just getting more and more difficult to stay with Macs with each coming month.

          Apple is not only dumbing down the macOS interface, they are removing capabilities–things that used to be directly available are not just hidden under a couple more layers in the GUI, they are now only available through terminal. Hardware is going more and more and more toward the concept of everything is a toaster. And the added killer is that toaster is based upon old technology even when it finally ships.

          Yes, Tim is turning in great financials, but that is NOT what makes a great company. In the past when I’ve interviewed candidates for senior staff I’ve been very blunt: “If you’re only here for the money–if your objective is to get rich while here–there’s the door. This interview is over.”

          With the overall PC market clawing back to positive sales growth after many quarters of negative growth to have the Mac sales drop by 13% should be a shameful embarrassment to Tim Cook and ALL of his senior staff.

  1. I’m definitely satisfied with Apple’s post-earnings share price pop if it stays above $195. That seems fair to me. I didn’t see very much pre-earnings doom and gloom, either. Maybe Wall Street is seeing Apple in a better light. I’m very happy Apple outperformed Facebook this quarter.

  2. I am so happy to see Laughing_Boy48 satisfied with Apple who usually whining how Apple under performs compared to Amazon, FaceBook and Google. From now on Laughing Boy48 would no longer complaining about Apple and Tim Cook lack of innovations and such.

  3. It’s hard to make sense of MDN’s live notes from the conference call when they don’t print the questions asked by participants and solely give Apple’s replies. Furthermore it’s not clear which extracts are Apple’s opening statements and which ones are replies to questions from participants in the conference call.

    Many of the comments have no context and therefore become meaningless, such as “We are not ready to talk about it yet, but we are very excited about what we’ll eventually offer”. It would be nice to know what they’re not talking about yet but are so excited about. Then a bit later “We’re really happy to be working on something that we’re not ready to talk about yet”. Is that the same thing they’re excited about or another?

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