MacDailyNews presents live notes from Apple’s Q420 conference call

MacDailyNews presents live notes from Apple’s Q420 Conference Call with analysts starting at 5pm ET/2pm PT today, October 29, 2020.

Apple's Q220 conference call. Image: Apple logoApple today will provide live audio streaming of its Q420 Results Conference Call. This stream is best experienced on an iPhone, iPad, or iPod touch using Safari on iOS 10 or later; a Mac using Safari on macOS Sierra 10.12 or later; or a PC using Windows 10 and Microsoft Edge. Streaming to Apple TV via AirPlay requires an Apple TV (2nd generation or later) with the latest Apple TV software or tvOS. Other platforms may also be able to access the stream using recent versions of Chrome or Firefox (MSE, H.264, and AAC required).

Apple’s live conference call webcast will begin at 5pm ET/2pm PT today here.

The company posted record September quarter revenue of $64.7 billion and quarterly earnings per diluted share of $0.73. International sales accounted for 59 percent of the quarter’s revenue.

For the September quarter, the Refinitiv consensus expected Apple to post revenue of 63.72 billion and EPS of $0.70.

Live notes from Apple’s Q320 Conference Call in reverse chronological order:

• AAPL after hours: $109.13, -$6.19 (-5.37%) @ 6:03PM EDT

• End of call

• Cook: 5G, installed base, product lineup – all of these things make me very bullish on iPhone going forward
• Cook: I won’t speak for our carrier partners. Generally, it’s in the vast majority of carriers and customers interest to move to 5G
• Carrier incentives with 5G launch?

• Cook: We have only early data on iPhone 12 and 12 Pro; two more models are yet to come
• Cook: The iPhone 12 is at $799; we see what the iPhone mix turns out to be
• Cook: iPhone 12 family starts at $699 in many places; a lot of people connect to a carrier plan with aggressive offers
• Q: iPhone pricing changes?

• Cook: Remote work won’t go away anytime soon
• Cook: COVID-19 remote work and schooling lessons will cause changes going forward, that won’t go back to pre-COVID levels that benefit Mac and iPad
• Cook: All products excluding iPhone expected to grow in the double-digits; we continue to be bullish on what Mac and iPad can do
• Q: Mac and iPad demand sustainable? Seasonality?

• Cook: Currently supply constrained on Mac, iPad and some Apple Watches
• Cook: We have not yet even taken preorders for iPhone 12 mini and iPhone Pro Max
• Cook: iPhone supply is constrained today; how long is hard to predict.
• Q: iPhone supply and demand?

• Cook: There are more things Apple can do in this space
• Cook: U.S. has been laggin in contactless payments, but COVID-19 may put the U.S. ona different trajectory
• Cook: Apple Card is doing well. Apple Pay is doing extremely well
• Q: Apple Pay, Apple Cash, Apple Card

• Luca: This time foreign exchange in not a factor, so that is different from the past
• Luca: We have a launched a lot of new products in the past several weeks, which come with costs
• Q: Gross margins?

• Cook: We adapt to the COVID-19 environment and the uncertainty it causes
• Cook: We prioritize safety first. We’ve instituted curbside retail services. We’ve increased phone support
• Q: Preparing for any new COVID-19 disruptions?

• Cook: Absent COVID-19, we suspect there would be even better sales
• Cook: We are seeing a lot of demand for new iPhones
• Cook: Prior to mid-September, we were seeing double-digit demand

• Luca: We are growing, launching new services, we feel confident about services and happy with the customer response to essentially all services around the world
• Q: Can gross margins stay at current levels?

• Cook: As I look at the initial iPhone 12 and 12 Pro data points, “we are off to a great start.”
• Cook: 5G is a once-in-a-decade opportunity.
• Cook: We are very bullish on iPhone; there is an iPhone for everyone this quarter
• Q: iPhone installed base at all-time high and elongated iPhone replacement cycle, outlook?

• Cook: I have no idea of how the DOJ suit will go, but it’s a long way from conclusion
• Cook: We have a lot of new services with a lot of potential
• Q: Do you see a risk in loss of revenue from Google search payment to be default in Apple products?

• Happy to to say foreign exchange in not a headwind
• The commodity market looks very good for Apple
• Luca: We do not provide outlook for gross margins for product categories
• iPhone 12 margins?

• Cook: We had customer asking for an easier way to buy all of their services, so we’re looking forward to launching Apple One bundles tomorrow
• Cook: We do view that people like to pay for their hardware on a monthly basis, so that’s why we’re doing that
• Cook: We don’t have anything to announce today on a hardware bundle
• Q: Why not add hardware into services bundle?

• Luca: “5G is a once-in-a-decade opportunity.”
• The launch timing of the iPhones are later than in the past; 4 weeks into the quarter for iPhone 12 and Pro, 7 weeks into quarter for iPhone 12 Pro Max and iPhone 12 mini
• Luca: We won’t provide a range of guidance due to COVID-19

• Cook: We are working hard to provide the best 5G experience for customers; 5G testing so far tested on over 100 carriers in over 30 geos
• Q: 5G adoption, launch?
• Apple is entering 5G in China at a very good time
• In this quarter, Apple confident in China “very bullish”
• China was very strong last quarter
• Until mid-September, iPhone sales were strong
• Cook: Last quarter Apple saw non-iPhone biz up strong double digit
• Q: What are you seeing from China, Huawei situation?

• The dividend is payable on November 12, 2020 to shareholders of record as of the close of business on November 9, 2020
• Apple’s Board of Directors has declared a cash dividend of $0.205 per share of the Company’s common stock
• Apple expects all other products and services to grow double digits
• Apple expects iPhone revenue to grow in the quarter (duh)
• iPhone 12 and 12 Pro are off to a great start
• Give the continued near-term uncertainty, Apple will not provide guidance

• In FY20, Apple gre EPS to a new all-time record
• $3.5 billion paid in dividends, $18 billion in share repurchases during the quarter
• $192 billion in cash, $112 billion total debt

• iPads are saving tons of paper around the world
• iPhone revenue: $26.444 billion
• Services revenue: $14.549 billion
• Wearables, Home and Accessories revenue: $7.876 billion
• Mac revenue: $9.032 billion
• iPad revenue: $6.797 billion

• Mac and iPad install bases both reached all-time highs
• Amazing customer response to MacBook Air and MacBook Pro
• Mac was BY FAR an all-time record, grew strong double digits in all geos

• Over 75% of Apple Watch buyers are new to the product

• Apple on track to hit 600 million paid subscribers by end of calendar 2020
• 585 million paid subscriptions, up 135 million YOY
• Paid subscriptions grew more then 35 million
• Installed base continuesu to grow an is at an all-time high in all product categories
• 451 research: iPhone customer satisfaction: 98%
• COVID-19 impacted store operations, but demand grew double digits for the iPhone lineup thru mid-Sept.
• iPhone revenue: $26.444 billion

• 29.8% product gross margin
• Services set an all-time record of $14.08 billion
• iPhone sales thru mid-Sept. gre double digits
• Our products outside of iPhone grew a combined 30%
• September quarter record for Wearables, Home and Accessories revenue ($7.876 billion)
• This year we did not launch or ship any new iPhones during this quarter
• Our outstanding September quarter performance concludes a remarkable fiscal year, where we established new all-time records for revenue, earnings per share, and free cash flow, in spite of an extremely volatile and challenging macro environment.
• Luca takes over call

• Cook: You never wish for a year like this one, but I couldn’t be prouder of the Apple team
• Cook: We will not look back on 2020 with fondness due to COVID-19, but a shared sense of purpose goes a long way
• Cook: This year has a few more surprises in store
• Apple TV+ continues to impress; “Ted Lasso” is inspiring
• Record quarter for Apple Services
• Apple One bundle to launch tomorrow
• A14 Bionic is Apple’s most powerful chip ever
• Apple iPad continues to set th epace for the category
• New Apple Watch Series 6 offer more features than ever
• Cook: Very optimistic about what the next few weeks will bring
• Cook extols first 5G iPhones, iPhone Pro cameras

• Apple started 9 of the company’s 10 largest school districts supporting a total of over 1 million students and teachers
• Apple launched new educational partnerships in FY 2020
• Apple committed to the environment
• Apple has donated millions of face masks, face shields, and more
• Apple innovated in retail and much more due to challenges from COVID-19

• Macintosh set all-time annual record sales in FY2020
• Apple set an all-time record of $274.5 billion revenue in FY2020, growing 6% YOY
• Apple set a quarterly record in India, with the launch of Apple Online Store in India
• Apple launched new iPhones a few weeks later than normal

• Despite many challenges, Apple posted record September quarterly revenue of $64.7 billion
• In Q420, Apple set all-time records for Mac ($7.93 billion) and Services ($14.08 billion)
• Cook: Atmosphere of uncertainty due to COVID-19; Apple stayed relentlessly focused

• Conference call starts (4 minutes late)
• Imagine the frantic time someone is having right about now and commiserate
• Wait music begins again
• Some technical difficulties appear to be happening on Apple’s end currently

• Start of conference call

• AAPL after hours: $110.42, -$4.90 (-4.25%) @ 4:58PM EDT
• AAPL after hours: $110.86, -$4.46 (-3.87%) @ 4:50PM EDT
• AAPL after hours: $110.97, -$4.35 (-3.77%) @ 4:43PM EDT

9 Comments

    1. I suspect the Wall Street panicked when iPhone revenue was down compared to last year. They always thought of Apple as the iPhone company in recent years.

      The reality is that without new iPhones launched this quarter, there would be a delayed boost from new models appearing in this current quarter. Add to that the ongoing success of Mac and iPad, together with multiple other great revenue generators and you’ve got a tremendous line up for future profits on an even bigger scale than at the moment.

      As has happened so many times in previous quarters, AAPL took a hit when the results were announced, but will rise again when the real story becomes clear enough for even analysts to understand.

      A diverse range of phenomenal profit generators is a much better long term bet than reliance primarily on one product.

  1. One of the biggest things is that they are selling more Macs which means more word of mouth from people seeing how easy they are and it will lead to more sales. Now that prices are not too crazy I think that Mac sales are only going to go up.

  2. Amusing. Everything was up except the share price. I always find that hilarious. I’m not blaming Apple, but it is funny how investors see things so differently from how Apple sees it. Apple can beat expectations, but not the whisper numbers. I think Apple is doing just fine, but I’d like to see a slightly better dividend. At least more than 1% yield. That’s just pitiful.

    1. Please, plenty should be enough. You are lucky to have SJW Cook give you dividends which is a great departure from Job’s correctly conservative approach to dividends; He would have you rely on being a long enough investor so that you would make a profit from eventually selling your stocks instead of doling out handouts which are rewards for doing nothing, and Apple does not need your investment in the company so it’s doing you a favor to allow you to hang around like wide-eyed puppy dog expecting treats.

  3. Apple regards the Bionic chip to be partially biological in the conceptual sense of course. But what if eventually engineers make it actually bionic by integrating biological parts directly into the CPU as a subsystem? For right now, Apple calls it “Bionic” because it is designed to handle biometric data for both the TouchID and FaceID sensors” which already merge electrically with the body’s electrical system via the wrist, face, and finger interfaces.

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