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