Apple Q3 2014 Fiscal Results Analysis
by Brett Howse on July 22, 2014 9:20 PM EST
Today Apple announced its Q3 results for the period ending June 2014, and sales of the iPhone once again dominate revenue and earnings for the company.
Revenue for the quarter came in at $37.4B – a 6% increase year-over-year, and a down sequentially from the previous quarter.
Net profit was $7.7B for the quarter which is up 11.6% from the same period last year, and earnings per share came in at $1.28, also up over last year’s $1.07. Gross margin was up as well at 39.4% compared to 36.9% in Q3 2013.
| Apple Q3 2014 Financial Results (GAAP) | |||||
| Q3'2014 | Q2'2014 | Q3'2013 | |||
| Revenue (in Billions USD) | $37.432 | $45.646 | $35.323 | ||
| Operating Income (in Billions USD) | $10.282 | $13.593 | $9.201 | ||
| Gross Margin (in Billions USD) | $14.735 | $17.947 | $13.024 | ||
| Net Income (in Billions USD) | $7.748 | $10.223 | $6.900 | ||
| Margins | 39.4% | 39.3% | 36.9% | ||
| Earnings per Share (in USD) | $1.28 | $1.66 | $1.07 | ||
Once again, the iPhone is the dominate force for Apple right now, accounting for $19.75B in revenue for this quarter with 35.203 million iPhones sold. The device numbers and revenue are both down over last quarter, but sales are up 13% year-over-year with revenue close behind at a 9% gain. Apple doesn’t break down numbers for each model, but using some math we can see the revenue per unit sold at $561 which is a great number.
Software, Services, and App/Music store sales came in at $4.485B for the quarter which is down 2% compared to last quarter but up 12% year-over-year.
Mac sales were up again with 4.4 million Macs sold which accounted for $5.5B in revenue. Sales were up 18% and revenue was up 13% compared to Q3 2013, with an increase in sales of 7% over last quarter with revenue remaining flat.
iPad sales have definitely slowed, with the second quarter in a row of decline. Total sales were 13.2 million units for a revenue of $5.9B, but the device sales are down both year-over-year (9%) and sequentially (19%).
Unsurprisingly, iPod sales continued their decline with 2.9 million devices sold – down 36% year-over-year. Revenue for the iPod was $442M which was down 40% from Q3 2013. Somewhat surprising was that iPod sales ticked up 6% from last quarter, but revenues declined 4%.
Finally, accessories now account for about three times the revenue of the once ubiquitous iPod, with revenue for the quarter of $1.3 billion which is up 12% over last year’s numbers.
| Apple Q2 2014 Revenue by Product (billions) | |||||
| Q3'2014 | Q2'2014 | Q3'2013 | Revenue for current quarter | ||
| iPhone | $19.751 | $26.064 | $18.154 | 52.8% | |
| iPad | $5.889 | $7.610 | $6.374 | 15.7% | |
| Mac | $5.540 | $5.519 | $4.893 | 14.8% | |
| iPod | $0.442 | $0.461 | $0.733 | 1.2% | |
| iTunes/Software/Services | $4.485 | $4.573 | $3.990 | 12% | |
| Accessories | $1.325 | $1.419 | $1.179 | 3.5% | |
During this quarter, Apple performed a 7-1 stock split, and returned $8 billion to shareholders through dividends and the share repurchase program. Apple will pay a dividend of $0.47 per share on August 14 for this quarter’s results.
Analysts were hoping for 36 to 38 million iPhones to be sold this quarter, with sales missing that mark. iPad sales were also lower than expected. With the new iPhone likely not being released until Q1 of fiscal year 2015, outlook for the next quarter is also lower. With the new iPhone not expected until late in Fiscal Year Q4 (ending September), revenues are not expected to be bumped from new iPhone sales much until Q1 2015 results are available in January 2015. Revenue outlook for the next quarter is $37 to $40 billion.
| Apple Q3 2014 Device Sales (thousands) | |||||
| Q3'2014 | Q2'2014 | Q3'2013 | |||
| iPhone | 35,203 | 43,719 | 31,241 | ||
| iPad | 13,276 | 16,350 | 14,617 | ||
| Mac | 4,413 | 4,136 | 3,754 | ||
| iPod | 2,926 | 2,761 | 4,569 | ||
While sales were still strong for the iPhone, the iPad has now declined in numbers for the second straight quarter. Mac sales were up a healthy 18% year-over-year which means the Mac is almost back to being the number two revenue stream for Apple. We seem to have hit some maturity in the tablet market, and upgrade cycles aren’t quite as quick as they are in the smartphone space. The waiting game is now on for new product announcements from Apple to keep the sales strong.
Source: Apple
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name99 - Wednesday, July 23, 2014 - link
There is a massive artificiality in how these categories are defined, which makes obsessing about them somewhat pointless. For example, the 'iPod" category contains three very different devices- the shuffle
- the nano
- the touch
The nano is likely to be replaced with some sort of wearable, but that's an issue for later. My point today is, suppose I rebrand the iPod Touch as the iPad nano. Now the iPad category looks completely different. Are the sales in that category up or down? We don't know because we don't know the shuffle/nano/touch split.
Thinking of the touch as the iPad nano is a whole lot more useful in terms of understanding how the product is placed, both to consumers and as engineered inside Apple. But you can't really compare that to anyone else because the "tablet" category as defined by other vendors doesn't have a nano section.
If you want to run around claiming that the sky is falling, either for Apple or specifically for the iPad, you're welcome to do so. But it seems awfully premature to do so on the eve of the quarter that will bring us, almost certainly
- a 2GHz or so A8 CPU (extrapolation from how process improvements usually play out)
- new screen sizes (certainly for phone, perhaps for iPad nano)
- at least one wearable (with who knows what implications for the desirability of iOS devices)
Perhaps (who knows) a large screen iPad Pro.
RavenMoon - Tuesday, September 2, 2014 - link
Q: So, what does finance have to do with tech? The answer is nothing. What all these "tech" sites are doing is allowing the financial "analysts" to dictate what's going on in the tech world, as if money has anything to do with that, or that the "analysts" know their elbow from an orifice when it comes to tech. Guess what? It doesn't. They are just trying to make a name for themselves.Apple did not get formed *only* to make money. I'd suppose this is true of other companies as well, but thats not the current subject. Apple does not exist just to make investors money. They make computers, software, and other devices. This point seems to be lost in the current greed rampant world.
So while we are speculating how much money they will make, or how many phones they are going to sell, blah, blah, blah, they are still considered the "most valuable company." ("Apple Now Biggest-Ever U.S. Company" - WSJ, August 20, 2014), and have a boatload of cash in he bank ($160 billion).
All this other talk? It means nothing, and it's not "tech news." They will come out with new products, iPhones, etc, and do very well with them.