Apple Releases FY 2015 Q2 Earnings Results: Strong Growth In China Fuel Large Sales
by Brett Howse on April 27, 2015 6:30 PM EST- Posted in
- Smartphones
- Mac
- iPhone
- Financial Results
Today Apple announced their earnings for their second quarter for fiscal year 2015. Once again, iPhone dominated their revenue stream, with 40% more units sold and 55% more revenue than the same period last year. Total revenue for the quarter came in at $58 billion, which is up 27% year-over-year. Gross margin for the quarter was up too, coming in at 40.8% for this quarter. Net income was $13.6 billion, which works out to $2.33 per share.
| Apple Q2 2015 Financial Results (GAAP) | |||||
| Q2'2015 | Q1'2015 | Q2'2014 | |||
| Revenue (in Billions USD) | $58.010 | $74.599 | $45.646 | ||
| Operating Income (in Billions USD) | $18.278 | $24.246 | $13.593 | ||
| Gross Margin (in Billions USD) | $23.656 | $29.741 | $17.947 | ||
| Net Income (in Billions USD) | $13.569 | $18.024 | $10.223 | ||
| Margins | 40.8% | 39.9% | 39.3% | ||
| Earnings per Share (in USD) | $2.33 | $3.08 | $1.66 | ||
Almost 70% of Apple’s revenue came from international sales, but China was the big market for Apple this quarter. Sales in Greater China were up 71% year-over-year, to $16.8 billion for this quarter. This is even a 4% rise over Q1, which was the launch quarter for the iPhone 6 series. China is now the second biggest market for Apple, closing in on the Americas where sales this quarter were $21.3 billion.
iPhone sales kept up their torrid pace. In Q1, Apple sold almost 75 million iPhones, and while there is traditionally a drop in the quarter succeeding the launch of the phone, they still managed to sell over 61 million iPhones for Q1. Year-over-year, this is a 40% increase in devices sold and even better for Apple’s bottom line, revenue was up 55%. With Apple, there really is iPhone, and everything else. iPhone accounts for 69.4% of all of Apple’s revenue. They are top heavy in this one product, but it seems to be a product that just keeps giving returns.
Mac sales were also up, with a 10% increase in units sold as compared to Q2 2014. Revenue for Mac also increased, but only 2%. Unit sales were 4.5 million devices, which accounted for $5.6 billion in revenue. This works out to an Average Selling Price of $1230.55 per Mac computer. Macs have once again surpassed iPad sales to become the number two device at Apple. For Q1, and the launch of the new iPad Air 2, iPad sales briefly retook the lead, but Mac sales have surpassed iPad again.
iPad sales have continued to struggle. What was once thought to be the next iPhone has certainly struggled to maintain the trajectory it first had. Sales for Q2 were 12.6 million units, which is down from the 21.4 million last quarter (when the new products were launched) and also down significantly year-over-year from the 16.35 million in Q2 2014. That is a 23% decline in sales, and it resulted in a 29% reduction in revenue, with iPad now coming in at $5.4 billion.
| Apple Q4 2014 Device Sales (thousands) | |||||
| Q2'2015 | Q1'2015 | Q2'2014 | Seq Change | Year/Year Change | |
| iPhone | 61,170 | 74,468 | 43,719 | -18% | +40% |
| iPad | 12,623 | 21,419 | 16,350 | -41% | -23% |
| Mac | 4,563 | 5,519 | 4,136 | -17% | +10% |
Services however did not suffer such a fate, and at $4.996 billion in revenue, iTunes, the App Store, and other Apple services are now almost a $5 billion per quarter business. Revenue was up 4% since Q1 2015, and up 9% from a year ago.
The final segment Apple reports on is “Other Products” which include iPod, Apple TV, Beats, and accessories. Revenue for this segment was $1.69 billion, down from $1.88 billion a year ago, and $2.69 billion in Q1. This is a year-over-year decrease of 10%. Much of that would be iPod sales which only two quarters ago were still listed in their own category, but have been falling for several years now as they have been superseded by smartphones.
| Apple Q2 2015 Revenue by Product (billions) | |||||
| Q2'2015 | Q1'2015 | Q2'2014 | Revenue for current quarter | ||
| iPhone | $40.282 | $51.182 | $26.064 | 69.4% | |
| iPad | $5.428 | $8.985 | $7.610 | 9.4% | |
| Mac | $5.615 | $6.944 | $5.519 | 9.7% | |
| iTunes/Software/Services | $4.996 | $4.799 | $4.573 | 8.6% | |
| Other Products | $1.689 | $2.689 | $1.880 | 2.9% | |
As part of their announcement, Apple is also expanding their capital return program. What was first going to be a $90 billion share repurchase program is now up to $140 billion. There is also going to be an 11% increase to the quarterly dividend, which will now be $0.52 per share, payable on May 14th to all shareholders of record as of May 11th. Since the creation of their capital return program, Apple has paid out over $112 billion to shareholders, with $80 billion of that being share repurchases.
For Q3, the forecast is revenue of $46 to 48 billion, with margins between 38.5% and 39.5%.
To a certain extent, we have become numb to the record breaking numbers every quarter, but really it is impressive that they have been able to sustain this for so long. For Q2, they once again set records for iPhone and Mac sales, and the App Store had an all-time record quarter. They have some new products in the market now with the MacBook and the Apple Watch, so it will be interesting to see the Q3 numbers.
Source: Apple Investor Relations
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solipsism - Tuesday, April 28, 2015 - link
I give you points for taking simple facts and then contorting them into the most bizarre results but the reality is everything you stated is BS.The iPad sales have dipped because it was too popular too quickly. You think that's a problem but it's a problem every company wishes they had. Their iPad markets being saturated doesn't mean there are no new buyers or repeat buyers, and if you remove the iPhone from the equation the iPad becomes the highest money maker for Apple and the key envy of all vendors. Let's remember that 5 years ago it didn't exist, and despite you obviously not understand what the iPad is for when a "real computer" can do so much more its unit sales quickly shot past the iPhone's unit sale for the first 5 years on the market. Let's also remember that's with a higher ASP for first years.
Let me repeat in case you still don't understand: THE IPAD ISN'T GOING AWAY. IT'S THE PRIMARY COMPUTING DEVICE FOR A LARGE PART OF THE POPULATION. THIS DROP IS JUST A CORRECTION AFTER AN UNPRECEDENTED RISE, NOT YOUR WEIRD "CONCERNS" OVER DOOMED iPAD SALES.
chizow - Tuesday, April 28, 2015 - link
LMAO, no BS, another buffoon that doesn't seem to understand what "market saturation" means.You said it yourself: "The iPad sales have dipped because it was too popular too quickly."
If Apple goes to market and sells 200 million devices to their primary addressable market of 300 million, but sees few repeat buyers with an annual 10-20% hardware turnover rate during their expected product life cycle, the market is saturated. Now they aren't getting the sales they want in their original target markets (well-defined, affluent markets like NA, EU, Japan) and they have to venture off into the side alley markets like India and Russia and sell at a fraction of the volume, profit, and revenue, that's what they have to do but that doesn't diminish the fact iPad sales are declining on a product line that is NOT going to be the next iPhone.
Again, no one is saying iPad is going to disappear completely, its just going to be relegated to the niche toy device it is and it is NOT ever going to enjoy those initial success level again.
solipsism - Tuesday, April 28, 2015 - link
"You said it yourself: "The iPad sales have dipped because it was too popular too quickly.""Yes, the correction is due to multiple factors for a breakaway device that is atypical, but you don't seem to realize there are 1) multiple markets, not just one, and 2) that markets change. An iPad Pro will increase market interest (see iPhone 6 series). A less expensive iPad will increase market interest (see MacBook Air).
"... side alley markets…"
Yeah, just how no one in Asia will ever buy an Apple product because their technology so much more advanced than in the West. They had TV on their cellphones after all. /s
"Again, no one is saying iPad is going to disappear completely, its just going to be relegated to the niche toy device it is and it is NOT ever going to enjoy those initial success level again."
And yet your comments and many other comments here and elsewhere are suggesting the iPad is doomed.
chizow - Tuesday, April 28, 2015 - link
@solipsism No, I fully understand there are multiple markets and they change, I also understand the markets Apple is forced to chase are not their typical markets and as a result, their sales overall are DECLINING because they are chasing less lucrative markets. Again, you can try to sell your goods in the main market where it is easy and profitable if you have good product, or you can try selling to a handful in the side alleys and streets. That doesn't change the fact if you are resorting to the latter, the market is saturated. I don't understand how this is hard to understand.Not sure what the Asian market comment is supposed to be about. Apple products are huge in affluent Asian markets like Japan, the markets they are forced to chase now are much harder to penetrate, despite high populations because they are much less affluent (China, India).
Uh where did I say it was doomed, here or elsewhere? iPad in its current incarnation is just going to be a toy niche market where it belongs, but it is NOT going to be the next massive growth vector for Apple, plain and simple. If the iPhone wasn't actually getting MORE popular in its 6th major iteration, Apple would be in a lot of trouble and not steamrolling their way towards $1Tn market cap.
name99 - Tuesday, April 28, 2015 - link
You are saying isolated facts that are true, but you're not connecting them into coherent sense.Yes, Apple will sell fewer iPads per year going forward. Why is that a problem?
Do you believe that the annual numbers will be so small that they cannot be made efficiently?
Do you believe that the annual numbers will be so small that Apple cannot cover the costs of R&D?
If neither of these are true, then the smaller sales are a sad matter for Apple's stockowners, but have FSCKALL effect on Apple's customers, or their role in the future of tech.
chizow - Tuesday, April 28, 2015 - link
@name99 again, I never said anything of the sort, of course Apple is going to keep making iPad as long as it is profitable, but that doesn't change the fact the tablet market is saturated and iPad sales will continue to decline until they address the key issues with functionality to try and increase typical use-cases, thus opening more opportunity for increasing the market again.Like I said before, iPad will need to become more of a 2-in-1 or laptop replacement if it wants to experience actual growth again, and the first step in that direction is ditching iOS and moving to OS X, at the minimum. Problem is, Apple has shown no inclination of making a touch capable version of OS X, so there's that.
xype - Tuesday, April 28, 2015 - link
Chizow, you are confused. If 40-70% of buyers are new to the iPad (40% in the US, 70 in China), pray tell how is that not market growth or how is that a saturated market? It’s not the explosive market growth that Apple needs to have to not be doomed, apparently, but it’s nowhere near the kind of numbers that would make any company rethink their strategy for a whole product line (like trying to shoehorn OS X onto iPads).There is absolutely no space for an iPad device running OS X that would fit between the new MacBook and the rumored 12" iPad. But don’t take my word for it—just try to find sales numbers for something like the Lenovo Yoga (or, heck, the whole "convertible laptop" market) and see how many millions of those Lenovo et al have sold.
chizow - Tuesday, April 28, 2015 - link
@xype, you are kidding right? You could have 100% sales to new users in any market, but if total sales DECLINED and you are only selling say, 100 units, you wouldn't say that the tablet market is saturated and in overall decline?Again, if you have a world population of 7Bn and you sold 300 million one year, 300 million the year after, 200 million the year after that but you only sold 100 million the next year, even if those 100 million are all new users, your market is saturated and DECLINING. Especially when those previous 1Bn are in no hurry to buy new tablets. Even the ones who seem to be in denial about market saturation seem to agree on that. So who are you going to sell next year's tablets to? The aborigines in the rainforests? The sweatshop workers in China making these devices?
iPad sales have been in decline for the last 2 years or so and that is because the tablet market is saturated and these devices are not obsoleting at a fast enough rate to spur increased demand to offset the decline in total addressable market.
There is plenty of room actually in that $800-1000 range, but it involves killing off the MBA, which is exactly what an OS X iPad would do. The new MacBook has pretty much killed off the MBA anyways, but an OS X 2-in-1 iPad would seal its fate.
And why point at the Lenovo Yoga when we can point at the Surface Pro 3 that shows this market for convertibles is not only successful, but continuing to grow?
shameermulji - Tuesday, April 28, 2015 - link
"Again, if you have a world population of 7Bn and you sold 300 million one year, 300 million the year after, 200 million the year after that but you only sold 100 million the next year, even if those 100 million are all new users, your market is saturated and DECLINING."Not necessarily. When 40% to 70% of iPad sales are to new users, depending on country of course, it can also mean that the overall iPad user base is increasing, albeit at a declining rate. If iPad had reached saturation, the overall user base would either stay stagnant or even shrink but that doesn't seem to be happening. At least not yet.
name99 - Tuesday, April 28, 2015 - link
Why does the iPad NEED to become a laptop replacement? What problem does this solve for Apple or its customers?Apple is in the business of selling tools that work well; it's not in the business of selling sporks that do ten things badly (but at least they're cheap).
Just because something CAN be done doesn't mean it makes sense to do it. This is as true for tablet+laptop mashups as it was for XTerminals or netbooks or Apple's Ping.