The Apple machine appears to be chugging along just fine. In its earnings report for the quarter ending March 31, 2018, published yesterday, the world’s largest publicly traded company by market cap revealed that it had earned $61.1 billion in total revenue in its second fiscal quarter of 2018, narrowly beating market expectations. The figure, while a drop from the previous quarter’s $88.2 billion in revenue, marked a 16 percent year-on-year increase, with a net income of $13.8 billion. According to the company, international sales accounted for 65 percent of the company’s total revenue, and it was its best-ever second quarter for sales.
Apple CEO Tim Cook said about the results, “We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, Services, and Wearables...Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20 percent growth in Greater China and Japan.” Apple sold 52.2 million iPhones, 9.1 million iPads, and over 4 million Macs during the quarter, earning $38 billion, $4.1 billion, and $5.8 billion respectively from these three verticals.
The company’s Services and Other Products verticals earned it $9.1 billion and $3.9 billion in revenue respectively, marking uniform revenue growth year-on-year across all verticals, barring Macs.
Luca Maestri, CFO of Apple, said, “Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow...With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure. Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend.”
The new buyback programme is the latest in a series of steady increases in Apple’s dividends and stock buybacks since its stock split in 2014. The company said yesterday that it had returned $275 billion in total capital to shareholders since 2012. While Luca refused to give a clear timeline for the latest buyback programme, he commented in an earnings call, “We are not giving an end date to the programme this time because the amount is very, very large...We will do it at a very fast pace but we also want to do it efficiently.” He did mention that the company would give an update on the status of the full repurchase programme 12 months from now.
For the upcoming quarter, Apple projected revenue between $51.5 billion and $53.5 billion, a gross margin of 38-38.5 percent, operating expenses between $7.7 billion and $7.8 billion and other incomes/expenses of $400 million, with an applicable tax rate of 14.5 percent. The company’s Q3 2018 guidance ties in with high expectations of many analysts, and while Apple has a history of surpassing expectations, the company is facing a steady rise in competition in markets like China and India that are seeing the emergence of local players.
For his part, Tim Cook clarified that he is optimistic about Apple’s growth in the new markets and that he sees great opportunity to convert mobile phone users to smartphones in these areas. He added, “I don’t buy the view that the market’s saturated...I think the smartphone market is sort of the best market for a consumer product company in the history of the world.”