Apple Reports Third Quarter Results
Revenue Growth of 7 Percent and EPS Growth of 17 Percent
Services Revenue Hits All-Time Quarterly Record
Apple® today announced financial results for its fiscal 2017 third quarter ended July 1, 2017. The Company posted quarterly
revenue of $45.4 billion and quarterly earnings per diluted share of $1.67. These results compare to revenue of $42.4 billion and
earnings per diluted share of $1.42 in the year-ago quarter. International sales accounted for 61 percent of the quarter’s
revenue.
“With revenue up 7 percent year-over-year, we’re happy to report our third consecutive quarter of accelerating growth and an
all-time quarterly record for Services revenue,” said Tim Cook, Apple’s CEO. “We hosted an incredibly successful Worldwide
Developers Conference in June, and we’re very excited about the advances in iOS, macOS, watchOS and tvOS coming this fall.”
“We reported unit and revenue growth in all our product categories in the June quarter, driving 17 percent growth in earnings
per share,” said Luca Maestri, Apple’s CFO. “We also returned $11.7 billion to investors during the quarter, bringing cumulative
capital returns under our program to almost $223 billion.”
Apple is providing the following guidance for its fiscal 2017 fourth quarter:
• revenue between $49 billion and $52 billion
• gross margin between 37.5 percent and 38 percent
• operating expenses between $6.7 billion and $6.8 billion
• other income/(expense) of $500 million
• tax rate of 25.5 percent
Apple’s board of directors has declared a cash dividend of $0.63 per share of the Company’s common stock. The dividend is
payable on August 17, 2017 to shareholders of record as of the close of business on August 14, 2017.
Apple will provide live streaming of its Q3 2017 financial results conference call beginning at 2:00 p.m. PDT on August 1, 2017
at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two
weeks thereafter.
This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue,
gross margin, operating expenses, other income/(expense), tax rate, and plans for return of capital. These statements involve risks
and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and
economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the
Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace
and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product
introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s
gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of
customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the
Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on
manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured
or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party
intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual
property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the
Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits;
the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters,
and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings.
More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s
public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 24, 2016, its Form 10-Q
for the fiscal quarter ended December 31, 2016, its Form 10-Q for the fiscal quarter ended April 1, 2017, and its Form 10-Q for the
quarter ended July 1, 2017 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or
information, which speak as of their respective dates.
Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in
innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS —
provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple
Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving
the world better than we found it.
NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom), or call Apple’s Media Helpline at (408) 974-2042.
© 2017 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be
trademarks of their respective owners.
| |
|
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
July 1,
2017 |
|
June 25,
2016 |
|
July 1,
2017 |
|
June 25,
2016 |
| Net sales |
|
$ |
45,408 |
|
|
$ |
42,358 |
|
|
$ |
176,655 |
|
|
$ |
168,787 |
| Cost of sales (1) |
|
27,920 |
|
|
26,252 |
|
|
108,400 |
|
|
102,337 |
| Gross margin |
|
17,488 |
|
|
16,106 |
|
|
68,255 |
|
|
66,450 |
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| Research and development (1) |
|
2,937 |
|
|
2,560 |
|
|
8,584 |
|
|
7,475 |
| Selling, general and administrative (1) |
|
3,783 |
|
|
3,441 |
|
|
11,447 |
|
|
10,712 |
| Total operating expenses |
|
6,720 |
|
|
6,001 |
|
|
20,031 |
|
|
18,187 |
|
|
|
|
|
|
|
|
|
| Operating income |
|
10,768 |
|
|
10,105 |
|
|
48,224 |
|
|
48,263 |
| Other income/(expense), net |
|
540 |
|
|
364 |
|
|
1,948 |
|
|
921 |
| Income before provision for income taxes |
|
11,308 |
|
|
10,469 |
|
|
50,172 |
|
|
49,184 |
| Provision for income taxes |
|
2,591 |
|
|
2,673 |
|
|
12,535 |
|
|
12,511 |
| Net income |
|
$ |
8,717 |
|
|
$ |
7,796 |
|
|
$ |
37,637 |
|
|
$ |
36,673 |
|
|
|
|
|
|
|
|
|
| Earnings per share: |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
1.68 |
|
|
$ |
1.43 |
|
|
$ |
7.18 |
|
|
$ |
6.66 |
| Diluted |
|
$ |
1.67 |
|
|
$ |
1.42 |
|
|
$ |
7.14 |
|
|
$ |
6.62 |
|
|
|
|
|
|
|
|
|
| Shares used in computing earnings per share: |
|
|
|
|
|
|
|
|
| Basic |
|
5,195,088 |
|
|
5,443,058 |
|
|
5,239,847 |
|
|
5,505,456 |
| Diluted |
|
5,233,499 |
|
|
5,472,781 |
|
|
5,274,394 |
|
|
5,535,931 |
|
|
|
|
|
|
|
|
|
| Cash dividends declared per share |
|
$ |
0.63 |
|
|
$ |
0.57 |
|
|
$ |
1.77 |
|
|
$ |
1.61 |
|
|
|
|
|
|
|
|
|
| (1) Includes share-based compensation expense as
follows: |
| Cost of sales |
|
$ |
216 |
|
|
$ |
188 |
|
|
$ |
662 |
|
|
$ |
583 |
| Research and development |
|
$ |
566 |
|
|
$ |
479 |
|
|
$ |
1,730 |
|
|
$ |
1,413 |
| Selling, general and administrative |
|
$ |
411 |
|
|
$ |
387 |
|
|
$ |
1,274 |
|
|
$ |
1,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in thousands and par value)
|
|
|
|
|
|
|
|
July 1,
2017 |
|
September 24,
2016 |
| ASSETS: |
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
18,571 |
|
|
$ |
20,484 |
| Short-term marketable securities |
|
58,188 |
|
|
46,671 |
| Accounts receivable, less allowances of $55 and $53, respectively |
|
12,399 |
|
|
15,754 |
| Inventories |
|
3,146 |
|
|
2,132 |
| Vendor non-trade receivables |
|
10,233 |
|
|
13,545 |
| Other current assets |
|
10,338 |
|
|
8,283 |
| Total current assets |
|
112,875 |
|
|
106,869 |
|
|
|
|
|
| Long-term marketable securities |
|
184,757 |
|
|
170,430 |
| Property, plant and equipment, net |
|
29,286 |
|
|
27,010 |
| Goodwill |
|
5,661 |
|
|
5,414 |
| Acquired intangible assets, net |
|
2,444 |
|
|
3,206 |
| Other non-current assets |
|
10,150 |
|
|
8,757 |
| Total assets |
|
$ |
345,173 |
|
|
$ |
321,686 |
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY: |
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
$ |
31,915 |
|
|
$ |
37,294 |
| Accrued expenses |
|
23,304 |
|
|
22,027 |
| Deferred revenue |
|
7,608 |
|
|
8,080 |
| Commercial paper |
|
11,980 |
|
|
8,105 |
| Current portion of long-term debt |
|
6,495 |
|
|
3,500 |
| Total current liabilities |
|
81,302 |
|
|
79,006 |
|
|
|
|
|
| Deferred revenue, non-current |
|
2,984 |
|
|
2,930 |
| Long-term debt |
|
89,864 |
|
|
75,427 |
| Other non-current liabilities |
|
38,598 |
|
|
36,074 |
| Total liabilities |
|
212,748 |
|
|
193,437 |
|
|
|
|
|
| Commitments and contingencies |
|
|
|
|
|
|
|
|
|
| Shareholders’ equity: |
|
|
|
|
| Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares
authorized; 5,169,782 and 5,336,166 shares issued and outstanding, respectively |
|
34,445 |
|
|
31,251 |
| Retained earnings |
|
98,525 |
|
|
96,364 |
| Accumulated other comprehensive income/(loss) |
|
(545 |
) |
|
634 |
| Total shareholders’ equity |
|
132,425 |
|
|
128,249 |
| Total liabilities and shareholders’ equity |
|
$ |
345,173 |
|
|
$ |
321,686 |
|
|
|
|
|
|
|
|
|
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
|
|
|
|
|
|
Nine Months Ended |
|
|
July 1,
2017 |
|
June 25,
2016 |
| Cash and cash equivalents, beginning of the period |
|
$ |
20,484 |
|
|
$ |
21,120 |
|
| Operating activities: |
|
|
|
|
| Net income |
|
37,637 |
|
|
36,673 |
|
| Adjustments to reconcile net income to cash generated by operating activities: |
|
|
|
|
| Depreciation and amortization |
|
7,673 |
|
|
7,957 |
|
| Share-based compensation expense |
|
3,666 |
|
|
3,180 |
|
| Deferred income tax expense |
|
4,764 |
|
|
5,191 |
|
| Other |
|
(142 |
) |
|
419 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
| Accounts receivable, net |
|
3,381 |
|
|
4,623 |
|
| Inventories |
|
(1,014 |
) |
|
518 |
|
| Vendor non-trade receivables |
|
3,312 |
|
|
6,166 |
|
| Other current and non-current assets |
|
(3,229 |
) |
|
1,049 |
|
| Accounts payable |
|
(5,212 |
) |
|
(9,567 |
) |
| Deferred revenue |
|
(418 |
) |
|
(1,148 |
) |
| Other current and non-current liabilities |
|
(2,476 |
) |
|
(5,363 |
) |
| Cash generated by operating activities |
|
47,942 |
|
|
49,698 |
|
| Investing activities: |
|
|
|
|
| Purchases of marketable securities |
|
(123,781 |
) |
|
(112,068 |
) |
| Proceeds from maturities of marketable securities |
|
19,347 |
|
|
14,915 |
|
| Proceeds from sales of marketable securities |
|
76,747 |
|
|
69,926 |
|
| Payments made in connection with business acquisitions, net |
|
(248 |
) |
|
(146 |
) |
| Payments for acquisition of property, plant and equipment |
|
(8,586 |
) |
|
(8,757 |
) |
| Payments for acquisition of intangible assets |
|
(209 |
) |
|
(753 |
) |
| Payments for strategic investments, net |
|
(87 |
) |
|
(1,376 |
) |
| Other |
|
313 |
|
|
(321 |
) |
| Cash used in investing activities |
|
(36,504 |
) |
|
(38,580 |
) |
| Financing activities: |
|
|
|
|
| Proceeds from issuance of common stock |
|
274 |
|
|
247 |
|
| Excess tax benefits from equity awards |
|
534 |
|
|
391 |
|
| Payments for taxes related to net share settlement of equity awards |
|
(1,646 |
) |
|
(1,361 |
) |
| Payments for dividends and dividend equivalents |
|
(9,499 |
) |
|
(9,058 |
) |
| Repurchases of common stock |
|
(25,105 |
) |
|
(23,696 |
) |
| Proceeds from issuance of term debt, net |
|
21,725 |
|
|
17,984 |
|
| Repayments of term debt |
|
(3,500 |
) |
|
(2,500 |
) |
| Change in commercial paper, net |
|
3,866 |
|
|
3,992 |
|
| Cash used in financing activities |
|
(13,351 |
) |
|
(14,001 |
) |
| Increase/(Decrease) in cash and cash equivalents |
|
(1,913 |
) |
|
(2,883 |
) |
| Cash and cash equivalents, end of the period |
|
$ |
18,571 |
|
|
$ |
18,237 |
|
| Supplemental cash flow disclosure: |
|
|
|
|
| Cash paid for income taxes, net |
|
$ |
9,752 |
|
|
$ |
8,990 |
|
| Cash paid for interest |
|
$ |
1,456 |
|
|
$ |
892 |
|
|
|
|
|
|
|
|
|
|
| Apple Inc. |
| Q3 2017 Unaudited Summary Data |
| (Units in thousands, Revenue in millions) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2017 |
|
Q2 2017 |
|
Q3 2016 |
|
Sequential Change |
|
Year/Year Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Segments |
|
|
|
Revenue |
|
|
|
Revenue |
|
|
|
Revenue |
|
|
|
Revenue |
|
|
|
Revenue |
|
Americas |
|
|
|
$20,376 |
|
|
|
$21,157 |
|
|
|
$17,963 |
|
|
|
- 4% |
|
|
|
13% |
|
Europe |
|
|
|
10,675 |
|
|
|
12,733 |
|
|
|
9,643 |
|
|
|
- 16% |
|
|
|
11% |
|
Greater China |
|
|
|
8,004 |
|
|
|
10,726 |
|
|
|
8,848 |
|
|
|
- 25% |
|
|
|
- 10% |
|
Japan |
|
|
|
3,624 |
|
|
|
4,485 |
|
|
|
3,529 |
|
|
|
- 19% |
|
|
|
3% |
|
Rest of Asia Pacific |
|
|
|
2,729 |
|
|
|
3,795 |
|
|
|
2,375 |
|
|
|
- 28% |
|
|
|
15% |
| Total Apple |
|
|
|
$45,408 |
|
|
|
$52,896 |
|
|
|
$42,358 |
|
|
|
- 14% |
|
|
|
7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2017 |
|
Q2 2017 |
|
Q3 2016 |
|
Sequential Change |
|
Year/Year Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Product Summary |
|
Units |
|
Revenue |
|
Units |
|
Revenue |
|
Units |
|
Revenue |
|
Units |
|
Revenue |
|
Units |
|
Revenue |
|
iPhone (1) |
|
41,026 |
|
$24,846 |
|
50,763 |
|
$33,249 |
|
40,399 |
|
$24,048 |
|
- 19% |
|
- 25% |
|
2% |
|
3% |
|
iPad (1) |
|
11,424 |
|
4,969 |
|
8,922 |
|
3,889 |
|
9,950 |
|
4,876 |
|
28% |
|
28% |
|
15% |
|
2% |
|
Mac (1) |
|
4,292 |
|
5,592 |
|
4,199 |
|
5,844 |
|
4,252 |
|
5,239 |
|
2% |
|
- 4% |
|
1% |
|
7% |
|
Services (2) |
|
|
|
7,266 |
|
|
|
7,041 |
|
|
|
5,976 |
|
|
|
3% |
|
|
|
22% |
|
Other Products (1)(3) |
|
|
|
2,735 |
|
|
|
2,873 |
|
|
|
2,219 |
|
|
|
- 5% |
|
|
|
23% |
| Total Apple |
|
|
|
$45,408 |
|
|
|
$52,896 |
|
|
|
$42,358 |
|
|
|
- 14% |
|
|
|
7% |
|
(1)
|
|
Includes deferrals and amortization of related software upgrade rights and non-software
services.
|
|
(2)
|
|
Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other
services.
|
|
(3)
|
|
Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party
accessories.
|
Apple
Press:
Kristin Huguet, 408-974-2414
khuguet@apple.com
or
Investor Relations:
Nancy Paxton, 408-974-5420
paxton1@apple.com
Joan Hoover, 408-974-4570
hoover1@apple.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170801006607/en/