Apple announced its Q2 2014 earnings with a quarterly revenue of $45.6 billion and profit of $10.2 billion or $11.62 per diluted share. This compares with $43.6 billion and a net profit of $9.5 billion in the year-ago quarter. The thing to note is Apple did not announce any new product in the current quarter. Apple also announced it sold 43.7 million iPhones as opposed to 37.4 million units in Q2 2013, 16.3 million iPads as opposed to 19.5 million units in the year-ago quarter. The company also sold 4.1 million Macs an increase from 3.9 million units in Q2 2013, and 2.8 million iPods as against 5.6 million units in the year-ago quarter. Apple has also announced record $4.6 billion in revenues from software and services during the quarter.
The second quarter is usually a flat quarter for Apple emerging out of the holiday sales period when no new products are announced. While iPhone sales numbers seem encouraging, the sharp decline in iPad numbers would be worrying for Apple. The iPhone sales numbers also reflect the aggressive marketing and sales strategy seem to be working for Apple. The company also announced gross margin of 39.3 percent as opposed to 37.5 percent in the year-ago quarter.
All eyes will be on CEO Tim Cook, who would address the earnings call starting any moment now. In previous calls, Cook has hinted about Apple working on “exciting” new product categories but nothing has been announced so far. Apple is rumored to be working on iPhones with bigger displays and also an iWatch. Rumors have been rife for over an year that Apple could also be working on a smart TV.
Apple’s press release follows:
Apple Reports Second Quarter Results
Strong iPhone Sales Drive Record March Quarter Revenue and 15 Percent EPS Growth
CUPERTINO, California—April 23, 2014—Apple® today announced financial results for its fiscal 2014 second quarter ended March 29, 2014. The Company posted quarterly revenue of $45.6 billion and quarterly net profit of $10.2 billion, or $11.62 per diluted share. These results compare to revenue of $43.6 billion and net profit of $9.5 billion, or $10.09 per diluted share, in the year-ago quarter. Gross margin was 39.3 percent compared to 37.5 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.
“We’re very proud of our quarterly results, especially our strong iPhone sales and record revenue from services,” said Tim Cook, Apple’s CEO. “We’re eagerly looking forward to introducing more new products and services that only Apple could bring to market.”
“We generated $13.5 billion in cash flow from operations and returned almost $21 billion in cash to shareholders through dividends and share repurchases during the March quarter,” said Peter Oppenheimer, Apple’s CFO. “That brings cumulative payments under our capital return program to $66 billion.”
Apple is providing the following guidance for its fiscal 2014 third quarter:
- revenue between $36 billion and $38 billion
- gross margin between 37 percent and 38 percent
- operating expenses between $4.4 billion and $4.5 billion
- other income/(expense) of $200 million
- tax rate of 26.1 percent