The company posted revenue of $46.33 billion and profits of $13.87 a share. Street consensus for the quarter had been for $39.1 billion in revenue and profits of $10.16 a share; guidance was $37 billion in revenue and profits of $9.30 a share.
Apple beat expectations in every major project category.
The company sold 15.43 million iPads in the quarter, 37.04 million iPhones, 5.2 million Macs and 15.4 million iPods.
The Street had expected shipments of 13.6 million iPads, 30.2 million iPhones, 5.16 million Macs, 13.6 million iPods.
Trading in Apple shares was halted a few minutes ago pending the earnings announcement, but you have to think the news will send the stock to new highs.
Gross margin in the quarter was a mammoth 44.7%, up from 38.5% a year ago. Analysts had expected gross margins of 40.7%, a bit ahead of the guidance at 40%.
Guidance was also impressive, especially given the company's tendency to take a cautious approach when predicting the future. For FY Q2, Apple sees revenue of $32.5 billion, and profits of $8.50 a share. The Street has been projecting revenue of $32.1 billion and profits of $7.99 a share. Street forecasts have been for shipments of 4.5 million Macs, 6.75 million iPods, 26.2 million iPhones and 10.4 million iPads; you can expect all of those to ratchet hire after the astonishing December performance. StreetAccount notes that over the last five years, March quarter revenue has been down on average 18% from the December quarter. The guidance suggests a sequential drop of almost 30%.
Apple generated over $17.5 billion in cash flow from operations in the quarter. The company now has cash and marketable securities worth $97.6 billion, up from $81.5 billion one quarter earlier.
"We're thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs," CEO Tim Cook said in a statement. "Apple's momentum is incredibly strong, and we have some amazing new products in the pipeline."
Update: here are some key points from the post-earnings conference call:
- CFO Peter Oppenheimer says the company was thrilled to report a tremendous quarter. They set quarterly records for iPhones, iPads and Macs.
- Revenue was up 73% from a year ago.
- Mac sales were up 26% year over year. Average weekly Mac sales were up strongly. Asia/Pacific Mac sales were up 58%.
- They had 3-4 weeks of Mac channel inventory.
- Mac App store: more than 100 million apps downloads in less than a year.
- iPod Touch was more than half of all iPods sold. They still have over 70% of the MP3 market.
- They were in target range on iPod inventory.
- iTunes Store had $1.7 billion in revenue in the quarter. They have over 20 million songs now.
- Over 140 million apps and content downloads on December 25.
- iPhone sales were up 128% year-over-year. They had strong growth in all segments.
- Oppenheimer says customers are "captivated" by Siri.
- Channel inventory was up 200K in the quarter, and remains below target levels, at a little under 6 million units.
- iPad sales were up 111% from a year ago. Revenue from iPad and iPad accessories was up 99%. Sell-through was about 200,000 ahead of sell in. Inventory is in line with target levels.
- 1.5 million iPads in use in educational institutions.
- Over 3 million copies of iTunes U have been downloaded.
- Now over 315 million iOS units sold.
- More than 85 million iCloud users to date.
- Over 550,000 apps in the app store; 175,000 for the iPad.
- Developers earnings will top $4 billion by the end of this month.
- Apple retail stores had $6.1 billion revenue, up 59% from a year ago.
- They opened four stores in the quarter, including Grand Central, now 361 stores total.
- Average $17.1 million revenue per store in the quarter.
- The company averaged 22,000 visitors per store per week.
- The company said it is actively discussing what to do with its cash, but has nothing to announce today. He says it is not burning a hole in their pocket.
- CEO Tim Cook noted particularly strong sales of the iPhone in the U.S., Japan and Greater China. He says they bet high on demand for the iPhone, and could have bet even higher, given short supply of the phone in some markets.
- China demand for the iPhone is "off the charts."
- Cook says the component environment is favorable, which helped them over-achieve on gross margin; he thinks that will remain the case, with the exception of hard drives due to the floods in Thailand. He says they will have to pay more for drives in the quarter, but adds that he does not expect them to have short supply of drives.
- He says NAND flash, DRAM and displays were in a situation of supply exceeding demand in the quarter, and will continue to be the case in the March quarter.
- The company sees gross margin falling 270 basis points in the March quarter from December; there were some one-time items that will go away; they also benefited from a better mix, mostly in iPhone sales in the latest quarter.
- On competition from other tablets for the iPad: Cook says they are really happy with their iPad sales in the quarter. He says their long-term belief remains that this is a huge opportunity for Apple. He says they really believe that eventually the market in units will be bigger than the PC market. He says tablets have already exceeded the desktop PC market in the U.S. in the fourth quarter. On competitiveness, he notes that the ecosystem for the iPad is in a class by itself.
- On his comments about the cash position, Oppenheimer elaborated that they have always discussed the cash position. He says that their discussions on what to do with the cash is "active." When we have something to announce, he added, they will announce it.
- In response to a question on the company's position in the living room, Cook said that the Apple TV product is doing well. But he noted that they still classify it as a hobby. But he has nothing new to say about TV products.
- On his time as CEO so far, he says he loves Apple, and that he feels "lucky."
- Oppeneheimer says they are looking at all uses of cash, what they might do in the supply chain, or acquisitions, or dividends, or buybacks. (Analysts keep trying to pry some information out of them on this subject to no avail.)
- Cook notes that they now have 130,000 points of sale throughout the world, up 35% from a year ago.
- Cook says that China Unicom is a good partner, and adds that they are always looking for ways to expand their presence in China, but he had nothing to say on new carrier relationships.
- Oppenheimer says iPhone sales will be up year-over-year, but down sequentially, same with iPad.
- Why the big percentage drop forecast: An extra week in the December quarter; last year, they increased iPhone channel inventory by 1.7 million units; December quarter benefited from iPhone 4S launch, the fastest launch ever. And the dollar has strengthened against the Euro, which will affect the sequential compare.
- Cook says the Apple and Android competition is not like Mac and Windows. The Mac is still single digit percentage of worldwide market. Cook says that NPD data shows that in the U.S., looking at October and November, that iPhone had 43% of the market with Android at 47%. Nielsen data shows iPhone 45%, Android 47%. ComScore shows iPhone 42%, Android 41%. He concludes that it is a very close race on iPhone vs. Android. In tablets, iPad is way ahead. Cook says he would not say it is a two-horse race, given the horse in Redmond, and other players. He says they will continue to keep innovating and ignore how many horses there are.
- On 4G and the potential for larger screen sizes for phones, Cook said he won't talk about the future road map. He says a lot of people out there love what they're doing.
Trading in Apple shares has resumed; the stock is up $31.60, or 7.5%, to $451.91; that boosts the company's market cap to a highest-ever $415.4 million, just a hair below that of Exxon Mobil, the largest U.S. company by market cap, at $418 billion.
