Apple announces Q3 2012 earnings: $35 billion revenue, $8.8 billion in net profits
It's hard to believe its been just three months since we were here last, but it's true. It's already earnings season again and, in the feast of financial conference calls, Apple is an entree. Not surprisingly, Cupertino was raking in the big bucks yet again, but it wasn't quite the windfall of revenue the company has seen in the past. All told the company pulled in $35 billion in revenue, pocketing $8.8 billion of that as pure profit, a record for both in Q3. But, just cause it wasn't quite as lucrative a quarter doesn't mean the boys in Cupertino aren't happy with the results. Profits were up $1.5 billion from Q3 of 2011, allowing the company to carry forward with its plan to issue a cash dividend to its share holders. During the last three months the company shipped 17 million iPads, an 84 percent increase over the same quarter last year -- a simply staggering number. And don't think that its other premier gadget has plateaued. 26 million iPhones were also sold, representing a 28 percent increase year-over-year. Interestingly, Mac sales slowed, increasing just two percent over last year, largely thanks to a 13 percent drop off in desktop sales.
The biggest money maker for the company continues to be the iPhone and its related products and services, however. More than $16 billion of the total revenue is directly attributable to the smaller member of the iOS family. The iPad is quickly closing the gap, netting Apple over $9 billion in this quarter alone. As a percentage of revenue, the iPod continued to decline, marking the slow death of the once flagship product line.
While revenues were down sequentially, it's the year-over-year numbers that tell the real story. Revenue was up $9.5 billion from Q3 of 2011 and net income by $1.5 billion, as the company has continued to increase its market share and open up to niches to itself. For the next quarter Apple actually expects a small drop in both revenue and earnings per-share, but not enough that we expect Wall Street types to start yelling, "sell, sell, sell!"
During the earnings call, the company talked up its growth in the educational market in particular. Learning institutions ordered a record number of Macs from the company, with Rutherford County in New Jersey ordering 6,000 MacBook Airs and Pueblo, Colorado's PS70 has begun migrating all of its students and staff to Airs as well. The iPad isn't doing so shabby either, with educational institutions ordering one million of them during the quarter, with Mansfield, Texas alone ordering 11,000. The iTunes U program has also enjoyed great success, with 14 million downloads and hundred of new courses being uploaded during the quarter.
Tim Cook also discussed how China has instrumental in Apple's continued growth. While revenues were down $2.2 billion from the previous quarter in the country they were up roughly 48 percent year-over-year to $5.7 billion. Cook was also quick to point out, however, that those numbers don't have the benefit of including the launch of the new iPad which only went on sale a few days ago. Europe, on the other hand, has leveled out with only a small growth from Q3 of 2011. Some of that did have to do with the continuing weak economy, particularly in Western Europe.
There was also an acknowledgment that speculations about an iPhone 5 (or iPhone 4SS, or New iPhone...) have impacted sales of the handset during the quarter.
Enjoy all the fun tables and numbers you can handle below.
Update: The story has been updated to reflect that the dividend declared during Apple's earnings call was actually the same dividend declared last quarter.
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Apple Reports Third Quarter Results
17 Million iPads Sold
CUPERTINO, Calif., Jul 24, 2012 (BUSINESS WIRE) -- --Board Declares Quarterly Dividend of $2.65 per Common Share
Apple(R) today announced financial results for its fiscal 2012 third quarter ended June 30, 2012. The Company posted quarterly revenue of $35.0 billion and quarterly net profit of $8.8 billion, or $9.32 per diluted share. These results compare to revenue of $28.6 billion and net profit of $7.3 billion, or $7.79 per diluted share, in the year-ago quarter. Gross margin was 42.8 percent compared to 41.7 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter's revenue.
The Company sold 26.0 million iPhones in the quarter, representing 28 percent unit growth over the year-ago quarter. Apple sold 17.0 million iPads during the quarter, an 84 percent unit increase over the year-ago quarter. The Company sold 4.0 million Macs during the quarter, a two percent unit increase over the year-ago quarter. Apple sold 6.8 million iPods, a 10 percent unit decline from the year-ago quarter.
Apple's Board of Directors has declared a cash dividend of $2.65 per share of the Company's common stock. The dividend is payable on August 16, 2012, to stockholders of record as of the close of business on August 13, 2012.
"We're thrilled with record sales of 17 million iPads in the June quarter," said Tim Cook, Apple's CEO. "We've also just updated the entire MacBook line, will release Mountain Lion tomorrow and will be launching iOS 6 this Fall. We are also really looking forward to the amazing new products we've got in the pipeline."
"We're continuing to invest in the growth of our business and are pleased to be declaring a dividend of $2.65 per share today," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the fourth fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $7.65."
Apple will provide live streaming of its Q3 2012 financial results conference call beginning at 2:00 p.m. PDT on July 24, 2012 at www.apple.com/quicktime/qtv/earningsq312 . 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 and diluted earnings per share. 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 other 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, 2011, its Forms 10-Q for the fiscal quarters ended December 31, 2011 and March 31, 2012, and its Form 10-Q for the quarter ended June 30, 2012 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 designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.
NOTE TO EDITORS: For additional information visit Apple's PR website ( www.apple.com/pr ), or call Apple's Media Helpline at (408) 974-2042.
(C) 2012 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS and Macintosh are trademarks of Apple. Other company and product names may be trademarks of their respective owners.
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except number of shares which are reflected in
thousands and per share amounts)
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
June 30, 2012 June 25, 2011 June 30, 2012 June 25, 2011
--------------- --------------- --------------- ---------------
Net sales $ 35,023 $ 28,571 $ 120,542 $ 79,979
Cost of sales (1) 20,029 16,649 66,281 47,541
------- ------- ------- -------
Gross margin 14,994 11,922 54,261 32,438
------- ------- ------- -------
Operating expenses:
Research and development (1) 876 628 2,475 1,784
Selling, general and administrative (1) 2,545 1,915 7,489 5,574
------- ------- ------- -------
Total operating expenses 3,421 2,543 9,964 7,358
------- ------- ------- -------
Operating income 11,573 9,379 44,297 25,080
Other income and expense 288 172 573 334
------- ------- ------- -------
Income before provision for income taxes 11,861 9,551 44,870 25,414
Provision for income taxes 3,037 2,243 11,360 6,115
------- ------- ------- -------
Net income $ 8,824 $ 7,308 $ 33,510 $ 19,299
======= ======= ======= =======
Earnings per common share:
Basic $ 9.42 $ 7.89 $ 35.89 $ 20.91
Diluted $ 9.32 $ 7.79 $ 35.48 $ 20.63
Shares used in computing earnings per share:
Basic 936,596 926,108 933,672 922,917
Diluted 947,059 937,810 944,440 935,688
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 70 $ 52 $ 196 $ 155
Research and development $ 172 $ 119 $ 500 $ 336
Selling, general and administrative $ 206 $ 113 $ 596 $ 379
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in
thousands)
June 30, 2012 September 24, 2011
-------------------- --------------------
ASSETS:
Current assets:
Cash and cash equivalents $ 7,945 $ 9,815
Short-term marketable securities 19,709 16,137
Accounts receivable, less allowances of $94 and $53, respectively 7,657 5,369
Inventories 1,122 776
Deferred tax assets 2,309 2,014
Vendor non-trade receivables 6,641 6,348
Other current assets 6,560 4,529
---------- ----------
Total current assets 51,943 44,988
Long-term marketable securities 89,567 55,618
Property, plant and equipment, net 10,487 7,777
Goodwill 1,132 896
Acquired intangible assets, net 4,329 3,536
Other assets 5,438 3,556
---------- ----------
Total assets $ 162,896 $ 116,371
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 16,808 $ 14,632
Accrued expenses 10,430 9,247
Deferred revenue 5,822 4,091
---------- ----------
Total current liabilities 33,060 27,970
Deferred revenue - non-current 2,530 1,686
Other non-current liabilities 15,560 10,100
---------- ----------
Total liabilities 51,150 39,756
---------- ----------
Commitments and contingencies
Shareholders' equity:
Common stock, no par value; 1,800,000 shares authorized; 937,266 and 15,573 13,331
929,277 shares issued and outstanding, respectively
Retained earnings 95,641 62,841
Accumulated other comprehensive income 532 443
---------- ----------
Total shareholders' equity 111,746 76,615
---------- ----------
$ 162,896 $ 116,371
Total liabilities and shareholders' equity
========== ==========
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Nine Months Ended
-----------------------------------------
June 30, 2012 June 25, 2011
-------------------- --------------------
Cash and cash equivalents, beginning of the period $ 9,815 $ 11,261
--------- ---------
Operating activities:
Net income 33,510 19,299
Adjustments to reconcile net income to cash generated by operating
activities:
Depreciation, amortization and accretion 2,296 1,271
Share-based compensation expense 1,292 870
Deferred income tax expense 4,066 2,232
Changes in operating assets and liabilities:
Accounts receivable, net (2,278) (592)
Inventories (346) 162
Vendor non-trade receivables (293) (955)
Other current and non-current assets (3,238) (1,551)
Accounts payable 2,450 2,480
Deferred revenue 2,575 1,276
Other current and non-current liabilities 1,686 2,608
--------- ---------
Cash generated by operating activities 41,720 27,100
--------- ---------
Investing activities:
Purchases of marketable securities (121,091) (75,133)
Proceeds from maturities of marketable securities 10,344 16,396
Proceeds from sales of marketable securities 73,140 34,301
Payments made in connection with business acquisitions, net of cash (350) 0
acquired
Payments for acquisition of property, plant and equipment (4,834) (2,615)
Payments for acquisition of intangible assets (1,067) (266)
Other (56) 34
--------- ---------
Cash used in investing activities (43,914) (27,283)
--------- ---------
Financing activities:
Proceeds from issuance of common stock 433 577
Excess tax benefits from equity awards 1,036 915
Taxes paid related to net share settlement of equity awards (1,145) (479)
--------- ---------
Cash generated by financing activities 324 1,013
--------- ---------
(Decrease)/increase in cash and cash equivalents (1,870) 830
--------- ---------
Cash and cash equivalents, end of the period $ 7,945 $ 12,091
========= =========
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 5,901 $ 2,563
Apple Inc.
Q3 2012 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q2 2012 Q3 2011 Q3 2012
---------------------- ---------------------- ----------------------
Sequential Change Year/Year Change
------------------- -------------------
Operating Segments Mac Units Revenue Mac Units Revenue Mac Units Revenue Mac Units Revenue Mac Units Revenue
--------- ----------- --------- ----------- --------- ----------- --------- ------- --------- -------
Americas 1,214 $ 13,182 1,487 $ 10,126 1,522 $ 12,806 25% - 3% 2% 26%
Europe 1,048 8,807 922 7,098 941 8,237 - 10% - 6% 2% 16%
Japan 158 2,645 150 1,510 173 2,009 9% - 24% 15% 33%
Asia Pacific 771 10,153 620 6,332 593 7,887 - 23% - 22% - 4% 25%
Retail 826 4,399 768 3,505 791 4,084 - 4% - 7% 3% 17%
--------- ------ --------- ------ --------- ------
Total Operating Segments 4,017 $ 39,186 3,947 $ 28,571 4,020 $ 35,023 0% - 11% 2% 23%
========= === ====== ========= === ====== ========= === ======
Sequential Change Year/Year Change
------------------- -------------------
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
--------- ----------- --------- ----------- --------- ----------- --------- ------- --------- -------
Mac Desktops (1)(9) 1,199 $ 1,563 1,155 $ 1,580 1,010 $ 1,287 - 16% - 18% - 13% - 19%
Mac Portables (2)(9) 2,818 3,510 2,792 3,525 3,010 3,646 7% 4% 8% 3%
--------- ------ --------- ------ --------- ------
Subtotal Mac 4,017 5,073 3,947 5,105 4,020 4,933 0% - 3% 2% - 3%
iPod (3)(9) 7,673 1,207 7,535 1,325 6,751 1,060 - 12% - 12% - 10% - 20%
Other Music Related Products and Services (4) 2,151 1,571 2,060 - 4% 31%
iPhone and Related Products and Services (5)(9) 35,064 22,690 20,338 13,311 26,028 16,245 - 26% - 28% 28% 22%
iPad and Related Products and Services (6)(9) 11,798 6,590 9,246 6,046 17,042 9,171 44% 39% 84% 52%
Peripherals and Other Hardware (7) 643 517 663 3% 28%
Software, Service and Other Sales (8) 832 696 891 7% 28%
------ ------ ------
Total Apple $ 39,186 $ 28,571 $ 35,023 - 11% 23%
=== ====== === ====== === ======
(1) Includes revenue from iMac, Mac mini and Mac Pro sales.
(2) Includes revenue from MacBook, MacBook Air and MacBook Pro sales.
(3) Includes revenue from iPod sales.
(4) Includes revenue from sales from the iTunes Store, App Store and
iBookstore in addition to sales of iPod services and Apple-branded
and third-party iPod accessories.
(5) Includes revenue from sales of iPhone, iPhone services, and
Apple-branded and third-party iPhone accessories.
(6) Includes revenue from sales of iPad, iPad services, and
Apple-branded and third-party iPad accessories.
(7) Includes revenue from sales of displays, networking products and
other hardware.
(8) Includes revenue from sales of Apple-branded and third-party Mac
software, and services.
(9) Includes amortization of related revenue deferred for non-software
services and embedded software upgrade rights.
