Apple Reports Fourth Quarter Results

Apple Reports Fourth Quarter Results

Services Revenue Reaches All-Time High of $12.5 Billion

EPS Sets New Fourth Quarter Record of $3.03
CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced financial results for its fiscal 2019 fourth quarter ended September 28, 2019. The Company posted quarterly revenue of $64 billion, an increase of 2 percent from the year-ago quarter, and quarterly earnings per diluted share of $3.03, up 4 percent. International sales accounted for 60 percent of the quarter’s revenue.

“We concluded a groundbreaking fiscal 2019 with our highest Q4 revenue ever, fueled by accelerating growth from Services, Wearables and iPad,” said Tim Cook, Apple’s CEO. “With customers and reviewers raving about the new generation of iPhones, today’s debut of new, noise-cancelling AirPods Pro, the hotly-anticipated arrival of Apple TV+ just two days away, and our best lineup of products and services ever, we’re very optimistic about what the holiday quarter has in store.”

“Our strong business performance drove record Q4 EPS of $3.03 and record Q4 operating cash flow of $19.9 billion,” said Luca Maestri, Apple’s CFO. “We also returned over $21 billion to shareholders, including almost $18 billion in share repurchases and $3.5 billion in dividends and equivalents, as we continue on our path to reaching a net cash neutral position over time.”

Apple is providing the following guidance for its fiscal 2020 first quarter:

revenue between $85.5 billion and $89.5 billion

gross margin between 37.5 percent and 38.5 percent

operating expenses between $9.6 billion and $9.8 billion

other income/(expense) of $200 million

tax rate of approximately 16.5 percent

Apple’s board of directors has declared a cash dividend of $0.77 per share of the Company’s common stock. The dividend is payable on November 14, 2019 to shareholders of record as of the close of business on November 11, 2019.

Apple will provide live streaming of its Q4 2019 financial results conference call beginning at 2:00 p.m. PDT on October 30, 2019 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

Apple periodically provides information for investors on its corporate website, apple.com, and its investors relations website, investor.apple.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance and details related to its annual meeting of shareholders.

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include 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 global and regional economic conditions on the Company’s business, including effects on purchasing decisions by consumers and businesses; the ability of the Company to compete in markets that are highly competitive and subject to rapid technological change; the ability of the Company to manage frequent introductions and transitions of products and services, including delivering to the marketplace, and stimulating customer demand for, new products, services and technological innovations on a timely basis; the effect that shifts in the mix of products and services and in the geographic, currency or channel mix, component cost increases, increases in the cost of acquiring and delivering content for the Company’s services, price competition, or the introduction of new products or services, including new products or services with higher cost structures, could have on the Company’s gross margin; the dependency of the Company on the performance of distributors of the Company’s products, including cellular network carriers and other resellers; the risk of write-downs on the value of inventory and other assets and purchase commitment cancellation risk; the continued availability on acceptable terms, or at all, of certain components, services and new technologies essential to the Company’s business, including components and technologies that may only be available from single or limited sources; the dependency of the Company on manufacturing and logistics services provided by third parties, many of which are located outside of the US and which may affect the quality, quantity or cost of products manufactured or services rendered to the Company; the effect of product and services design and manufacturing defects on the Company’s financial performance and reputation; the dependency of the Company on third-party intellectual property and digital content, which may not be available to the Company on commercially reasonable terms or at all; the dependency of the Company on support from third-party software developers to develop and maintain software applications and services for the Company’s products; the impact of unfavorable legal proceedings, such as a potential finding that the Company has infringed on the intellectual property rights of others; the impact of complex and changing laws and regulations worldwide, which expose the Company to potential liabilities, increased costs and other adverse effects on the Company’s business; the ability of the Company to manage risks associated with the Company’s retail stores; the ability of the Company to manage risks associated with the Company’s investments in new business strategies and acquisitions; the impact on the Company’s business and reputation from information technology system failures, network disruptions or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data protection; the continued service and availability of key executives and employees; political events, international trade disputes, war, terrorism, natural disasters, public health issues, and other business interruptions that could disrupt supply or delivery of, or demand for, the Company’s products; financial risks, including risks relating to currency fluctuations, credit risks and fluctuations in the market value of the Company’s investment portfolio; and changes in tax rates and exposure to additional tax liabilities. More information on these risks and other potential factors that could affect the Company’s financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. 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.

© 2019 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

 

Twelve Months Ended

 

September 28,
2019

 

September 29,
2018

 

September 28,
2019

 

September 29,
2018

Net sales:

 

 

 

 

 

 

 

Products

$

51,529

 

 

$

52,301

 

 

$

213,883

 

 

$

225,847

 

Services

12,511

 

 

10,599

 

 

46,291

 

 

39,748

 

Total net sales (1)

64,040

 

 

62,900

 

 

260,174

 

 

265,595

 

Cost of sales:

 

 

 

 

 

 

 

Products

35,238

 

 

34,697

 

 

144,996

 

 

148,164

 

Services

4,489

 

 

4,119

 

 

16,786

 

 

15,592

 

Total cost of sales

39,727

 

 

38,816

 

 

161,782

 

 

163,756

 

Gross margin

24,313

 

 

24,084

 

 

98,392

 

 

101,839

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

4,110

 

 

3,750

 

 

16,217

 

 

14,236

 

Selling, general and administrative

4,578

 

 

4,216

 

 

18,245

 

 

16,705

 

Total operating expenses

8,688

 

 

7,966

 

 

34,462

 

 

30,941

 

 

 

 

 

 

 

 

 

Operating income

15,625

 

 

16,118

 

 

63,930

 

 

70,898

 

Other income/(expense), net

502

 

 

303

 

 

1,807

 

 

2,005

 

Income before provision for income taxes

16,127

 

 

16,421

 

 

65,737

 

 

72,903

 

Provision for income taxes

2,441

 

 

2,296

 

 

10,481

 

 

13,372

 

Net income

$

13,686

 

 

$

14,125

 

 

$

55,256

 

 

$

59,531

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

3.05

 

 

$

2.94

 

 

$

11.97

 

 

$

12.01

 

Diluted

$

3.03

 

 

$

2.91

 

 

$

11.89

 

 

$

11.91

 

Shares used in computing earnings per share:

 

 

 

 

 

 

 

Basic

4,490,812

 

 

4,801,589

 

 

4,617,834

 

 

4,955,377

 

Diluted

4,520,373

 

 

4,847,547

 

 

4,648,913

 

 

5,000,109

 

 

 

 

 

 

 

 

 

(1) Net sales by reportable segment:

 

 

 

 

 

 

 

Americas

$

29,322

 

 

$

27,517

 

 

$

116,914

 

 

$

112,093

 

Europe

14,946

 

 

15,382

 

 

60,288

 

 

62,420

 

Greater China

11,134

 

 

11,411

 

 

43,678

 

 

51,942

 

Japan

4,982

 

 

5,161

 

 

21,506

 

 

21,733

 

Rest of Asia Pacific

3,656

 

 

3,429

 

 

17,788

 

 

17,407

 

Total net sales

$

64,040

 

 

$

62,900

 

 

$

260,174

 

 

$

265,595

 

 

 

 

 

 

 

 

 

(1) Net sales by category:

 

 

 

 

 

 

 

iPhone

$

33,362

 

 

$

36,755

 

 

$

142,381

 

 

$

164,888

 

Mac

6,991

 

 

7,340

 

 

25,740

 

 

25,198

 

iPad

4,656

 

 

3,983

 

 

21,280

 

 

18,380

 

Wearables, Home and Accessories

6,520

 

 

4,223

 

 

24,482

 

 

17,381

 

Services

12,511

 

 

10,599

 

 

46,291

 

 

39,748

 

Total net sale

$

64,040

 

 

$

62,900

 

$

260,174

 

 

$

265,595

Apple Inc.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except number of shares which are reflected in thousands and par value)

 

 

September 28,
2019

 

September 29,
2018

ASSETS:

Current assets:

 

 

 

Cash and cash equivalents

$

48,844

 

 

$

25,913

 

Marketable securities

51,713

 

 

40,388

 

Accounts receivable, net

22,926

 

 

23,186

 

Inventories

4,106

 

 

3,956

 

Vendor non-trade receivables

22,878

 

 

25,809

 

Other current assets

12,352

 

 

12,087

 

Total current assets

162,819

 

 

131,339

 

 

 

 

 

Non-current assets:

 

 

 

Marketable securities

105,341

 

 

170,799

 

Property, plant and equipment, net

37,378

 

 

41,304

 

Other non-current assets

32,978

 

 

22,283

 

Total non-current assets

175,697

 

 

234,386

 

Total assets

$

338,516

 

 

$

365,725

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Current liabilities:

 

 

 

Accounts payable

$

46,236

 

 

$

55,888

 

Other current liabilities

37,720

 

 

33,327

 

Deferred revenue

5,522

 

 

5,966

 

Commercial paper

5,980

 

 

11,964

 

Term debt

10,260

 

 

8,784

 

Total current liabilities

105,718

 

 

115,929

 

 

 

 

 

Non-current liabilities:

 

 

 

Term debt

91,807

 

 

93,735

 

Other non-current liabilities

50,503

 

 

48,914

 

Total non-current liabilities

142,310

 

 

142,649

 

Total liabilities

248,028

 

 

258,578

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,443,236 and 4,754,986 shares issued and outstanding, respectively

45,174

 

 

40,201

 

Retained earnings

45,898

 

 

70,400

 

Accumulated other comprehensive income/(loss)

(584

)

 

(3,454

)

Total shareholders’ equity

90,488

 

 

107,147

 

Total liabilities and shareholders’ equity

$

338,516

 

 

$

365,725

 

Apple Inc.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

 

 

Twelve Months Ended

 

September 28,
2019

 

September 29,
2018

Cash, cash equivalents and restricted cash, beginning balances

$

25,913

 

 

$

20,289

 

Operating activities:

 

 

 

Net income

55,256

 

 

59,531

 

Adjustments to reconcile net income to cash generated by operating activities:

 

 

 

Depreciation and amortization

12,547

 

 

10,903

 

Share-based compensation expense

6,068

 

 

5,340

 

Deferred income tax benefit

(340

)

 

(32,590

)

Other

(652

)

 

(444

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

245

 

 

(5,322

)

Inventories

(289

)

 

828

 

Vendor non-trade receivables

2,931

 

 

(8,010

)

Other current and non-current assets

873

 

 

(423

)

Accounts payable

(1,923

)

 

9,175

 

Deferred revenue

(625

)

 

(3

)

Other current and non-current liabilities

(4,700

)

 

38,449

 

Cash generated by operating activities

69,391

 

 

77,434

 

Investing activities:

 

 

 

Purchases of marketable securities

(39,630

)

 

(71,356

)

Proceeds from maturities of marketable securities

40,102

 

 

55,881

 

Proceeds from sales of marketable securities

56,988

 

 

47,838

 

Payments for acquisition of property, plant and equipment

(10,495

)

 

(13,313

)

Payments made in connection with business acquisitions, net

(624

)

 

(721

)

Purchases of non-marketable securities

(1,001

)

 

(1,871

)

Proceeds from non-marketable securities

1,634

 

 

353

 

Other

(1,078

)

 

(745

)

Cash generated by investing activities

45,896

 

 

16,066

 

Financing activities:

 

 

 

Proceeds from issuance of common stock

781

 

 

669

 

Payments for taxes related to net share settlement of equity awards

(2,817

)

 

(2,527

)

Payments for dividends and dividend equivalents

(14,119

)

 

(13,712

)

Repurchases of common stock

(66,897

)

 

(72,738

)

Proceeds from issuance of term debt, net

6,963

 

 

6,969

 

Repayments of term debt

(8,805

)

 

(6,500

)

Repayments of commercial paper, net

(5,977

)

 

(37

)

Other

(105

)

 

 

Cash used in financing activities

(90,976

)

 

(87,876

)

Increase in cash, cash equivalents and restricted cash

24,311

 

 

5,624

 

Cash, cash equivalents and restricted cash, ending balances

$

50,224

 

 

$

25,913

 

Supplemental cash flow disclosure:

 

 

 

Cash paid for income taxes, net

$

15,263

 

 

$

10,417

 

Cash paid for interest

$

3,423

 

 

$

3,022

 
Contacts
Apple
Press Contact:Kristin Huguet Quayle, (408) 974-2414
[email protected]

Investor Relations Contacts:Nancy Paxton, (408) 974-5420
[email protected]

Tejas Gala, (669) 227-2402
[email protected]

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