01—Abstract
Summary
Summary of the 10-K filed October 31, 2019. Cited figures are marked; the original filing is the authoritative source.
Apple Inc. reported total net sales of $260.17 billiona for the fiscal year ended September 28, 2019, a decrease of 2% compared to the prior year.
This decline was primarily driven by lower iPhone sales, although this was partially offset by growth in the Wearables, Home and Accessories, and Services segments. The company continues to see strong performance in its Services division, which posted a 16% increase in net sales. Despite the slight dip in overall revenue, Apple demonstrated robust profitability, with net income of $55.26 billionb.
The company also continued its significant capital return program, repurchasing $67.1 billionc of its common stock and increasing its quarterly dividend. Apple faces a highly competitive market and risks associated with global economic conditions, supply chain disruptions, and evolving regulatory landscapes, but remains focused on innovation and product integration to maintain its competitive advantage. The company's substantial cash reserves provide financial flexibility.
02—Key points
Key Highlights
- Total net sales for fiscal year 2019 were $260.17 billion, a 2% decrease from $265.60 billion in fiscal year 2018, primarily due to a decline in iPhone sales.
- Net income for fiscal year 2019 was $55.26 billion, down from $59.53 billion in fiscal year 2018.
- Services revenue continued to grow, increasing by 16% year-over-year to $46.29 billion, driven by strong performance in the App Store, licensing, and AppleCare.
- The Wearables, Home and Accessories segment saw significant growth, up 41% year-over-year to $24.48 billion, fueled by sales of AirPods and Apple Watch.
- Apple returned $67.1 billion to shareholders through share repurchases and paid $14.1 billion in dividends during fiscal year 2019.
- The company maintained a strong liquidity position with $205.9 billion in cash, cash equivalents, and marketable securities as of September 28, 2019.
- Greater China sales declined by 16% to $43.68 billion, largely impacted by lower iPhone sales.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Apple Inc. kept $0.21.
- Revenue$260.17B100.0%
- Cost of revenue−$161.78B62.2%
- Gross profit$98.39B37.8%
- Operating costs−$34.46B13.2%
- Operating income$63.93B24.6%
- Interest, other & tax−$8.67B3.3%
- Net income$55.26B21.2%
Where FY2019 revenue went
$260.17B- Cost of revenue: $161.78B, 62% of revenue
- Net income: $55.26B, 21% of revenue
- R&D: $16.22B, 6.2% of revenue
- SG&A: $18.25B, 7.0% of revenue
- Interest, other & tax: $8.67B, 3.3% of revenue
Kept 21% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed October 31, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $260.17B$265.60B | −2.0% |
| Cost of Revenue | $161.78B$163.76B | −1.2% |
| Gross Profit | $98.39B$101.84B | −3.4% |
| R&D Expenses | $16.22B$14.24B | +13.9% |
| SG&A Expenses | $18.25B$16.70B | +9.2% |
| Operating Expenses | $34.46B$30.94B | +11.4% |
| Operating Income | $63.93B$70.90B | −9.8% |
| Interest Expense | $3.58B$3.24B | +10.4% |
| Net Income | $55.26B$59.53B | −7.2% |
| EPS (Basic) | $2.99$3.00 | −0.3% |
| EPS (Diluted) | $2.97$2.98 | −0.3% |
| Shares Outstanding (Basic) | 18.47B19.82B | −6.8% |
| Shares Outstanding (Diluted) | 18.60B20.00B | −7.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of Apple's financial performance in fiscal year 2019?
The primary driver for the 2% decline in total net sales ($260.17 billion) was a decrease in iPhone sales. However, this was partially offset by strong growth in the Wearables, Home and Accessories segment (+41% to $24.48 billion) and the Services segment (+16% to $46.29 billion).
How is Apple managing its capital and returning value to shareholders?
Apple continued its aggressive capital return program. In fiscal year 2019, the company repurchased $67.1 billion of its common stock, utilizing a significant portion of its $175 billion repurchase authorization. Additionally, the quarterly dividend was increased from $0.73 to $0.77 per share. As of September 28, 2019, Apple held $205.9 billion in cash, cash equivalents, and marketable securities, indicating substantial financial flexibility.
What are the key risks highlighted by Apple in its 2019 10-K filing?
Key risks identified include global and regional economic conditions impacting demand, intense competition in highly competitive markets characterized by rapid technological change and pricing pressure, supply chain disruptions due to reliance on single-source components and international manufacturing, and potential negative impacts from unfavorable legal proceedings and evolving regulatory environments worldwide, particularly concerning antitrust and data privacy.
How significant is the Services segment for Apple, and what is contributing to its growth?
The Services segment is a significant and growing contributor to Apple's revenue, reaching $46.29 billion in fiscal year 2019, a 16% increase. Growth drivers include the App Store, licensing agreements, and AppleCare. The company has also reclassified certain amortization of bundled services (Maps, Siri, iCloud) to Services revenue starting in Q1 2019, further boosting its reported performance.
06—Continue