01—Abstract
Summary
Summary of the 10-K filed October 30, 2020. Cited figures are marked; the original filing is the authoritative source.
Apple Inc.'s 2020 10-K filing, for the fiscal year ended September 26, 2020, reveals a company navigating global economic uncertainties and the impacts of the COVID-19 pandemic, while demonstrating resilience and continued growth.
Total net sales saw a 6%a increase year-over-year, driven significantly by the robust performance of the Services and Wearables, Home and Accessories segments. Despite a decrease in iPhone sales compared to the prior year, Apple's diversified product and service portfolio enabled it to maintain a strong financial position. The company continued its commitment to returning capital to shareholders through substantial share repurchases and dividend payments.
The filing also highlights Apple's ongoing investment in research and development, underscoring its focus on innovation and future product development. Key risks identified include the ongoing impact of the COVID-19 pandemic, intense competition, supply chain vulnerabilities, and evolving regulatory landscapes, all of which Apple is actively managing.
02—Key points
Key Highlights
- Total net sales increased by 6% to $274.5 billion in fiscal year 2020, driven by strong performance in Services and Wearables, Home and Accessories.
- iPhone sales saw a slight decrease of 3% to $137.8 billion, impacted by the absence of new model launches in Q4 2020 and currency headwinds.
- The Services segment continued its impressive growth, with net sales up 16% to $53.8 billion, fueled by the App Store, advertising, and cloud services.
- Wearables, Home and Accessories revenue surged by 25% to $30.6 billion, largely due to strong sales of AirPods and Apple Watch.
- Apple returned approximately $72.5 billion to shareholders through share repurchases and $14.1 billion through dividends in fiscal year 2020.
- The company maintained a strong liquidity position with $191.8 billion in cash, cash equivalents, and marketable securities as of September 26, 2020.
- Significant investments in Research and Development ($18.8 billion) and Selling, General, and Administrative expenses ($19.9 billion) reflect a continued focus on innovation and market presence.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Apple Inc. kept $0.21.
- Revenue$274.51B100.0%
- Cost of revenue−$169.56B61.8%
- Gross profit$104.96B38.2%
- Operating costs−$38.67B14.1%
- Operating income$66.29B24.1%
- Interest, other & tax−$8.88B3.2%
- Net income$57.41B20.9%
Where FY2020 revenue went
$274.51B- Cost of revenue: $169.56B, 62% of revenue
- Net income: $57.41B, 21% of revenue
- R&D: $18.75B, 6.8% of revenue
- SG&A: $19.92B, 7.3% of revenue
- Interest, other & tax: $8.88B, 3.2% of revenue
Kept 21% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed October 30, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $274.51B$260.17B | +5.5% |
| Cost of Revenue | $169.56B$161.78B | +4.8% |
| Gross Profit | $104.96B$98.39B | +6.7% |
| R&D Expenses | $18.75B$16.22B | +15.6% |
| SG&A Expenses | $19.92B$18.25B | +9.2% |
| Operating Expenses | $38.67B$34.46B | +12.2% |
| Operating Income | $66.29B$63.93B | +3.7% |
| Interest Expense | $2.87B$3.58B | −19.7% |
| Net Income | $57.41B$55.26B | +3.9% |
| EPS (Basic) | $3.31$2.99 | +10.7% |
| EPS (Diluted) | $3.28$2.97 | +10.4% |
| Shares Outstanding (Basic) | 17.35B18.47B | −6.1% |
| Shares Outstanding (Diluted) | 17.53B18.60B | −5.7% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic impact Apple's business in fiscal year 2020?
The COVID-19 pandemic adversely affected Apple's business through disruptions to its manufacturing and supply chain, temporary closures of retail stores and partner points of sale, and the need for most employees to work remotely. While the full extent of future impacts remains uncertain, the company experienced temporary iPhone supply shortages and operational challenges.
What are Apple's primary sources of revenue growth, and are there any significant declines?
Apple's primary revenue growth drivers in fiscal year 2020 were its Services (up 16%) and Wearables, Home and Accessories (up 25%) segments. While the iPhone remains the largest single product category, its net sales decreased by 3% compared to the prior year, primarily due to the timing of new product releases and currency fluctuations.
How is Apple returning capital to shareholders?
Apple is actively returning capital to shareholders through a robust share repurchase program and dividend payments. In fiscal year 2020, the company repurchased approximately $72.5 billion of its common stock and paid $14.1 billion in dividends and dividend equivalents. The company also authorized an increase in its share repurchase program to $225 billion.
What are the key risks highlighted by Apple in its 10-K filing?
Key risks identified include the continued adverse effects of the COVID-19 pandemic, intense global competition, rapid technological change, dependence on third-party suppliers and manufacturers, supply chain disruptions, foreign currency exchange rate fluctuations, and increasing regulatory scrutiny worldwide. The company also noted potential impacts from legal proceedings and government investigations.
06—Continue