10-QPeriod: Q2 FY2011

Apple Inc. Quarterly Report for Q2 Ended Mar 26, 2011

Filed April 21, 2011For Securities:AAPL

Summary

Apple Inc. reported a strong financial performance for the quarter ended March 26, 2011, with net sales surging by 83% year-over-year to $24.7 billion. This growth was primarily driven by exceptional sales of the iPhone, which accounted for 50% of total net sales in the quarter, and the newly launched iPad, contributing 11% of net sales. Mac sales also showed robust growth of 32%, while iPod sales experienced a decline. The company's profitability remained strong, with net income increasing significantly to $6.0 billion, leading to diluted earnings per share of $6.40. Apple's balance sheet reflects a healthy financial position with total assets growing to $94.9 billion, bolstered by substantial increases in cash and cash equivalents and marketable securities, which collectively reached $65.8 billion. The company continues to invest heavily in research and development, with R&D expenses increasing by 36% year-over-year, underscoring its commitment to innovation. Management expressed confidence in the company's liquidity and ability to meet its obligations over the next 12 months.

Financial Highlights

46 data points
Beta

Revenue

$24.67B

41.4% Gross Margin

Net Income

$5.99B

24.3% Net Margin

EPS (Diluted)

$0.23

Total Assets

$94.90B

Cash & Equivalents

$15.98B

Free Cash Flow

$6.22B

Financial Statements
Beta
Revenue$24.67B
Cost of Revenue$14.45B
Gross Profit$10.22B
R&D Expenses$581.00M
SG&A Expenses$1.76B
Operating Expenses$2.34B
Operating Income$7.87B
Net Income$5.99B
EPS (Basic)$0.23
EPS (Diluted)$0.23
Shares Outstanding (Basic)25.85B
Shares Outstanding (Diluted)26.21B

Key Highlights

  • 1Net sales dramatically increased by 83% year-over-year to $24.7 billion, showcasing strong market demand.
  • 2iPhone sales were a primary growth driver, up 126% and comprising 50% of total net sales in the quarter.
  • 3The newly introduced iPad contributed $2.8 billion in net sales (11% of total), demonstrating rapid market adoption.
  • 4Mac sales grew 32% year-over-year, indicating continued strength in the personal computer segment.
  • 5Net income more than doubled to $6.0 billion, resulting in diluted EPS of $6.40, a significant improvement from the prior year.
  • 6The company maintained a strong liquidity position with $65.8 billion in cash, cash equivalents, and marketable securities.
  • 7Research and Development expenses increased by 36% year-over-year, reflecting a continued focus on innovation and new product development.

Frequently Asked Questions

The primary drivers of Apple's substantial revenue growth were the exceptional performance of the iPhone and the strong market reception of the newly launched iPad. iPhone sales surged 126% year-over-year, becoming the largest contributor to net sales, while the iPad contributed significantly in its first full quarters of availability.

Apple's profitability has seen a significant increase, with net income more than doubling to $6.0 billion. This translated to a diluted earnings per share of $6.40, up from $3.33 in the same quarter last year, indicating strong operational efficiency and increased profitability.

Apple's financial health appears very strong. The company ended the quarter with $65.8 billion in cash, cash equivalents, and marketable securities, a substantial increase from the previous year. This robust liquidity position, coupled with positive operating cash flow, indicates a strong ability to fund operations, invest in growth, and meet financial obligations.

The company continues to prioritize innovation, as evidenced by a 36% year-over-year increase in Research and Development expenses. This demonstrates Apple's commitment to developing new products and enhancing existing ones, which is crucial for maintaining its competitive edge and driving future growth in its key markets.