10-QPeriod: Q3 FY2011

Apple Inc. Quarterly Report for Q3 Ended Jun 25, 2011

Filed July 20, 2011For Securities:AAPL

Summary

Apple Inc. reported robust financial performance for the quarter and nine months ended June 25, 2011, demonstrating significant year-over-year growth. Net sales surged by 82% to $28.6 billion for the quarter and 78% to $80.0 billion for the nine-month period, driven primarily by exceptional demand for the iPhone and iPad. The company achieved a gross margin of 41.7% in the third quarter, an improvement from 39.1% in the prior year, attributed to a favorable product mix and lower manufacturing costs. Net income for the quarter more than doubled to $7.3 billion, or $7.79 per diluted share, from $3.3 billion, or $3.51 per diluted share, in the same period last year. The balance sheet remains strong, with total assets growing to $106.8 billion and cash, cash equivalents, and marketable securities reaching $76.2 billion. The company's strategic investments in research and development continue, with R&D expenses increasing by 35% year-over-year, reflecting its commitment to innovation and product development. Overall, Apple presented a picture of strong financial health and continued growth momentum in this filing.

Financial Highlights

46 data points
Beta

Revenue

$28.57B

41.7% Gross Margin

Net Income

$7.31B

25.6% Net Margin

EPS (Diluted)

$0.28

Total Assets

$106.76B

Cash & Equivalents

$12.09B

Free Cash Flow

$11.11B

Financial Statements
Beta
Revenue$28.57B
Cost of Revenue$16.65B
Gross Profit$11.92B
R&D Expenses$628.00M
SG&A Expenses$1.92B
Operating Expenses$2.54B
Operating Income$9.38B
Net Income$7.31B
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)25.93B
Shares Outstanding (Diluted)26.26B

Key Highlights

  • 1Net sales increased by 82% to $28.6 billion in Q3 2011 compared to Q3 2010.
  • 2Net income more than doubled to $7.3 billion in Q3 2011, with diluted EPS of $7.79.
  • 3iPhone and iPad sales were primary growth drivers, with iPhone sales up 150% and iPad sales up 179% year-over-year in Q3.
  • 4Gross margin improved to 41.7% in Q3 2011 from 39.1% in Q3 2010.
  • 5Cash, cash equivalents, and marketable securities grew significantly to $76.2 billion as of June 25, 2011.
  • 6Research and development expenses increased by 35% year-over-year, reflecting continued investment in innovation.

Frequently Asked Questions

The primary drivers of Apple's significant revenue growth were the exceptional performance of the iPhone and the strong introduction and sales of the iPad. iPhone sales saw a 150% year-over-year increase in the third quarter of 2011, while iPad sales grew by 179% in the same period. Expanded distribution for the iPhone, including its launch on the Verizon Wireless network, also contributed significantly.

Apple's profitability saw substantial improvement. Net income more than doubled to $7.3 billion in the third quarter of 2011, up from $3.3 billion in the prior year's comparable quarter. Diluted earnings per share rose to $7.79 from $3.51, reflecting strong operational performance and increased sales volume.

Apple maintained a very strong financial position. As of June 25, 2011, the company held $76.2 billion in cash, cash equivalents, and marketable securities, an increase of $25.1 billion from the previous fiscal year-end. This substantial liquidity provides significant financial flexibility for operations, investments, and potential strategic initiatives.

Apple continued to prioritize R&D, increasing expenses by 35% year-over-year to $628 million in the third quarter of 2011. This reflects the company's strategy of sustained investment in developing innovative new products and enhancing existing ones, which is considered critical for maintaining its competitive edge and driving future growth.