10-QPeriod: Q1 FY2016

Apple Inc. Quarterly Report for Q1 Ended Dec 26, 2015

Filed January 27, 2016For Securities:AAPL

Summary

Apple Inc. reported its first quarter fiscal year 2016 results, showcasing a modest 2% increase in net sales to $75.87 billion, driven by robust performance in its 'Other Products' and 'Services' segments. While iPhone sales saw a slight uptick, iPad and Mac sales experienced year-over-year declines. The company's gross margin percentage improved to 40.1%, benefiting from a favorable product mix, although foreign currency headwinds partially offset this gain. Despite a challenging global economic environment and increased R&D spending, Apple demonstrated strong operational execution. The company generated substantial cash flow from operations, allowing for significant investments in share repurchases and dividends as part of its ongoing capital return program. Management expressed confidence in its liquidity position to meet its obligations over the next twelve months.

Financial Highlights

56 data points
Beta

Revenue

$75.87B

40.1% Gross Margin

Net Income

$18.36B

24.2% Net Margin

EPS (Diluted)

$0.82

Total Assets

$293.28B

Cash & Equivalents

$16.69B

Free Cash Flow

$23.85B

Financial Statements
Beta
Revenue$75.87B
Cost of Revenue$45.45B
Gross Profit$30.42B
R&D Expenses$2.40B
SG&A Expenses$3.85B
Operating Expenses$6.25B
Operating Income$24.17B
Interest Expense$276.00M
Net Income$18.36B
EPS (Basic)$0.82
EPS (Diluted)$0.82
Shares Outstanding (Basic)22.24B
Shares Outstanding (Diluted)22.38B

Key Highlights

  • 1Net sales increased by 2% to $75.87 billion, demonstrating continued revenue growth.
  • 2Services and 'Other Products' segments showed strong growth, up 26% and 62% respectively, indicating diversification beyond core hardware.
  • 3iPhone sales saw a modest 1% increase, maintaining its position as the primary revenue driver.
  • 4iPad and Mac sales declined by 21% and 3% respectively, reflecting market saturation or longer upgrade cycles.
  • 5Gross margin percentage improved to 40.1% from 39.9% in the prior year, driven by a favorable product mix.
  • 6Operating expenses increased by 14% year-over-year, primarily due to higher R&D and SG&A investments, reflecting a commitment to innovation.
  • 7The company returned significant capital to shareholders through $6.9 billion in share repurchases and $3.0 billion in dividends during the quarter.

Frequently Asked Questions

Apple's net sales increased by 2% to $75.87 billion in the first quarter of fiscal year 2016, compared to $74.60 billion in the same period of fiscal year 2015. This growth was primarily driven by strong performance in 'Other Products' and 'Services', partially offset by lower iPad sales.

iPhone net sales saw a slight increase of 1% to $51.64 billion. iPad sales declined by 21% to $7.08 billion, and Mac sales decreased by 3% to $6.75 billion. These declines are attributed to factors such as longer repurchase cycles and market competition.

Apple generated $27.46 billion in cash from operating activities. During the quarter, the company repurchased $6.86 billion of common stock and paid $2.97 billion in dividends, reflecting its ongoing commitment to returning capital to shareholders through its significant share repurchase program and dividend payments.

Apple reported a gross margin of 40.1% for the quarter, an improvement from 39.9% in the prior year, driven by a favorable product mix. The company anticipates gross margin for the second quarter of fiscal 2016 to be between 39% and 39.5%.