Apple Reports Second Quarter Results

Total Revenue Grows, Services Revenue Reaches New All-Time High of $13.3 Billion

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced financial results for its fiscal 2020 second quarter ended March 28, 2020. The Company posted quarterly revenue of $58.3 billion, an increase of 1 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.55, up 4 percent. International sales accounted for 62 percent of the quarter’s revenue.

Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in Services and a quarterly record for Wearables,” said Tim Cook, Apple’s CEO. “In this difficult environment, our users are depending on Apple products in renewed ways to stay connected, informed, creative, and productive. We feel motivated and inspired to not only keep meeting these needs in innovative ways, but to continue giving back to support the global response, from the tens of millions of face masks and custom-built face shields we’ve sent to medical professionals around the world, to the millions we’ve donated to organizations like Global Citizen and America’s Food Fund.”

We are proud of our Apple teams around the world and how resilient our business and financial performance has been during these challenging times,” said Luca Maestri, Apple’s CFO. “Our active installed base of devices reached an all-time high in all of our geographic segments and all major product categories. We also generated operating cash flow of $13.3 billion during the quarter, up $2.2 billion over a year ago. We are confident in our future and continue to make significant investments in all areas of our business to enrich our customers’ lives and support our long-term plans — including our five-year commitment to contribute $350 billion to the United States economy.”

Apple’s board of directors has declared a cash dividend of $0.82 per share of the Company’s common stock, an increase of 6 percent. The dividend is payable on May 14, 2020 to shareholders of record as of the close of business on May 11, 2020. The board of directors has also authorized an increase of $50 billion to the existing share repurchase program.

Apple will provide live streaming of its Q2 2020 financial results conference call beginning at 2:00 p.m. PT on April 30, 2020 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

Apple periodically provides information for investors on its corporate website, apple.com, and its investor relations website, investor.apple.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance, and details related to its annual meeting of shareholders.

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include without limitation those about the Company’s expectations regarding the impact of the COVID-19 pandemic; anticipated revenue, gross margin, operating expenses, other income/(expense), and tax rate; and plans for return of capital. These statements involve risks and uncertainties, and actual results may differ materially from any future results expressed or implied by the forward-looking statements. Risks and uncertainties include without limitation: the effect of the COVID-19 pandemic on the Company’s business, results of operations, financial condition, and stock price; the effect of global and regional economic conditions on the Company’s business, including effects on purchasing decisions by consumers and businesses; the ability of the Company to compete in markets that are highly competitive and subject to rapid technological change; the ability of the Company to manage frequent introductions and transitions of products and services, including delivering to the marketplace, and stimulating customer demand for, new products, services, and technological innovations on a timely basis; the effect that shifts in the mix of products and services and in the geographic, currency, or channel mix, component cost increases, increases in the cost of acquiring and delivering content for the Company’s services, price competition, or the introduction of new products or services, including new products or services with higher cost structures, could have on the Company’s gross margin; the dependency of the Company on the performance of distributors of the Company’s products, including cellular network carriers and other resellers; the risk of write-downs on the value of inventory and other assets and purchase commitment cancellation risk; the continued availability on acceptable terms, or at all, of certain components, services, and new technologies essential to the Company’s business, including components and technologies that may only be available from single or limited sources; the dependency of the Company on manufacturing and logistics services provided by third parties, many of which are located outside of the US and which may affect the quality, quantity, or cost of products manufactured or services rendered to the Company; the effect of product and services design and manufacturing defects on the Company’s financial performance and reputation; the dependency of the Company on third-party intellectual property and digital content, which may not be available to the Company on commercially reasonable terms or at all; the dependency of the Company on support from third-party software developers to develop and maintain software applications and services for the Company’s products; the impact of unfavorable legal proceedings, such as a potential finding that the Company has infringed on the intellectual property rights of others; the impact of complex and changing laws and regulations worldwide, which expose the Company to potential liabilities, increased costs, and other adverse effects on the Company’s business; the ability of the Company to manage risks associated with the Company’s retail stores; the ability of the Company to manage risks associated with the Company’s investments in new business strategies and acquisitions; the impact on the Company’s business and reputation from information technology system failures, network disruptions, or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data protection; the continued service and availability of key executives and employees; political events, international trade disputes, war, terrorism, natural disasters, public health issues, and other business interruptions that could disrupt supply or delivery of, or demand for, the Company’s products; financial risks, including risks relating to currency fluctuations, credit risks, and fluctuations in the market value of the Company’s investment portfolio; and changes in tax rates and exposure to additional tax liabilities. More information on these risks and other potential factors that could affect the Company’s business and financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch, and Apple TV. Apple’s five software platforms — iOS, iPadOS, macOS, watchOS, and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay, and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom), or call Apple’s Media Helpline at (408) 974-2042.

© 2020 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In millions, except number of shares which are reflected in thousands and per share amounts)

 

 

Three Months Ended

 

Six Months Ended

 

March 28,

2020

 

March 30,

2019

 

March 28,

2020

 

March 30,

2019

Net sales:

 

 

 

 

 

 

 

Products

$

44,965

 

 

$

46,565

 

 

$

124,069

 

 

$

120,000

 

Services

13,348

 

 

11,450

 

 

26,063

 

 

22,325

 

Total net sales (1)

58,313

 

 

58,015

 

 

150,132

 

 

142,325

 

Cost of sales:

 

 

 

 

 

 

 

Products

31,321

 

 

32,047

 

 

83,396

 

 

80,285

 

Services

4,622

 

 

4,147

 

 

9,149

 

 

8,188

 

Total cost of sales

35,943

 

 

36,194

 

 

92,545

 

 

88,473

 

Gross margin

22,370

 

 

21,821

 

 

57,587

 

 

53,852

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

4,565

 

 

3,948

 

 

9,016

 

 

7,850

 

Selling, general and administrative

4,952

 

 

4,458

 

 

10,149

 

 

9,241

 

Total operating expenses

9,517

 

 

8,406

 

 

19,165

 

 

17,091

 

 

 

 

 

 

 

 

 

Operating income

12,853

 

 

13,415

 

 

38,422

 

 

36,761

 

Other income/(expense), net

282

 

 

378

 

 

631

 

 

938

 

Income before provision for income taxes

13,135

 

 

13,793

 

 

39,053

 

 

37,699

 

Provision for income taxes

1,886

 

 

2,232

 

 

5,568

 

 

6,173

 

Net income

$

11,249

 

 

$

11,561

 

 

$

33,485

 

 

$

31,526

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

2.58

 

 

$

2.47

 

 

$

7.63

 

 

$

6.70

 

Diluted

$

2.55

 

 

$

2.46

 

 

$

7.56

 

 

$

6.66

 

Shares used in computing earnings per share:

 

 

 

 

 

 

 

Basic

4,360,101

 

 

4,674,071

 

 

4,387,570

 

 

4,704,945

 

Diluted

4,404,691

 

 

4,700,646

 

 

4,429,648

 

 

4,736,949

 

 

 

 

 

 

 

 

 

(1) Net sales by reportable segment:

 

 

 

 

 

 

 

Americas

$

25,473

 

 

$

25,596

 

 

$

66,840

 

 

$

62,536

 

Europe

14,294

 

 

13,054

 

 

37,567

 

 

33,417

 

Greater China

9,455

 

 

10,218

 

 

23,033

 

 

23,387

 

Japan

5,206

 

 

5,532

 

 

11,429

 

 

12,442

 

Rest of Asia Pacific

3,885

 

 

3,615

 

 

11,263

 

 

10,543

 

Total net sales

$

58,313

 

 

$

58,015

 

 

$

150,132

 

 

$

142,325

 

 

 

 

 

 

 

 

 

(1) Net sales by category:

 

 

 

 

 

 

 

iPhone

$

28,962

 

 

$

31,051

 

 

$

84,919

 

 

$

83,033

 

Mac

5,351

 

 

5,513

 

 

12,511

 

 

12,929

 

iPad

4,368

 

 

4,872

 

 

10,345

 

 

11,601

 

Wearables, Home and Accessories

6,284

 

 

5,129

 

 

16,294

 

 

12,437

 

Services

13,348

 

 

11,450

 

 

26,063

 

 

22,325

 

Total net sales

 

$

58,313

 

 

$

58,015

 

 

$

150,132

 

 

$

142,325

 

Apple Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except number of shares which are reflected in thousands and par value)

 

 

March 28,

2020

 

September 28,

2019

ASSETS:

Current assets:

 

 

 

Cash and cash equivalents

$

40,174

 

 

$

48,844

 

Marketable securities

53,877

 

 

51,713

 

Accounts receivable, net

15,722

 

 

22,926

 

Inventories

3,334

 

 

4,106

 

Vendor non-trade receivables

14,955

 

 

22,878

 

Other current assets

15,691

 

 

12,352

 

Total current assets

143,753

 

 

162,819

 

 

 

 

 

Non-current assets:

 

 

 

Marketable securities

98,793

 

 

105,341

 

Property, plant and equipment, net

35,889

 

 

37,378

 

Other non-current assets

41,965

 

 

32,978

 

Total non-current assets

176,647

 

 

175,697

 

Total assets

$

320,400

 

 

$

338,516

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Current liabilities:

 

 

 

Accounts payable

$

32,421

 

 

$

46,236

 

Other current liabilities

37,324

 

 

37,720

 

Deferred revenue

5,928

 

 

5,522

 

Commercial paper and repurchase agreement

10,029

 

 

5,980

 

Term debt

10,392

 

 

10,260

 

Total current liabilities

96,094

 

 

105,718

 

 

 

 

 

Non-current liabilities:

 

 

 

Term debt

89,086

 

 

91,807

 

Other non-current liabilities

56,795

 

 

50,503

 

Total non-current liabilities

145,881

 

 

142,310

 

Total liabilities

241,975

 

 

248,028

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,323,987 and 4,443,236 shares issued and outstanding, respectively

48,032

 

 

45,174

 

Retained earnings

33,182

 

 

45,898

 

Accumulated other comprehensive income/(loss)

(2,789

)

 

(584

)

Total shareholders’ equity

78,425

 

 

90,488

 

Total liabilities and shareholders’ equity

$

320,400

 

 

$

338,516

 

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

 

 

Six Months Ended

 

March 28,

2020

 

March 30,

2019

Cash, cash equivalents and restricted cash, beginning balances

$

50,224

 

 

$

25,913

 

Operating activities:

 

 

 

Net income

33,485

 

 

31,526

 

Adjustments to reconcile net income to cash generated by operating activities:

 

 

 

Depreciation and amortization

5,602

 

 

6,435

 

Share-based compensation expense

3,407

 

 

3,073

 

Deferred income tax benefit

(651

)

 

(124

)

Other

(259

)

 

(215

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

7,284

 

 

8,094

 

Inventories

699

 

 

(1,006

)

Vendor non-trade receivables

7,923

 

 

14,616

 

Other current and non-current assets

(8,866

)

 

(717

)

Accounts payable

(13,520

)

 

(20,024

)

Deferred revenue

1,223

 

 

(540

)

Other current and non-current liabilities

7,500

 

 

(3,273

)

Cash generated by operating activities

43,827

 

 

37,845

 

Investing activities:

 

 

 

Purchases of marketable securities

(66,489

)

 

(13,854

)

Proceeds from maturities of marketable securities

39,738

 

 

16,880

 

Proceeds from sales of marketable securities

27,762

 

 

22,635

 

Payments for acquisition of property, plant and equipment

(3,960

)

 

(5,718

)

Payments made in connection with business acquisitions, net

(1,134

)

 

(291

)

Purchases of non-marketable securities

(146

)

 

(490

)

Other

(426

)

 

30

 

Cash generated by/(used in) investing activities

(4,655

)

 

19,192

 

Financing activities:

 

 

 

Proceeds from issuance of common stock

430

 

 

390

 

Payments for taxes related to net share settlement of equity awards

(1,566

)

 

(1,427

)

Payments for dividends and dividend equivalents

(6,914

)

 

(7,011

)

Repurchases of common stock

(39,280

)

 

(32,498

)

Proceeds from issuance of term debt, net

2,210

 

 

 

Repayments of term debt

(5,250

)

 

(2,500

)

Proceeds from/(Repayments of) commercial paper, net

1,518

 

 

(36

)

Proceeds from repurchase agreement

2,556

 

 

 

Other

(51

)

 

(51

)

Cash used in financing activities

(46,347

)

 

(43,133

)

Increase/(Decrease) in cash, cash equivalents and restricted cash

(7,175

)

 

13,904

 

Cash, cash equivalents and restricted cash, ending balances

$

43,049

 

 

$

39,817

 

Supplemental cash flow disclosure:

 

 

 

Cash paid for income taxes, net

$

7,505

 

 

$

9,497

 

Cash paid for interest

$

1,689

 

 

$

1,762

 

 

Contacts

Apple

Press Contact:
Kristin Huguet Quayle, (408) 974-2414

khuguet@apple.com

Investor Relations Contact:
Tejas Gala, (669) 227-2402

tgala@apple.com

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