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The Q1 AAPL earnings beat Wall Street expectations by a huge margin, thanks to monster iPhone sales over the holidays.
Apple Inc. (Nasdaq: AAPL) reported its December quarter earnings after the market close today (Tuesday).
Apple reported earnings per share (EPS) of $3.06, blowing past the consensus forecast for $2.59. Revenue was $74.6 billion, also much higher than the $67.5 billion analysts had expected. Both are all-time record highs for the Cupertino, Calif.-based tech giant.
Investors approved. Shares of AAPL stock were up nearly 5% in after-hours trading to $114.20.
The Q1 Apple earnings represent a 48% year-over-year gain – a stunning achievement for one of the largest companies in the world. Revenue was nearly 30% higher from the same period a year ago.
Helping boost the bottom line was an increase in gross margin from 37.9% last year to 39.9%. A preference for iPhones with more memory, as well as a preference for the larger screen of the iPhone 6 Plus helped Apple improve its margins.
The Q1 AAPL Earnings Lifted by the iPhone
Apple sold 74.5 million iPhones, crushing estimates for sales of 65.7 million. That's a 46% increase over the same quarter last year. And it means that Apple is even more dependent on the iPhone. In the December quarter, the iPhone accounted for more than 68% of Apple's revenue.
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As Money Morning pointed out earlier today, there was plenty of evidence for a blowout quarter for the iPhone:
- Consumer Intelligence Research Partners reported that the iPhone accounted for 50% of all smartphone activations in the December quarter, up from 28% in the September quarter.
- Research firm Counterpoint reported that in November the iPhone grabbed 33% of the smartphone market in South Korea, the home of rival Samsung Electronics (OTCMKTS: SSNLF). Samsung's share slipped from 60% to 46%.
- The Financial Times said that Apple is expected to report for the first time that it sold more iPhones in China than in the United States. Gaining share in China's vast market will not only be reflected in the Q1 AAPL earnings, but for many quarters to come.
"They've been capacity constrained on the iPhone 6. They can't keep the things in stock. They would sell more if they could make more," said Money Morning Defense & Tech Specialist Michael Robinson.
Apple also sold 5.5 million Macs, a 14% increase over last year and about in line with analyst expectations. Apple's Macintosh computer business has also been quietly growing and snatching market share.
Meanwhile, iPad sales fell 18% to 21.4 million units, although that was expected. Apple has not found a way to stem drooping iPad sales, but few are worried as long as the iPhone keeps flying off the shelves.
Apple's cash increased by 15% to $178 billion. And the company still paid out $8 billion to shareholders.
Guidance for the current quarter was slightly higher than what analysts were looking for. Apple said it expects revenue of between $52 billion and $55 billion and gross margin of between 38.5% and 39.5%.
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