Apple Boosts Quarterly Revenue Guidance on Strong iPhone Sales

[MacRumors]

Alongside today's announcement that it sold a record-breaking nine million iPhone 5s and iPhone 5c models over the launch weekend, Apple made a regulatory filing with the U.S. Securities and Exchange Commission revealing that it now expects revenue and gross margin for the current financial quarter to come in at the high end of its previously issued guidance.

On September 23, 2013, Apple Inc. (the "Company") announced that it has sold over nine million new iPhone 5s and iPhone 5c models, just three days after the launch of the new iPhones on September 20.

Apple expects total company revenue for the fourth fiscal quarter to be near the high end of the previously provided range of $34 billion to $37 billion, and expects gross margin to be near the high end of the previously provided range of 36% to 37%.

Apple's fourth fiscal quarter of 2013 runs through September 28, and the company will report earnings for the quarter in the latter part of October.

Apple's stock is currently up over 6% in pre-market trading.

Article Link: Apple Boosts Quarterly Revenue Guidance on Strong iPhone Sales

 

[musika]

They just can't survive without Steve.

 

[BC2009]

At $37B revenue and 37% margin, they are looking at about $13.5B in profit for the quarter compared to about $8.5B in the same quarter a year ago. They are also looking at $3B more in annual profit for fiscal 2013 versus fiscal 2012.

Not bad Apple. Keep it up and the cash assets will match the market cap in six years unless the stock price corrects upwards in a big way.

 

[mrxak]

I'm a little surprised the stock is up 6% in pre-market trading. I thought Apple's stock always dropped with good news, because analysts always expect the impossible.

 

[nwcs]

So much for that "Apple artificially restricted supply" argument.

 

[ftaok]

At $37B revenue and 37% margin, they are looking at about $13.5B in profit for the quarter compared to about $8.5B in the same quarter a year ago. They are also looking at $3B more in annual profit for fiscal 2013 versus fiscal

You forgot to account for operating expenses and taxes, along with other income.

If apple hits on the high end of their guidance, they're looking at $7.3billion.

 

[Carnegie]

At $37B revenue and 37% margin, they are looking at about $13.5B in profit for the quarter compared to about $8.5B in the same quarter a year ago. They are also looking at $3B more in annual profit for fiscal 2013 versus fiscal 2012.

Not bad Apple. Keep it up and the cash assets will match the market cap in six years unless the stock price corrects upwards in a big way.

That margin guidance is for gross margin. You also have to factor in operating expenses (Apple's guidance was between $3.9 billion and $3.95 billion), other income (Apple's guidance was $200 million), and taxes (Apple's guidance was for a rate of 26.5%).

The top end of Apple's guidance range ($37 billion in revenue, 37% gross margin) would (based on the rest of Apple's guidance) generate $7.31 to $7.34 billion in earnings as compared to earnings of $8.22 billion from the year ago quarter.

Depending on the share count used to compute EPS, that total earnings estimate ($7.34 billion) would represent an EPS of around $8, which is a little above current consensus estimates. I'd expect those estimates to rise soon.

 

[milo]

And this is exactly what people need to remember when a new product is announced and they declare it a flop based on AAPL dropping the day of the announcement.

In the end, panicked reactions on message boards mean nothing, it all comes down to actual sales. And the millions buying are a very different crowd than the much smaller group of folks posting on message boards like this one.

 

[macaddict06]

Works for me

 

[perealb]

And that's because I haven't bought mine yet. I am waiting until jb comes for iPhone 5S. And I'm sure there are plenty people waiting also.

 

[IJ Reilly]

I'm a little surprised the stock is up 6% in pre-market trading. I thought Apple's stock always dropped with good news, because analysts always expect the impossible.

Then you always thought wrongly.

 

[JHankwitz]

So much for that "Apple artificially restricted supply" argument.

I don't think this has anything to do with restricted supply. This number reports the number of iPhones sold, not delivered. It could very well be that 8 million are on back order. I likely won't see the two iPhones I bought this weekend until late next month.

 

[BurchK]

I don't think this has anything to do with restricted supply. This number reports the number of iPhones sold, not delivered. It could very well be that 8 million are on back order. I likely won't see the two iPhones I bought this weekend until late next month.

Except Appple can not claim they sold any iPhones until they are delivered - from their 10-K they recognize revenue

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit.

Yhus for the 2 iPhone you are waiting on Apple will not recognize revenue until they are in your eager hands.

 

[Will do good]

So much for that "Apple artificially restricted supply" argument.

Those bubble heads

 

[BC2009]

You forgot to account for operating expenses and taxes, along with other income.

If apple hits on the high end of their guidance, they're looking at $7.3billion.

drat -- so profit margin does not take those into account?

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That margin guidance is for gross margin. You also have to factor in operating expenses (Apple's guidance was between $3.9 billion and $3.95 billion), other income (Apple's guidance was $200 million), and taxes (Apple's guidance was for a rate of 26.5%).

The top end of Apple's guidance range ($37 billion in revenue, 37% gross margin) would (based on the rest of Apple's guidance) generate $7.31 to $7.34 billion in earnings as compared to earnings of $8.22 billion from the year ago quarter.

Depending on the share count used to compute EPS, that total earnings estimate ($7.34 billion) would represent an EPS of around $8, which is a little above current consensus estimates. I'd expect those estimates to rise soon.

thanks for the break down, i though that seemed a bit high.

 

[macs4nw]

…..Apple made a regulatory filing with the U.S. Securities and Exchange Commission revealing that it now expects revenue and gross margin for the current financial quarter to come in at the high end of its previously issued guidance.Apple's fourth fiscal quarter of 2013 runs through September 28, and the company will report earnings for the quarter in the latter part of October…..

Apple expects total company revenue for the fourth fiscal quarter to be near the high end of the previously provided range of $34 billion to $37 billion, and expects gross margin to be near the high end of the previously provided range of 36% to 37%…..

Article Link: Apple Boosts Quarterly Revenue Guidance on Strong iPhone Sales

And all that primarily on just nine days of expected 5S and 5C sales. Pretty good! At an average price of ~$600, that 3B translates into an extra 5 million phones, over and above what they expected.

 

[CKA]

I don't think this has anything to do with restricted supply. This number reports the number of iPhones sold, not delivered. It could very well be that 8 million are on back order. I likely won't see the two iPhones I bought this weekend until late next month.

Unlike Samsung, Apple use the sell-out figure (they only count the revenue when the product shipped to user address or already in user hand), Samsung count in revenue when they shipped the product to retailer shop / service provider - sell-in . So, Apple's figure is more realistic in certain sense.

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And all that primarily on just nine days of expected 5S and 5C sales. Pretty good! At an average price of ~$600, that 3B translates into an extra 5 million phones, over and above what they expected.

Honestly speaking, if they can sell 9 millions in the first weekend (3 days), do you think they cannot make 5 millions in the coming week?

 

[CKA]

So much for that "Apple artificially restricted supply" argument.

I think if Apple can sell-out 9 millions under "artificially restricted supply", they can sell like double without that .

Samsung S4 'sell-in' for ~ 10 millions in around 1 month after released. It may be under 5 millions to user hand. Samsung shipped 70 million mobiles in 2013 Q1, but according to reports, only around 14% are high-end Galaxy, the rest 86% are mainly low-end phones, which may even running Android 2.x.

It's quite impressive already for Apple selling that good even though many people complained a lot after its announced.

What can you expect?

 

[kdarling]

Except Appple can not claim they sold any iPhones until they are delivered - from their 10-K they recognize revenue

Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped.

Yhus for the 2 iPhone you are waiting on Apple will not recognize revenue until they are in your eager hands.

Reread the 10-K. You're right except when it comes to retailers:

• Apple counts a sale from a store directly to an end user because it is delivered.
• Apple counts a sale from their online store to an end user when delivered.
• Apple counts a sale to a retailer when shipped.

Normally, about 80% of iPhone sales are through carriers and other retailers, 20% through Apple stores. Unknown what the ratio is at a launch.

Unlike Samsung, Apple use the sell-out figure ...

For retailers, Apple uses sell-in, just like Samsung and everyone else. See 10-K above. The only difference is that Apple counts it when shipped to a retailer, Samsung counts it when delivered to a retailer.

I think if Apple can sell-out 9 millions under "artificially restricted supply", they can sell like double without that .

According to analysts, Apple's 9 million breaks down as:

• 4.0 million iPhone 5S sold-through
• 1.5 million iPhone 5C sold-through
• 3.5 million iPhone 5C sold-in

Note that this would not include 5C pre-sales that were not yet delivered to the customer.

 

[szw-mapple fan]

I'm a little surprised the stock is up 6% in pre-market trading. I thought Apple's stock always dropped with good news, because analysts always expect the impossible.

Except this time, they achieved the impossible.

 

[nwcs]

I think if Apple can sell-out 9 millions under "artificially restricted supply", they can sell like double without that .

Maybe, but then again maybe they made as many as they possibly could given the circumstances?

 

[monkeybear0145]

They just can't survive without Steve.

How can you see their sales figures and say that?

 

[ftaok]

According to analysts, Apple's 9 million breaks down as:

• 4.0 million iPhone 5S sold-through
• 1.5 million iPhone 5C sold-through
• 3.5 million iPhone 5C sold-in

Note that this would not include 5C pre-sales that were not yet delivered to the customer.

Which analysts would this be? Morgan Stanley issued some WAG which was totally divergent from an analytics firm. The analytics firm had the ratio btwn 5s and 5c closer to 4:1.

 

[kdarling]

Which analysts would this be?

Gene Munster from Piper Jaffray and Keith Bachman from BMO Capital, both said that a lot of 5C sales were into the retail channel.

Morgan Stanley issued some WAG which was totally divergent from an analytics firm. The analytics firm had the ratio btwn 5s and 5c closer to 4:1.

Morgan Stanley also said that most 5C sales were into the retail channel? Looks like a trend.

As for the lone statistic that diverges, do you mean the one from the mobile ad marketing firm, Localytics?

Ad figures have rarely, if ever, accurately reflected sales... or even often come close. All they show is how many times one of their affiliates serve up one of their ads. Such reports are basically nothing but self-serving ads for their own ad network.

--

Btw, Bachman's comments on Apple accounting echo my explanation in a previous post, although he oddly uses "ship out" to mean "sell through", and "ship in" to mean "sell in".

(Bachman) notes that from an accounting point of view, Apple recognizes Apple direct retail/web sales on ship out, and for third-party retail outlets (e.g., Best Buy) on ship in. "More specifically, Apple recognizes web based sales upon customer receipt, so we think much of the 5s sales will be in the December quarter. We believe sell-in of 5c units on a global basis contributed to the nine million sales over the past three days."

- StreetInsider

Note the important point that we keep talking about, that many end user sales won't be counted until delivered. That's usually a few million right there.

 

[ftaok]

Gene Munster from Piper Jaffray and Keith Bachman from BMO Capital, both said that a lot of 5C sales were into the retail channel.



Morgan Stanley also said that most 5C sales were into the retail channel? Looks like a trend.

As for the lone statistic that diverges, do you mean the one from the mobile ad marketing firm, Localytics?

Ad figures have rarely, if ever, accurately reflected sales... or even often come close. All they show is how many times one of their affiliates serve up one of their ads. Such reports are basically nothing but self-serving ads for their own ad network.

Well, it seems like Morgan Stanley's numbers diverge from Piper Jaffrey and Bachmann as well. What is their methodology? Channel checks? Retail checks? I don't put much stock in their methods either ... after all, these guys routinely miss (by a big margin) quarterly iPhone numbers too.

As for the analytics firm, yes, that's the one. I don't put a lot of faith in the number either, but it's completely opposite of the Wall Street analysts.

The truth is probably somewhere in the middle.