Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Apple Reports 2Q 2019 Results: $11.56B Profit on $58B Revenue as Services Revenue Hits All-Time High
- Thread starter MacRumors
- Start date
- Sort by reaction score
Q3 2017 - Revenue Actual $45.4B
Q3 2018 - Revenue Actual $53.3B (YOY Growth of 17.4% in Revenue)
Q3 2019 - Revenue Guidance $53.5B (Mid point of $54.5 & $52.5)
If Apple's guidance is correct, this translates to a mere year-over-year of 0.38% in Revenue growth.
Don't forget, in Q3 2018, they hit 17.4% of YOY growth in Revenue!! That is substantially more than 0.38%!
Let's not even go into their Gross Margin...
Q3 2017 - Actual Gross Margin 38.50%
Q3 2018 - Actual Gross Margin 38.30%
Q3 2019 - Guidance Gross Margin 37 to 38%
Maybe Apple should get into the Insurance industry now too... You know.. Since they are now a 'service company'....
Q3 2018 - Revenue Actual $53.3B (YOY Growth of 17.4% in Revenue)
Q3 2019 - Revenue Guidance $53.5B (Mid point of $54.5 & $52.5)
If Apple's guidance is correct, this translates to a mere year-over-year of 0.38% in Revenue growth.
Don't forget, in Q3 2018, they hit 17.4% of YOY growth in Revenue!! That is substantially more than 0.38%!
Let's not even go into their Gross Margin...
Q3 2017 - Actual Gross Margin 38.50%
Q3 2018 - Actual Gross Margin 38.30%
Q3 2019 - Guidance Gross Margin 37 to 38%
Maybe Apple should get into the Insurance industry now too... You know.. Since they are now a 'service company'....
Better yet, why not post how many shares you own and tell us about your insider knowledge instead of insulting him?
You don’t actually believe that the CEO of the number one publicly traded corporation on the planet in terms of market capitalization makes a unilateral decision on buybacks and dividend prices, do you?
“The company's BOARD has authorized an additional $75 billion for share repurchases. Apple’s BOARD also declared a cash dividend of $0.77 per share of the Company’s common stock, an increase of 5 percent.”
https://www.streetinsider.com/dr/news.php?id=15430254&gfv=1
Did you miss the part of the hardware ecosystem setting records in all 5 major markets and a record over 1.4B active devices?
What you and other non shareholders don’t recognize is that Apple doesn’t have to sell more iPhones every year to grow the user base.
That base is pushing 16% services growth and buying wearables for 30% growth.
Huawei sells phones primarily at price points Apple doesn’t participate. iPhone users aren’t switching...they just aren’t upgrading as often.
Yeah, Apple got these pretty billions from watch straps and dongles.
Keep spinning.... keep spinning, just mind the G force.
Gosh, A billion dollars a WEEK in profit. It boggles the mind how Apple's apps and OS can be such a CRAPPY user experience far too often.
Apple will always be selling hardware; they want to control the experience of hardware and software integration. That being said the service business will definitely be the biggest piece of the pie in a couple of years. This is why Apple is pushing into music/video/magazine services.
AppleCare has been reported in the services category for many years. Apple describes it as a fee-based service and it includes telephone support and repair service.
Agree!
The contribution of iPhone to the overall success of Apple is getting smaller and smaller, which is great. As soon as iPhone will be <50%, that I reckon will be next year unless big market changes for iPhone (as India), the narrative will change. Apple will be recognised for all the rest, such wearables (that have an insane growth, and already a volume such as Nike ie). As investor I can not wait, a bit of instability in the stock is expected and not worrying.
I don't get the comparison with Alphabet or Facebook - they basically do not compete in any market.
Google and FB get 90% of their revenues from Ads. Apple next to 0. Apple get 75% of revenues of HW, you can guess how much HW Google or Facebook sell.
I don't get why Apple should even be compared with Alphabet, their business are very different. I would rather compare Apple with Xiaomi, Samsung, ... HW based companies that for a living "build stuff, and sell it".
Thinking to the future, Ad-based companies like Google are under the scrutiny of legislator around the world, and their business can be cut dramatically with a few laws. That's why they spend so much money on lobbying, don't you think? Or why a fine in EU can impact the stock so much?
Q3 2017 - Revenue Actual $45.4B
Q3 2018 - Revenue Actual $53.3B (YOY Growth of 17.4% in Revenue)
Q3 2019 - Revenue Guidance $53.5B (Mid point of $54.5 & $52.5)
If Apple's guidance is correct, this translates to a mere year-over-year of 0.38% in Revenue growth.
Don't forget, in Q3 2018, they hit 17.4% of YOY growth in Revenue!! That is substantially more than 0.38%!
Let's not even go into their Gross Margin...
Q3 2017 - Actual Gross Margin 38.50%
Q3 2018 - Actual Gross Margin 38.30%
Q3 2019 - Guidance Gross Margin 37 to 38%
Maybe Apple should get into the Insurance industry now too... You know.. Since they are now a 'service company'....
Since 2013, Apple gross margin has varied between 37% to 40% so this is within the normal interval. Also, it also disproves the notion many MacRumors commenters opinion that Apple has increased prices to increase their profit.
The revenue for FY 2019 will probably be flat, but this is already priced into the stock.
So they did as well as anyone can expect. Well done Apple. It will be interesting to watch the services revenue continue to grew especially when all the paid subscriptions go live. iPads also did well. It’s great that Apple have managed to turn the fate of the iPad around when it had so many straight quarters of loss and then in 2017 we started seeing growth again which goes against the overall downward trend of tablets.
Did the new iPad Air 3 and iPad mini 5 contribute to these figures or will they show up next quarter?
Wearables continues to grow. The Apple Watch has been a great success for Apple and will continue to grow.
[doublepost=1556697162][/doublepost]
Did the new iPad Air 3 and iPad mini 5 contribute to these figures or will they show up next quarter?
Wearables continues to grow. The Apple Watch has been a great success for Apple and will continue to grow.
[doublepost=1556697162][/doublepost]
I think the narrative is the Apple increased their prices to maintain their profits despite static/falling iPhone sales.
Really?, I read:
"Intel's personal computer processor division saw revenues grow four per cent to $8.6bn"
https://www.theregister.co.uk/2019/04/26/intel_q1_fy2019/
funny how we believe different things isn't it?
[doublepost=1556703746][/doublepost]
You must be rich to consider $2bn "next to 0"; that's the projected income from Apple's search ads:
https://searchengineland.com/apple-...-generate-2-billion-in-revenue-by-2020-306882
[doublepost=1556704435][/doublepost]
A "product" is something "produced" by an entity that you can own hence that's why hardware is described this way. You can own an iMac; it's yours. You can never own Apple Music, just subscribe to the service Apple provides.
High level story here - core product sales diminishing with no sign of substantial recovery to previous levels. Revenue created by selling services to existing user base increasing dramatically as a result of decent takeup by a user base in the billions.
Core strategy of extracting maximum revenue from existing customers is still being pursued.
Long term risk is if the user base shrinks over time and existing users stop spending on services.
Core strategy of extracting maximum revenue from existing customers is still being pursued.
Long term risk is if the user base shrinks over time and existing users stop spending on services.
It’s really because people are using a non-specific term, product. Like you say, they’re all products, in the general sense that they’re sold and they generate revenue.
But it’s more correctly stated that Apple is transitioning from a hardware company to a services company. The dividing line is really tangible product vs. intangible product.
Tangible: hardware/accessories. Mac, iPad, iPhone, Watch, AirPod, HomePod, AppleTV 1080/4K, iPod, mice, keyboards, cables, adapters, watch bands, etc.
Whereas intangible: software/services. software (e.g. Final Cut, Logic Pro), Apple Music, iTunes, AppleCare, iCloud storage, App Store, App Store search ads, Apple Pay, Google’s payment for default search, and of course the four new services: Apple News+, TV+, Arcade and Apple Card. (It’s not quite that black and white; a portion of device revenue is amortized and booked to software/services to account for the value of bundled items like the OS, warranty service and the free iCloud tier).
Services had over twice the gross profit margin as hardware this quarter, 63.8% vs. 31.2% for hardware. So even though services were only 20% of the revenue, they generated roughly 33% of profits. It doesn’t sound that different but it’s huge. Hardware sales were about $46 billion, and contributed $14 billion in gross profit. Services revenue was only about $11 billion, but they contributed about $7 billion in gross profit.
Which is exactly why it’s so important (and meaningful) for Apple to grow services. I’m not sure services will ever be a larger revenue source than hardware, but if the services margin stays at twice the hardware margin, services will be generating half of all profits when it reaches 33% of revenue.
Eventually Apple will be able to actually lower prices on hardware and take a smaller gross margin, knowing they’ll make it up on the services side. They could even provide free hardware with certain subscriptions, for instance free AppleTV HD/4K with a TV+ Channels subscription, or free HomePod with an Apple Music subscription. (How would Spotify compete with that, give away a free Sonos like they do Hulu? I don’t think so, that would bankrupt them.)
Last edited:
I get what you're saying but thing is, most consumers see "products" as physical hardware, especially if they are incompetent. So when they say Apple is transitioning from a "product" company what they really mean is Hardware. Apple Music could be seen as product but is also technically SaaS so it all depends on the terminology you wish to use.
[doublepost=1556710206][/doublepost]
Also this ^
Not necessarily, Mr. Cook could be referring to iOS 13, which is rumored to be adding a lot of features to iPad. Or could be a sneak preview of the Mac Pro and the new monitor(s).
But you never know, they could actually release instead of just previewing. (But I think they need AMD’s Navi before they can ship).
I’d be pleasantly surprised if Apple ever uncharacteristically does this.
The Apple TV and HomePod are premium products that are also not big sellers. Giving them away would indicate problems in their services narrative. I don’t expect this to ever happen, at least under Tim Cook’s reign
Not at all. As services revenue has a huge profit margin, it can easily subsidize the hardware.
If somebody subscribes to HBO and Showtime, that brings in $250-$300 a year. Don’t you think that’s worth throwing an AppleTV HD/4K box at them—which costs Apple maybe $50-75? Manufacturing larger quantities will drive the cost down even further.
Cook isn’t stupid. It’s really no different from them bumping up the iPhone trade in allowance by $50-75 dollars. Basically it’s just buying a chunk of profit for a small fee. Just think of how profitable it is after a few years. If someone cancels early, they have to return the device. It can then be reused/refurbed as necessary. Maybe after a year or two they could keep it even if they cancel.
I wasn't referring to their revenues ... I was referring to the slowing roadmap of performance per watt.
I could be wrong here as well yet they are definitely slowing. Moving out of the 5G race was most likely the best move to be honest.
Wouldn’t happen under Steve Jobs region either. You’d get a bumper case under Steve.
Since you seem to have such conviction, why not short it here?Q3 2017 - Revenue Actual $45.4B
Q3 2018 - Revenue Actual $53.3B (YOY Growth of 17.4% in Revenue)
Q3 2019 - Revenue Guidance $53.5B (Mid point of $54.5 & $52.5)
If Apple's guidance is correct, this translates to a mere year-over-year of 0.38% in Revenue growth.
Don't forget, in Q3 2018, they hit 17.4% of YOY growth in Revenue!! That is substantially more than 0.38%!
Let's not even go into their Gross Margin...
Q3 2017 - Actual Gross Margin 38.50%
Q3 2018 - Actual Gross Margin 38.30%
Q3 2019 - Guidance Gross Margin 37 to 38%
Maybe Apple should get into the Insurance industry now too... You know.. Since they are now a 'service company'....
Your analysis is stuck in the past.
Services growing 16%, wearables 30% and iPad 20%.
iPhone is a mature product but people aren’t switching. They are spending money on wearables and services. Active devices hit a new record at over 1.4B and did so in every market.
Oh, and another $75B in buyback authorization. That is huge. Apple doesn’t need huge growth in hardware for the stock to work. Welcome to the new Apple. Services alone might be worth $1T by 2021. A 35 multiple on a $60B business with 70% margins? Do the math.
No one says that. They are saying that Apple is transitioning from a "hardware" company to a "services" company.
In the old days, it was hardware or software. Both are products, but they have different traits.
The difference between software and services is mostly in how you pay for them. Software is generally seen as a one-time purchase (that you might have to re-buy in 3 to 4 years). Services is generally a monthly (or annual) fee that you would lose if you didn't keep paying.
It's all "product", but different.
[doublepost=1556716653][/doublepost]@Baymowe335 I apologize because I should know this. Are you the MR member that had the statue of the bull as your member picture? That's how I usually remember members.
Thanks.