As usual, Apple’s Q4 quarter report which ended on September 28, 2019, was released on October 30, after Microsoft, Amazon and Google reported results. Apple’s shares rose nearly 2 percent in after-hours trading to hold a market value above $1 trillion as the results beat market expectations.
Apple CEO Tim Cook also declared that “this is The highest-grossing Q4 quarter in Apple’s history.”
Let’s start with the overall data:
Total revenue (net sales) was $64.040 billion, compared to $62.90 0 billion in the same period last year, up 2% YoY;
Gross profit was $24.313 billion, compared to $24.084 billion in the same period last year, up 1% yo-yo;
Net profit was $13.686 billion, compared to $14.125 billion in the same period last year, down 3% yo-yo;
Diluted earnings per share were $3.03, compared to $2.91 in the same period last year, an increase of 4% year-on-year;
According to the data, Apple Q4’s revenue was $64.04 billion, beating Wall Street’s expectations of $63 billion, and while revenue grew by only 2% year-on-year, it was already a big step forward for Apple:
First, in the first two quarters of fiscal 2019, Apple’s revenue was negative year-on-year until the last fiscal quarter, q3 q3, that it reversed its two consecutive fiscal years with a 1% year-on-year increase in revenue;
Second, Apple’s revenue for the quarter, compared with the other three tech giants, is far ahead of Microsoft and Google, just below Amazon. (Microsoft revenue was $33.1 billion, Google revenue was $40.499 billion and Amazon revenue was $69.981 billion in the same quarter)
Another noteworthy figure is Apple’s Q4 net profit, after all, of all the key data above, only net profit is down year-on-year. Apple’s decline in net profit this time is largely due to increased operating costs, which are up 9.6% in research and development costs and 8.5% in sales management costs, and 9% overall, while there is also a factor that cannot be overlooked, of course, that gross profit was already modest, but reversed the previous negative growth in gross profit.
Apple is also understood to have returned $21 billion to investors, including nearly $18 billion in share buybacks and $3.5 billion in dividends and equivalents.
IPhone sales have long been the absolute dominant part of Apple’s total revenue. From Q4 q4 in FY17 to Q4 in FY18, iPhone revenue has been consistentwith out of year-over-year growth, and in FY14 Q4, Apple’s total revenue from the iPhone contributed as much as 60%.
This began to shift in fy19: iPhone sales began to shrink as a percentage of total revenue, and even in the previous fiscal quarter, iPhone revenue fell below 50% of total revenue for the first time since 2012.
However, in fY14 Q4, iPhone revenue was “killed back” to more than 50%. IPhone revenue for the quarter was $33.36 billion, down about 9 percent from a year earlier, but that beat analysts’ expectations of $32.3 billion. Tim Cook said the decline in iPhone revenue in Q4 in FY19 had slowed significantly compared to negative growth in previous quarters.
It is understood that iPhone revenue in the first three quarters of fiscal 2019 fell 15%, 17% and 13% year-on-year, respectively; The marked slowdown in negative growth in iPhone revenue in the quarter was linked to the strong performance of the iPhone 11.
On September 11, 2019, Apple unveiled three new iPhone and several new products at its fall launch, including the iPhone 11; IPhone sales in the U.S. and India were higher in the U.S. and India after the iPhone 11 series was launched, and by the end of September, it was even reported that Apple had increased its iPhone 11 orders, requiring suppliers to increase production of the iPhone 11 by about 10 percent. 8 million units increased.
The iPhone 11’s boom is also evident in the domestic market. Sales of the iPhone 11 on the first day of pre-sale increased 335 percent year-on-year (compared to the iPhone XR) and 480 percent year-on-year sales in JD.com, the Beijing News reported. And within a dozen days of its launch, the iPhone 11 was the king of jd.com’s september phone sales, with about 383,000 units twice as many as the second-place iPhone XR. In addition, five of the top 10 phones sold in September were iPhones on the JD platform.
It’s worth noting that the Tmall platform, the iPhone 11, also had the highest sales in September.
In every way, the iPhone “blooded back” in the quarter, especially in Greater China: in Q4, Apple’s revenue in Greater China was $11.134 billion in 2019, down 2.4% year-on-year. In the first two quarters of the 2019 fiscal year, Apple’s revenue in Greater China fell by 21% and 25% Year-on-Year; Apple’s revenue decline narrowed further in the same quarter in Greater China, with the iPhone, apple’s revenue driver, arguably contributing a lot.
However, according to a third-quarter report on the Chinese smartphone market released yesterday by market research firm Canalys, iPhone shipments in China were 5.1 million units in the third quarter of 2019, the same period as Apple’s Q4 fiscal year 2019, a 28% decrease from the same period last year.
In other words, the iPhone 11’s strong performance in the quarter not only slowed the year-on-year decline in iPhone revenue, but also helped apple’s revenue decline in Greater China narrow further. But the iPhone 11 alone won’t reverse the iPhone’s slump in China, where the future of the iPhone remains uncertain.
In addition to the iPhone, Apple’s other hardware products are also noteworthy. The financial results show:
Mac revenue was $6.991 billion, down 4.8% from $7.34 billion a year earlier
iPad revenue was $4.656 billion, up 17% from $3.983 billion a year earlier
Wearables, homes and accessories revenue was $6.52 billion, up 54% from $4.223 billion a year earlier
In all three sets of data, Mac revenue fell nearly 5 percent, compared with nearly 11 percent in the previous quarter, and Apple Chief Financial Officer Luca Maestri said on a earnings call that, despite a 5 percent decline, Mac’s revenue was still higher than in fiscal 2019 Mac revenue was high in the first three quarters.
In addition, the performance of the accessories business, including wearables, homes and accessories, is particularly bright. The accessories business grew 54%, the fastest of all Apple’s product lines, and it has accounted for more than 10% of total revenue for two consecutive quarters.
In addition to hardware, Apple’s software business (service business) is also receiving increasing attention in fy19. Revenue from Apple’s services business reached $12.511 billion in the quarter, up 18 percent from a year earlier, a record high, and it accounted for 21.3 percent of Apple’s total revenue, making it the second-largest pillar of Apple’s revenue, according to the results.
Luca Maestri revealed on a earnings call:
Absolute revenue grew at double-digit growth due to strong customer demand for in-app purchases and subscriptions. Our third-party subscription business grew in multiple categories, up nearly 40% year-on-year.
Tim Cook, for his parting and service business, said:
Our accessories business has grown explosively, with annual revenueexceeding two-thirds of the Fortune 500 and service beyond the Fortune 70.
It’s worth noting that Apple’s gaming service, Apple Arcade, launched on September 19 and offers a free one-month trial, so Apple doesn’t get any revenue this quarter from Apple Arcade, which subscribes for $4.99 a month; Apple TV Plus will be released on November 1.
Apple’s platform now has 450 million paid subscriptions, up from 330 million a year ago, and Apple is on track to break the 500 million mark by 2020. Apple’s service business is expected to strengthen its revenue capacity in the next quarter.
Apple’s Q4 fy.m. financial year 2019 results were encouraging, with overall revenue and gross profit growth positive and stable, and specific products, the iPhone was “back in the blood”, the accessories business is growing rapidly, and service business revenue is at a record high.
And with new additions such as the iPhone 11, The AirPods Pro, Apple Watch Series 5 and Apple TV Plus, Apple’s outlook for the next quarter looks very positive; Q1) revenue for fiscal year 0 will be between $85.5 billion and $89.5 billion, compared to analysts’ expectations of $86.5 billion.
For Apple, however, a good-looking financial report doesn’t mean it’s all good. The iPhone, which lost 50 percent of its revenue for the first time in the last quarter, is back above 50 percent, meaning Apple is still not out of its heavy reliance on the iPhone.
After all, it’s a pleasure to see Apple’s revenue diversify, though it’s not something that can be done overnight.