Apple Q4 Revenue $64 billion net profit $13.7 billion Cook: iPhone sales improved

 Apple Q4 Revenue $64 billion net profit $13.7 billion Cook: iPhone sales improved

Apple shares rose about 2% in after hours trading on Wednesday. Apple shares closed at $243.26 earlier Wednesday, up more than 50% this year.

The following are the main indicators of financial performance;

u2014u2014The total revenue was US $64.04 billion, up 2% year on year from US $62.900 billion in the same period last year.

u2014u2014Gross profit was US $24.313 billion, up 1% year-on-year from US $24.084 billion in the same period last year.

u2014u2014Net profit was US $13.686 billion, compared with us $14.125 billion in the same period last year, down 3% year on year.

u2014u2014International market revenue accounts for 60% of total revenue.

u2014u2014Apples cash reserves at the end of the quarter were $205.9 billion, compared with $210.6 billion at the end of last quarter, down 2% on month.

By product:

u2014u2014The revenue of wearable, home furnishing and accessories business in the current quarter was US $6.52 billion, up 54% from US $4.223 billion in the same period last year.

u2014u2014The revenue of service business in the current quarter was US $12.511 billion, up 18% year on year from US $10.599 billion in the same period last year.

Interpretation of earnings report

Apple said the iPhone business generated $33.362 billion in revenue this quarter. The figure exceeded analysts expectations of $32.3 billion, but was still below last years $36.755 billion for the same period. But Tim Cook, Apples chief executive, said iPhone revenue fell 15% or more from a year earlier in the previous quarters, a significant improvement.

The wearable devices, home furnishings and accessories business, including applewatch, airpods, homepod, AppleTV and beats headsets, generated $6.52 billion in revenue, easily exceeding Wall Streets expectations.

The latest iPhones and applewatch went on sale on September 20, while Apples quarter ended on September 28, so Apples fourth quarter results included some early sales of these devices.

Although Apple has developed different devices and new digital services in recent years, more than half of its revenue and profits still depend on the iPhone. Mobile phones are still at the heart of the companys sales of other products, so investors are still most concerned about the fate of iPhone products.

Analysts are increasingly optimistic about iPhone 11 sales. Apple has lowered some prices and offered more attractive discounts. There are hundreds of millions of older iPhones that need to be upgraded as soon as possible. But some analysts are worried about the fall in iPhone prices, saying revenue growth will be more difficult to achieve.

Beyond the iPhone business, we grew 17% year-on-year, with wearable devices growing by far more than 50%, continuing the strong momentum of accelerated growth driven by Apple watch and airpods, Cook said.

The services business is also growing at a faster pace, with revenue up 18% in the quarter from a year earlier. Revenue is up 13% from the previous quarter. Apples game service, apple arcade, was launched on September 19, offering a free one month trial, so Apple didnt receive any revenue from its $4.99 monthly subscription service in the fourth quarter. AppleTV + will be released on November 1, while applecard and applenews + were released earlier this year. Apple said its subscription business, including subscription applications, was up 40% year-on-year, and that there were 450 million paid subscribers on its platform.

However, Apples revenue fell in several markets outside the US. Apples revenue in China fell 2% to $11.1 billion in the quarter. Sales also fell in Japan and Europe.

Apples revenue forecast for the next quarter exceeded analysts expectations, indicating strong demand for new services such as the iPhone 11 series smartphones, Apple TV +, and the upgraded wearable devices such as airpodspro and apple watch.

In particular, its new iPhone will help the tech giant recover growth during the key holiday season and gain support from more and more other products and services.

Apple said revenue in the first quarter would be between $85.5 billion and $89.5 billion, compared with analysts forecast of $86.5 billion.

We are very optimistic about the coming holiday season, Cook said. In a conference call with analysts, cook further said that early trends looked very good in terms of new cell phone sales. You can see that in our projections, he added.

Apples optimistic outlook for the next quarter means it will resume growth after failing to meet sales targets during the holiday season last year.

Source: Wang Fengzhi, editor in charge of Netease Technology Report