Apple Reports Record Q3 Results, $49.6b revenue, $10.7b profit

iPhone, Apple Watch, Mac & App Store Drive Revenue Growth of 33%

Apple today announced financial results for its fiscal 2015 third quarter ended June 27, 2015. The Company posted quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion, or $1.85 per diluted share. These results compare to revenue of $37.4 billion and net profit of $7.7 billion, or $1.28 per diluted share, in the year-ago quarter. Gross margin was 39.7 percent compared to 39.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

The growth was fueled by record third quarter sales of iPhone® and Mac®, all-time record revenue from services and the successful launch of Apple Watch™.

“We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,” said Tim Cook, Apple’s CEO.

“The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.”

Luca Maestri, Apple’s CFO said,

“In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent,”

“We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.”

Apple is providing the following guidance for its fiscal 2015 fourth quarter:

• revenue between $49 billion and $51 billion
• gross margin between 38.5 percent and 39.5 percent
• operating expenses between $5.85 billion and $5.95 billion
• other income/(expense) of $400 million
• tax rate of 26.3 percent

Apple’s board of directors has declared a cash dividend of $.52 per share of the Company’s common stock. The dividend is payable on August 13, 2015, to shareholders of record as of the close of business on August 10, 2015.

Apple will provide live streaming of its Q3 2015 financial results conference call beginning at 2:00 p.m. PDT on July 21, 2015 at apple.com/quicktime/qtv/earningsq315. This webcast will also be available for replay for approximately two weeks thereafter.
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Apple Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts)
		Three Months Ended						Nine Months Ended
		June 27, 2015			June 28, 2014			June 27, 2015			June 28, 2014
Net sales		$	49,605		$	37,432		$	182,214		$	140,672
Cost of sales (1)			29,924			22,697			109,136			86,144
Gross margin			19,681			14,735			73,078			54,528
Operating expenses:
Research and development (1)			2,034			1,603			5,847			4,355
Selling, general and administrative (1)			3,564			2,850			10,624			8,835
Total operating expenses			5,598			4,453			16,471			13,190
Operating income			14,083			10,282			56,607			41,338
Other income/(expense), net			390			202			846			673
Income before provision for income taxes			14,473			10,484			57,453			42,011
Provision for income taxes			3,796			2,736			15,183			10,968
Net income		$	10,677		$	7,748		$	42,270		$	31,043
Earnings per share:
Basic		$	1.86		$	1.29		$	7.30		$	5.06
Diluted		$	1.85		$	1.28		$	7.25		$	5.03
Shares used in computing earnings per share:
Basic			5,729,886			6,012,635			5,788,922			6,136,147
Diluted			5,773,099			6,051,711			5,829,920			6,172,857
Cash dividends declared per share		$	0.52		$	0.47		$	1.46		$	1.35
(1) Includes share-based compensation expense as follows:
Cost of sales		$	148		$	115		$	430		$	334
Research and development		$	388		$	313		$	1,146		$	902
Selling, general and administrative		$	320		$	296		$	1,095		$	865

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Apple Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value)
		June 27, 2015			September 27, 2014
ASSETS:
Current assets:
Cash and cash equivalents		$	15,319		$	13,844
Short-term marketable securities			19,384			11,233
Accounts receivable, less allowances of $83 and $86, respectively			10,370			17,460
Inventories			2,042			2,111
Deferred tax assets			5,010			4,318
Vendor non-trade receivables			9,537			9,759
Other current assets			9,291			9,806
Total current assets			70,953			68,531
Long-term marketable securities			168,145			130,162
Property, plant and equipment, net			21,149			20,624
Goodwill			5,044			4,616
Acquired intangible assets, net			3,779			4,142
Other assets			4,081			3,764
Total assets		$	273,151		$	231,839
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable		$	26,474		$	30,196
Accrued expenses			22,724			18,453
Deferred revenue			9,088			8,491
Commercial paper			4,499			6,308
Current portion of long-term debt			2,500			0
Total current liabilities			65,285			63,448
Deferred revenue, non-current			3,474			3,031
Long-term debt			47,419			28,987
Other non-current liabilities			31,296			24,826
Total liabilities			147,474			120,292
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,705,400 and 5,866,161 shares issued and outstanding, respectively			26,327			23,313
Retained earnings			98,252			87,152
Accumulated other comprehensive income			1,098			1,082
Total shareholders’ equity			125,677			111,547
Total liabilities and shareholders’ equity		$	273,151		$	231,839