Apple’s Q3 2016 results beats expectations, $42.4B in revenue, 40.4M iPhone sales

Apple today announced financial results for its fiscal 2016 third quarter ended June 25, 2016. The Company posted quarterly revenue of $42.4 billion and quarterly net income of $7.8 billion, or $1.42 per diluted share.

These results compare to revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.7 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.

“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” said Tim Cook, Apple’s CEO.

“We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”

Luca Maestri, Apple’s CFO said,

“Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,”

“We returned over $13 billion to investors through share repurchases and dividends, and we have now completed almost $177 billion of our $250 billion capital return program.”

Highlights

• Demand for iPhone SE outstripped supply throughout the quarter, prompting Apple to add capacity
• Apple saw its highest level of switchers to the iPhone ever
• iPad saw its best result in 10 quarters, with revenue up 9 percent year over year
• Apple’s services business also saw 19 percent growth and will be the size of a Fortune 100 company next year
• iPhone average selling price fell $595 due to popularity of the iPhone SE. ASPs are expected to increase next quarter
• Apple finished the quarter with $231.5 billion in cash

Apple is providing the following guidance for its fiscal 2016 fourth quarter:

• revenue between $45.5 billion and $47.5 billion
• gross margin between 37.5 percent and 38 percent
• operating expenses between $6.05 billion and $6.15 billion
• other income/(expense) of $350 million
• tax rate of 25.5 percent

Apple’s board of directors has declared a cash dividend of $.57 per share of the Company’s common stock.  The dividend is payable on August 11, 2016 to shareholders of record as of the close of business on August 8, 2016.

Apple will provide live streaming of its Q3 2016 financial results conference call beginning at 2:00 p.m. PDT on July 26, 2016 at apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.