Apple Q1 2019 Reports $84.3B Revenue

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Apple gained 3.6% on Q1 2019 results that beat EPS and revenue estimates with revenue down 5% Y/Y. The downsides in iPhone and China were largely priced into the quarter following Apple’s outlook cut earlier this month.

Revenue breakdown: iPhone, $52B (-15% Y/Y); Mac, $7.4B (+9% Y/Y); Wearables, Home and Accessories, $7.3B (+33% Y/Y); iPad, $6.7B (+17% Y/Y); Services, $10.9B (+19% Y/Y). Apple disclosed Services margin for the first time and it was 62.8%.

Greater China revenue fell from nearly $18B in last year’s quarter to $13.2B. Tim Cook attributed the quarter’s iPhone weakness to the soft China market. Operating cash flow was $26.7B and Apple returned $13B to investors during the quarter. The net cash balance was $130B at period’s end.

Downside Q2 guidance has revenue from $55B to $59B (consensus: $58.97B), gross margin from 37% to 38% (consensus: 38%), and operating expenses of $8.5B to $8.6B.

While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” said Tim Cook, Apple’s CEO.

“Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”

Luca Maestri, Apple’s CFO said,

“We generated very strong operating cash flow of $26.7 billion during the December quarter and set an all-time EPS record of $4.18,”

“We returned over $13 billion to our investors during the quarter through dividends and share repurchases. Our net cash balance was $130 billion at the end of the quarter, and we continue to target a net cash neutral position over time.”

Apple is providing the following guidance for its fiscal 2019 second quarter.  Revenue between $55 billion and $59 billion, gross margin between 37 percent and 38 percent, operating expenses between $8.5 billion and $8.6 billion, other income/(expense) of $300 million and tax rate of approximately 17 percent.

Earnings call is scheduled for 5 PM ET with a webcast available here.

Consolidated Financial Statements

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