It seems to me that Apple is only going to be further increasing the number of price points and "levels" of caliber of devices, from budget/entry level all the way to new heights such as things like iPhone Ultra or Macbook Ultra, because services will be have an even wider net to cast into (If you're buying Ultra devices, you'll probably get AppleCare+, and if you have new apple devices such as the Neo or 17e etc, you'll be more likely to get Apple music or books or fitness or whatnot.
I subscribed to MacAddict in the mid-90s, back when Gil Amelio was Apple’s CEO, the company couldn’t ship software (Copland, Dylan, Gershwin, etc.), & they could barely afford to acquire NeXT.
It still blows my mind that this is the same company.
Reported quarterly revenue: ~$111 billion, so a 17% year-over-year increase.
Diluted earnings per share: ~$2. 22% increase compared to the same quarter last year.
Operating cash flow: surpassed $28 billion. Record for a March quarter.
iPhone: Record March-quarter revenue of ~$57 billion, heavily supported by demand for the iPhone 17.
Services: Hit an all-time high revenue record of ~$31 billion.
Capital Allocation: The board raised the quarterly cash dividend by 4% to $0.27 per share and authorized an additional $100 billion for share repurchases.
More generally, we're seeing a transition in their financials away from hardware dependence. At this point we can pretty conclusively say that Apple is now a hardware manufacturer mainly, backed up by a high-margin services ecosystem. Services revenue has grown consistently, providing a smoothing function against the more spikey revenue from the hardware product cycles.
Overall they've managed to maintain an ability to deliver double-digit growth, despite creating categories of product which haven't succeeded, providing enough free cash flow to continue their insane (in terms of scale) capital return program (dividends and massive buybacks in the main).
There's only a handful of sources for the services revenue which is growing like crazy, I wonder if they've been able to negotiate a higher ad revenue cut with Google which was revealed to be 36% in Google's antitrust trial, leaving a lot of money on the table.
It definitely looks like they've been able to stall the effect of rulings allowing apps to use third party payments. But earlier this week the courts reversed a stay of December's injunction that limits Apple to a very small fee, in their arguments against the stay Epic claimed developers were hesitant to use 3rd party payments until they knew what the final cost would be and that reversing the stay would mitigate their fears so it will be interesting to see what happens next quarter.
If they’re going hard in on services maybe they’ll finally go up against Microsoft 365 and Google Workspace, proper.
Between the two someone needs to disrupt it with a cheaper stripped down alternative (from a big player) because the prices are going through the roof.
I was floored to find out recently that the web interface for iCloud (iCloud.com) has no way to edit a spreadsheet in-browser. I thought for sure they’d have browser based Numbers at this point, but nope! I think if they haven’t done this yet it ain’t gonna happen.
So I really wanted to understand the different kinds of margins. Yes, this was made with the help of an AI, with lots of iterations to make it applicable to Apple and easily understandable. I attempted to verify the numbers manually fwiw. Now please roast me.
Net profit margin: 26.6% ($29.58B / $111.18B) — what the company and its shareholders keep after taxes and everything else. (edited)
Operating margin: 32.3% ($35.89B / $111.18B) — left after the product and running the company (staff, R&D, marketing, stores).
Gross margin: 49.3% ($54.78B / $111.18B) — left after paying suppliers and contract manufacturers. Shows how much more customers pay than it costs to build.
I know it is not you but the industry parlance, so a question to anyone knowledgable. Is gross margin ever useful? Sure 50% sounds like a lot, but without R&D and staff and other expenses, you can not make that 50% and even the 100%.
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[ 2.3 ms ] story [ 38.1 ms ] threadIt still blows my mind that this is the same company.
Reported quarterly revenue: ~$111 billion, so a 17% year-over-year increase.
Diluted earnings per share: ~$2. 22% increase compared to the same quarter last year.
Operating cash flow: surpassed $28 billion. Record for a March quarter.
iPhone: Record March-quarter revenue of ~$57 billion, heavily supported by demand for the iPhone 17.
Services: Hit an all-time high revenue record of ~$31 billion.
Capital Allocation: The board raised the quarterly cash dividend by 4% to $0.27 per share and authorized an additional $100 billion for share repurchases.
More generally, we're seeing a transition in their financials away from hardware dependence. At this point we can pretty conclusively say that Apple is now a hardware manufacturer mainly, backed up by a high-margin services ecosystem. Services revenue has grown consistently, providing a smoothing function against the more spikey revenue from the hardware product cycles.
Overall they've managed to maintain an ability to deliver double-digit growth, despite creating categories of product which haven't succeeded, providing enough free cash flow to continue their insane (in terms of scale) capital return program (dividends and massive buybacks in the main).
If the bubble bursts, Apple with its mountain of cash will be ready to buy the carcasses of whatever is left.
It definitely looks like they've been able to stall the effect of rulings allowing apps to use third party payments. But earlier this week the courts reversed a stay of December's injunction that limits Apple to a very small fee, in their arguments against the stay Epic claimed developers were hesitant to use 3rd party payments until they knew what the final cost would be and that reversing the stay would mitigate their fears so it will be interesting to see what happens next quarter.
I used to tout the superiority of Apple Maps to people by saying "And there no ads, so you can trust the results". I can't do that anymore.
Between the two someone needs to disrupt it with a cheaper stripped down alternative (from a big player) because the prices are going through the roof.
Net profit margin: 26.6% ($29.58B / $111.18B) — what the company and its shareholders keep after taxes and everything else. (edited)
Operating margin: 32.3% ($35.89B / $111.18B) — left after the product and running the company (staff, R&D, marketing, stores).
Gross margin: 49.3% ($54.78B / $111.18B) — left after paying suppliers and contract manufacturers. Shows how much more customers pay than it costs to build.