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- Net profit grew 38% to $18 billion on sales of $74.6 billion; EPS of $3.06, all beat expectations
- The Apple Watch will ship in April
- Sales in the Greater China region rose 70% to $16.1 billion
- Currency headwinds (strong dollar, FX flux in Russia and Japan) cut revenues by 4%
- Dark spot continues to be iPad: sales fell 22% to $9 billion, mirroring a wider contraction in the tablet market
- Average selling price of the iPhone rose $50, to $687
- Shares of Apple jump 5.4% to $109.14 in after-hours trading.
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Apple crushed expectations for its first quarter of fiscal 2015, selling a remarkable 74.6 million iPhones and earning $18 billion in net profit, up 38% from last year, on sales of $74.6 billion, the company revealed on Tuesday in its latest financial report.
Apple's earnings per share came in at $3.06, and gross margins at 39.9%.
Analysts had expected Apple to report a first-quarter net profit of $15.3 billion on sales of $67.6 billion, and earnings per share of $2.57.
Those and Apple's own forecasts of no more than $66.5 billion in sales for the last three months of 2014 appear to have been far too conservative in hindsight, for what's been a record quarter for the Cupertino-based iPhone maker. The company not only reached a new record in iPhone sales but Mac sales too.
Its grip on the market for the most profitable, high-end phones is only strengthening: even as sales jumped amid talk of monetary deflation in several of the world's big economies, Apple said the average selling price for the iPhone rose by around $50, to $687.
Analysts had also predicted sales of between 61 million and 70 million iPhones, meaning Apple beat even the most optimistic expectations for device sales. Its sales would have been 4 percentage points higher were it not for major currency fluctuations, particularly in Japan and Russia, Apple's CFO Luca Maestri said on a conference call.
The company said that 65% of its sales came from abroad, and that sales in China were "particularly impressive." The company ended the quarter with $178 billion in cash and securities.
As for the near future, the company said it expected revenues of between $52 billion and $55 billion for the second quarter of 2015.
"We’re incredibly bullish about the iPhone going forward," Apple CEO Tim Cook said in a conference call on Tuesday, adding that the last quarter had seen the largest rate of people switching from Android to Apple's iOS devices.
He said the company would begin shipping its new Apple Watch in April, and added that his expectations for the device were high.
"I use it everyday," he said. "Love it and can’t live without it."
Piper Jaffray analyst Gene Munster called the results "impressive," and said he was still bullish on Apple shares because the current iPhone cycle would "last longer and be stronger than investors expect as we look forward to the June quarter."
"Today we’re reporting a historic quarter," Cook said on the call. "Interest in Apple products is at a all time high. Demand for the iPhone has been staggering, shattering our high expectations, and driven by the unprecedented popularity of the iPhone 6 and iPhone 6 Plus. This volume is hard to comprehend."
Cook said Apple on average sold 34,000 iPhones per hour, each day in the first quarter.
He added that the company's new mobile-payment system Apple Pay now had support from 750 banks and credit units, with Whole Foods supermarket seeing mobile payments increase more than 400% since it started accepting the service.
Apple said sales in the greater China region, which includes Taiwan, jumped 70% from last year to $16.1 billion.
Apple has made some significant leaps in marketshare recently, most notably in China. The company has quickly become the No. 1 vendor of smartphones in China, research firm Canalys reported today, having languished in fourth place for the last seven quarters, largely thanks to the release of the wider-screen iPhone 6 and 6 Plus.
Apple's ambitions for China are evident in the number of stores it wants to open there: Maestri said the company was on track to open 40 outlets in China by mid 2016, a leap from just 15 today.
Cook deflected questions on the conference call about competition in China, talking up the company's potential and investment there - "We'll hit 20 [stores] soon." - and the jump in demand in the last quarter.
Online revenues in China last quarter were more than the sum of the previous five years, he said. Apple also did not say how many units were shipped in China, but the Greater China region has become a bigger source of Apple's revenue in the last year. Sales there represented 21.6% of total revenue in the first quarter, up from 16.5% a year ago.
Cook also declined to give a break-down on sales of the iPhone 6 versus the 6 Plus, only saying that there were variations in regional preference.
"Some [regions] skew higher to the iPhone 6 Plus... It's something that is not consistent around the world," he said. "Both did incredibly well."
