Apple Reports Second Quarter Results

Services Revenue Reaches New All-Time High of $11.5 Billion

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced financial results for its fiscal 2019 second
quarter ended March 30, 2019. The Company posted quarterly revenue of
$58 billion, a decline of 5 percent from the year-ago quarter, and
quarterly earnings per diluted share of $2.46, down 10 percent.
International sales accounted for 61 percent of the quarter’s revenue.

“Our March quarter results show the continued strength of our installed
base of over 1.4 billion active devices, as we set an all-time record
for Services, and the strong momentum of our Wearables, Home and
Accessories category, which set a new March quarter record,” said Tim
Cook, Apple’s CEO. “We delivered our strongest iPad growth in six years,
and we are as excited as ever about our pipeline of innovative hardware,
software and services. We’re looking forward to sharing more with
developers and customers at Apple’s 30th annual Worldwide Developers
Conference in June.”

“We generated operating cash flow of $11.2 billion in the March quarter
and continued to make significant investments in all areas of our
business,” said Luca Maestri, Apple’s CFO. “We also returned over $27
billion to shareholders through share repurchases and dividends. Given
our confidence in Apple’s future and the value we see in our stock, our
Board has authorized an additional $75 billion for share repurchases. We
are also raising our quarterly dividend for the seventh time in less
than seven years.”

Reflecting the approved increase, Apple’s board of directors has
declared a cash dividend of $0.77 per share of the Company’s common
stock, an increase of 5 percent. The dividend is payable on May 16, 2019
to shareholders of record as of the close of business on May 13, 2019.

The management team and the Board will continue to review each element
of the capital return program regularly and plan to provide an update on
the program on an annual basis.

Apple is providing the following guidance for its fiscal 2019 third
quarter:

• revenue between $52.5 billion and $54.5 billion
• gross margin
between 37 percent and 38 percent
• operating expenses between $8.7
billion and $8.8 billion
• other income/(expense) of $250 million
•
tax rate of approximately 16.5 percent

Apple will provide live streaming of its Q2 2019 financial results
conference call beginning at 2:00 p.m. PDT on April 30, 2019 at www.apple.com/investor/earnings-call/.
This webcast will also be available for replay for approximately two
weeks thereafter.

Apple periodically provides information for investors on its corporate
website, apple.com,
and its investors relations website, investor.apple.com.
This includes press releases and other information about financial
performance, reports filed or furnished with the SEC, information on
corporate governance and details related to its annual meeting of
shareholders.

This press release contains forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include without limitation those about the
Company’s estimated revenue, gross margin, operating expenses, other
income/(expense), tax rate, and plans for return of capital. These
statements involve risks and uncertainties, and actual results may
differ. Risks and uncertainties include without limitation: the effect
of global and regional economic conditions on the Company’s business,
including effects on purchasing decisions by consumers and businesses;
the ability of the Company to compete in markets that are highly
competitive and subject to rapid technological change; the ability of
the Company to manage frequent introductions and transitions of products
and services, including delivering to the marketplace, and stimulating
customer demand for, new products, services and technological
innovations on a timely basis; the effect that shifts in the mix of
products and services and in the geographic, currency or channel mix,
component cost increases, increases in the cost of acquiring and
delivering content for the Company’s services, price competition, or the
introduction of new products or services, including new products or
services with higher cost structures, could have on the Company’s gross
margin; the dependency of the Company on the performance of distributors
of the Company’s products, including cellular network carriers and other
resellers; the inventory and other asset risks associated with the
Company’s need to order, or commit to order, product components in
advance of customer orders; the continued availability on acceptable
terms, or at all, of certain components, services and new technologies
essential to the Company’s business, including components and
technologies that may only be available from single or limited sources;
the dependency of the Company on manufacturing and logistics services
provided by third parties, many of which are located outside of the US
and which may affect the quality, quantity or cost of products
manufactured or services rendered to the Company; the effect of product
and services design and manufacturing defects on the Company’s financial
performance and reputation; the dependency of the Company on third-party
intellectual property and digital content, which may not be available to
the Company on commercially reasonable terms or at all; the dependency
of the Company on support from third-party software developers to
develop and maintain software applications and services for the
Company’s products; the impact of unfavorable legal proceedings, such as
a potential finding that the Company has infringed on the intellectual
property rights of others; the impact of changes to laws and regulations
that affect the Company’s activities, including the Company’s ability to
offer products or services to customers in different regions; the
ability of the Company to manage risks associated with its international
activities, including complying with laws and regulations affecting the
Company’s international operations; the ability of the Company to manage
risks associated with the Company’s retail stores; the ability of the
Company to manage risks associated with the Company’s investments in new
business strategies and acquisitions; the impact on the Company’s
business and reputation from information technology system failures,
network disruptions or losses or unauthorized access to, or release of,
confidential information; the ability of the Company to comply with laws
and regulations regarding data protection; the continued service and
availability of key executives and employees; political events,
international trade disputes, war, terrorism, natural disasters, public
health issues, and other business interruptions that could disrupt
supply or delivery of, or demand for, the Company’s products; financial
risks, including risks relating to currency fluctuations, credit risks
and fluctuations in the market value of the Company’s investment
portfolio; and changes in tax rates and exposure to additional tax
liabilities. More information on these risks and other potential factors
that could affect the Company’s financial results is included in the
Company’s filings with the SEC, including in the “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” sections of the Company’s most recently filed periodic
reports on Form 10-K and Form 10-Q and subsequent filings. The Company
assumes no obligation to update any forward-looking statements or
information, which speak as of their respective dates.

Apple revolutionized personal technology with the introduction of the
Macintosh in 1984. Today, Apple leads the world in innovation with
iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software
platforms — iOS, macOS, watchOS and tvOS — provide seamless experiences
across all Apple devices and empower people with breakthrough services
including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more
than 100,000 employees are dedicated to making the best products on
earth, and to leaving the world better than we found it.

NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom),
or call Apple’s Media Helpline at (408) 974-2042.


Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Net sales:
Products	$	46,565	$	51,287	$	120,000	$	130,451
Services	11,450		9,850		22,325		18,979
Total net sales ⁽¹⁾	58,015		61,137		142,325		149,430
Cost of sales:
Products	32,047		33,936		80,285		84,511
Services	4,147		3,779		8,188		7,585
Total cost of sales	36,194		37,715		88,473		92,096
Gross margin	21,821		23,422		53,852		57,334

Operating expenses:
Research and development	3,948		3,378		7,850		6,785
Selling, general and administrative	4,458		4,150		9,241		8,381
Total operating expenses	8,406		7,528		17,091		15,166

Operating income	13,415		15,894		36,761		42,168
Other income/(expense), net	378		274		938		1,030
Income before provision for income taxes	13,793		16,168		37,699		43,198
Provision for income taxes	2,232		2,346		6,173		9,311
Net income	$	11,561	$	13,822	$	31,526	$	33,887

Earnings per share:
Basic	$	2.47	$	2.75	$	6.70	$	6.69
Diluted	$	2.46	$	2.73	$	6.66	$	6.63
Shares used in computing earnings per share:
Basic	4,674,071		5,024,877		4,704,945		5,068,877
Diluted	4,700,646		5,068,493		4,736,949		5,113,140

⁽¹⁾ Net sales by reportable segment:
Americas	$	25,596	$	24,841	$	62,536	$	60,034
Europe	13,054		13,846		33,417		34,900
Greater China	10,218		13,024		23,387		30,980
Japan	5,532		5,468		12,442		12,705
Rest of Asia Pacific	3,615		3,958		10,543		10,811
Total net sales	$	58,015	$	61,137	$	142,325	$	149,430

⁽¹⁾ Net sales by category:
iPhone	$	31,051	$	37,559	$	83,033	$	98,663
Mac	5,513		5,776		12,929		12,600
iPad	4,872		4,008		11,601		9,763
Wearables, Home and Accessories	5,129		3,944		12,437		9,425
Services	11,450		9,850		22,325		18,979
Total net sales	$	58,015	$	61,137	$	142,325	$	149,430


Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in thousands and par value)

	March 30, 2019			September 29, 2018
ASSETS:
Current assets:
Cash and cash equivalents	$	37,988		$	25,913
Marketable securities	42,104			40,388
Accounts receivable, net	15,085			23,186
Inventories	4,884			3,956
Vendor non-trade receivables	11,193			25,809
Other current assets	12,092			12,087
Total current assets	123,346			131,339

Non-current assets:
Marketable securities	145,319			170,799
Property, plant and equipment, net	38,746			41,304
Other non-current assets	34,587			22,283
Total non-current assets	218,652			234,386
Total assets	$	341,998		$	365,725

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	30,443		$	55,888
Other current liabilities	35,368			33,327
Deferred revenue	5,532			5,966
Commercial paper	11,924			11,964
Term debt	10,505			8,784
Total current liabilities	93,772			115,929

Non-current liabilities:
Term debt	90,201			93,735
Other non-current liabilities	52,165			48,914
Total non-current liabilities	142,366			142,649
Total liabilities	236,138			258,578

Commitments and contingencies

Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,607,284 and 4,754,986 shares issued and outstanding, respectively	42,801			40,201
Retained earnings	64,558			70,400
Accumulated other comprehensive income/(loss)	(1,499		)	(3,454		)
Total shareholders’ equity	105,860			107,147
Total liabilities and shareholders’ equity	$	341,998		$	365,725


Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)

	Six Months Ended
	March 30, 2019			March 31, 2018
Cash, cash equivalents and restricted cash, beginning balances	$	25,913		$	20,289
Operating activities:
Net income	31,526			33,887
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization	6,435			5,484
Share-based compensation expense	3,073			2,644
Deferred income tax benefit	(124		)	(34,235		)
Other	(215		)	(151		)
Changes in operating assets and liabilities:
Accounts receivable, net	8,094			3,523
Inventories	(1,006		)	(2,807		)
Vendor non-trade receivables	14,616			9,715
Other current and non-current assets	(717		)	(1,053		)
Accounts payable	(20,024		)	(12,004		)
Deferred revenue	(540		)	394
Other current and non-current liabilities	(3,273		)	38,026
Cash generated by operating activities	37,845			43,423
Investing activities:
Purchases of marketable securities	(13,854		)	(48,449		)
Proceeds from maturities of marketable securities	16,880			31,884
Proceeds from sales of marketable securities	22,635			38,942
Payments for acquisition of property, plant and equipment	(5,718		)	(7,005		)
Payments made in connection with business acquisitions, net	(291		)	(305		)
Purchases of non-marketable securities	(490		)	(163		)
Other	30			216
Cash generated by investing activities	19,192			15,120
Financing activities:
Proceeds from issuance of common stock	390			327
Payments for taxes related to net share settlement of equity awards	(1,427		)	(1,190		)
Payments for dividends and dividend equivalents	(7,011		)	(6,529		)
Repurchases of common stock	(32,498		)	(32,851		)
Proceeds from issuance of term debt, net	—			6,969
Repayments of term debt	(2,500		)	(500		)
Other	(87		)	1
Cash used in financing activities	(43,133		)	(33,773		)
Increase in cash, cash equivalents and restricted cash	13,904			24,770
Cash, cash equivalents and restricted cash, ending balances	$	39,817		$	45,059
Supplemental cash flow disclosure:
Cash paid for income taxes, net	$	9,497		$	6,340
Cash paid for interest	$	1,762		$	1,356

Contacts

Apple
Press Contact:
Kristin Huguet, (408) 974-2414
khuguet@apple.com

Investor
Relations Contacts:
Nancy Paxton, (408) 974-5420
paxton1@apple.com
Matt
Blake, (408) 974-7406
mattblake@apple.com