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Apple Inc. (AAPL)
F1Q 2013 Earnings Conference Call
January 23, 2013 17:00 ET
Previous Statements by AAPL
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Nancy Paxton - Senior Director, Investor Relations
Tim Cook - Chief Executive Officer
Peter Oppenheimer - Chief Financial Officer
Gary Wipfler - Treasurer
Katy Huberty - Morgan Stanley
Bill Shope - Goldman Sachs
Antonio Sacconaghi - Sanford Bernstein
Ben Reitzes - Barclays
Steve Milunovich – UBS
Shannon Cross - Cross Research Group
Gene Munster - Piper Jaffray
Keith Bachman - Bank of Montreal
Scott Craig - Bank of America/Merrill Lynch
Mark Moskowitz - JPMorgan
Chris Whitmore - Deutsche Bank
Good day, everyone, and welcome to this Apple Incorporated First Quarter Fiscal Year 2013 Earnings Release Conference Call. Today’s call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Nancy Paxton, Senior Director of Investor Relations. Please go ahead, ma’am.
Thank you. Good afternoon, and thanks to everyone for joining us. Speaking today are Apple’s CEO, Tim Cook and CFO, Peter Oppenheimer, and they will be joined by Treasurer, Gary Wipfler for the Q&A session with the analysts.
Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, stock-based compensation expense, taxes, and future products. Actual results or trends could differ materially from our forecast. For more information, please refer to the Risk Factors discussed in Apple’s Form 10-K for 2012 and the Form 8-K filed with the SEC today along with the attached press release. Apple assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
I’d now like to turn the call over to Tim Cook for introductory remarks.
Thanks, Nancy and good afternoon everyone and thank you for joining us. We are incredibly pleased to report an extraordinary quarter with $54.5 billion in revenue and new records for iPhone and the iPad sales. No technology company has ever reported these kinds of results.
Apple is in one of the most prolific periods of innovation of new products in its history. Just in the last few months, we have introduced new products in every category that we make. Each one of these reflects our dedication to making the very best products in the world. At Apple, we think about the smallest details and we are unwilling to cut corners in delivering the best customer experience in the world. This relentless commitment to innovation and excellence is the reason our customers choose to buy our product and this will always be the driving force behind Apple.
Apple today is over 80,000 people strong and we are one team working together to surprise and delight our customers. Part of my job is to preserve our culture and drive it forward, so we remain the world’s most innovative company. People join Apple to do the very best work of their life and there is no greater reward than seeing how customers love to use our products. We continue to believe that our fundamental, our remarkable people, our clear and focused strategy, our new product pipeline, our booming ecosystem, and more than 400 Apple retail stores will serve us well in the coming months and years ahead.
Tomorrow marks the anniversary of a revolution. On January 24, 1984, Steve introduced the first Macintosh right here at a shareholder meeting in Cupertino. On the evening news that night, they said it was supposed to be one of the easiest computers to use, and thanks to the new mouse, you hardly have to touch the keyboard. We have come a long way since 1984, but we rely on the same spirit and drive that brought the original Mac and other revolutionary products like the iPod, the iPhone and the iPad into the world.
You are going to hear a lot of impressive numbers during this call, but they are not the only way that we measure success at Apple. The most important thing to us is that our customers love our product, not just buy them, but love them. Everyone here is laser focused on creating an unprecedented customer experience. We have now sold well over 0.5 billion iOS devices, including a staggering 10 per second last quarter alone. We couldn’t have achieved these milestones without the very best products in the world and unmatched execution by our engineering operations and sales teams to deliver so many innovative and beautifully designed products. It’s simply phenomenal.
Everyone at Apple has their eyes on the future, a future driven by the incredible hard work and dedication by the most talented and creative team on earth who all share a common purpose of continuing to create the world’s best product and in doing so enrich the lives of our customers. Today we’re proud to share with you our latest results. Peter will review the highlights of our Q1 earnings and I’ll be back for the Q&A. Peter.
Thanks Tim. We’re very pleased to report the results of Apple’s first fiscal quarter. We established new all-time quarterly records for iPhone and iPad sales, significantly broadened our eco-system and generated Apple’s highest quarterly revenue and net income ever. Revenue for the quarter was 54.5 billion compared to 46.3 billion in the year ago quarter, an increase of 8.2 billion year-over-year. As a remainder our first quarter this fiscal year spanned 13 weeks whereas the first quarter last year included a 14th week. As such average weekly revenue was 4.2 billion in the current year quarter compared to 3.3 billion in the year ago quarter, an increase of 27%. The strong year-over-year growth was fuelled by record iPhone, iPad and iTune sales.
Operating margin was 17.2 billion representing 31.6% of revenue. Net income was a record 13.1 billion just ahead of the amount generated in last year’s 14 week quarter and translated to diluted earnings per share of $13.81. Beginning this fiscal year we’re reorganizing the presentation of our results to provide greater transparency. First, we’ve established a new operating segment of Greater China given the very significant contribution of that region to our overall business. We define Greater China to include Mainland China, Hong Kong and Taiwan. Second, for segment reporting purposes we’re allocating certain manufacturing cost and variances including cost related to product tooling and manufacturing process equipment to our operating segments instead of including these expenditures in corporate expenses as we have done in the past.
We have recast our operating income for each quarter in fiscal 2011 and 2012 to reflect this change and have provided a reconciliation on Apple.com/Investor. These changes have no impact in overall reported operating income. And third, we have realigned the presentation of product information in our summary data schedule to provide greater visibility to revenue by product category. Under this new format revenue from iPhone, iPad, Mac and iPod sales is presented exclusive of related service and accessory revenue. All revenue from iTunes, stand-alone Apple and third party software and services is presented as a single line item and revenue from all Apple and third party accessory sales is presented as a single line item.