11 key takeaways from Apple’s latest blockbuster financial quarter


Photo: Jim Merithew
Apple Pay is coming to Best Buy. And that's just one small piece of good news from Apple's latest earnings call. Photo: Jim Merithew/Cult of Mac

The iPhone 6 is a monster hit, China is now bigger than US for iPhone sales, and Tim Cook is delighted with the world’s response to the Apple Watch. And those are just some of the key insights from today’s Apple earnings call.

Here are the top 11 takeaways about Cupertino’s blockbuster second quarter, which once again set financial records.

Apple continues to grow

There’s no slowdown whatsoever in Apple’s ever-ballooning business. Q2 2015 was another huge, record quarter, with revenue at a mind-boggling $58 billion, representing 27 percent year-over-year growth. Revenue was higher than Wall Street expected, but not quite as big as the record December quarter, which was a $75 billion monster. Still, not too shabby.

iPhone 6 is a monster hit

The iPhone 6 still sells like hot cakes. Photo: Jim Merithew/Cult of Mac
The iPhone 6 is still selling in massive numbers. Photo: Jim Merithew/Cult of Mac
Photo: Jim Merithew/Cult of Mac

iPhone shipments passed 61 million, the second-highest quarterly total ever. iPhone revenue represented 69 percent of Apple’s total sales, the same as in the December quarter. 20 percent of the active iPhone install base has upgraded to the iPhone 6 or 6 Plus, so there’s plenty of upgrade headroom among current iPhone owners, according to Cook.

You’re seeing Apple’s vision of the future

Three new products available (sort of) right now are giving Apple buyers a glimpse of the future, Cook said:

  1. The all-new, crazy-thin MacBook.
  2. Apple-exclusive (for now) streaming service HBO Now.
  3. Apple Watch, which is an unabashed hit out of the gate.

Everything’s up, except iPad

The iPhone 6 drove sales, but almost all of Apple’s revenue sources climbed. Here are the numbers:

  • iPhone — 61.2 million, 40 percent YOY growth.
  • Mac – 4.7 million units sold, 10 percent YOY growth, spurred by the updated MacBook Air. Meanwhile, the PC market shrank by 7 percent in the same period, according to IDC.
  • App Store — Apple services climbed to $5 billion for the quarter, with App Store sales growing 100 percent year-over-year to set an “all-time record performance,” according to Apple.
  • Switchers — We didn’t get an actual number on this, but Cook said Apple is seeing a “higher rate of people switching to iPhone than we’ve experienced in previous cycles.”

China is booming

Apple is growing like a weed in China. Apple's retail stores have always been attractive places, but their newest store in the West Lake shopping center in Hangzhou, China, is more than attractive: it's gorgeous. Credit: Apple
Apple is growing like crazy in China. Apple’s retail stores have always been attractive places, but their newest store in the West Lake shopping center in Hangzhou, China, is more than attractive: it’s gorgeous. Credit: Apple

China has now become Apple’s biggest market for iPhone sales, besting the home turf of America. Apple’s iPhone sales in Greater China — which includes the mainland, Hong Kong and Taiwan — surpassed US sales, although Spple did;t disclose specific numbers. As a result, China revenues hit an all-time high: $16.8 billion, about 30 percent of the company’s total sales. The iPhone led the way, up over 70% year-over-year, and the iPad too hit record sales numbers.

The Mac also had an unbelievable quarter in China. Sales were up over 30%, even though PC sales contracted 5% in Greater China.

“I’ve never seen as many people coming into the middle class as they are in China, and that’s where the bulk of our sales are going,” Cook said. The App Store also set a record, growing over 100% in China year-over-year.

iPad sales are slowing

iPad sales are slowing. Photo: Jim Merithew/Cult of Mac
iPad sales are slowing. Photo: Jim Merithew/Cult of Mac

iPad sales are slowing. They fell 23 percent year-over-year to 12.6 million, down from 16 million in the year-ago-quarter. In fact, Mac revenue beat iPad revenue in Q2. This is only the second time this has happened since 2011.

However, Cook is still a big believer in iPad, saying it’s going to be a big player in enterprise. Plus, data shows that the market isn’t saturated and the iPad is still popular among first time buyers. “I still think the iPad is an extremely good business over the long-term,” said Cook.

Cook also hinted that some new features should be coming to Apple’s tablet soon.

Apple investors are smiling

Apple now has an ungodly $193.5 billion in cash and investments. Apple also announced that it’s returning an extra $200 billion to shareholders by the end of March 2017.

Apple Watch demand is exceeding supply

Tap your way to wherever you want. Photo: Jim Merithew/Cult of Mac
Tap your way to wherever you want. Photo: Jim Merithew/Cult of Mac

There were no specifics on sales of the Apple Watch, but Cook said it’s off to a good start. “Right now, demand is greater than supply” for the Apple Watch, is all Cook would say.

However, Apple hopes to bring the Apple Watch to more countries in a couple of months: “I think we’re in a good position, and sometime in late June we anticipate being in a position to sell the Apple Watch in different countries,” he said.

The response to Apple Watch has been “overwhelmingly positive,” Cook added. “I’m thrilled. I’m not sure how to say it any clearer than that.”

Cook said there are already more than 3,500 apps available for the new wearable — more apps at launch than Apple had for the iPad at launch.

Apple stock is up again

Apple earnings are on the way. Photo: Jim Merithew/Cult of Mac
Apple stock is up again. Photo: Jim Merithew/Cult of Mac

Apple shares closed today at $132.65 — up about 22 percent so far this year, and up about 2 percent on the day. If and when AAPL goes up to $175, Apple will become the world’s first trillion-dollar company.

Apple Pay still growing

Apple is seeing great momentum with Apple Pay. The number of locations accepting the mobile payments service has tripled. Discover just signed up to support Apple Pay in the fall — another big get for the platform. Best Buy announced it’s bringing Apple Pay to its retail stores. 50 major hospitals across the country will accept Apple Pay for co-pays and payments later this year.

“The Apple ecosystem continues to expand in exciting ways,” Cook said.

ResearchKit is a life-changing hit

More than 1,000 medical researchers have contacted Apple to launch studies using ResearchKit. Response from the health community has been amazing, Cook says.