Q1 2014 Earnings Call Transcript

Transcript Call Date 01/27/2014

Operator: Good day, everyone and welcome to the Apple Incorporated First Quarter Fiscal Year 2014 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.

Nancy Paxton - IR: Thank you. Good afternoon, and thanks to everyone for joining us. Speaking first today is Apple's CFO, Peter Oppenheimer. He will be joined by CEO, Tim Cook; Vice President and Corporate Controller, Luca Maestri for the Q&A session with analysts.

Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenues, gross margins, 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 2013, the Form 8-K filed with the SEC today, along with the associated press release. Apple assumes no obligation to update any forward-looking statements or information, which speak as of their respective date.

I'd now like to turn the call over to Peter Oppenheimer for introductory remarks.

Peter Oppenheimer - SVP and CFO: Thank you, Nancy. We are very pleased to report the results of the first quarter of Apple's fiscal year '14. We established new all-time quarterly records for iPhone and iPad sales and had one of our best Mac quarters ever, driving the highest quarterly revenue and operating profit in Apple's history. We were also very pleased with our results in emerging markets around the world.

Revenue for the quarter was $57.6 billion, up $3.1 billion, or 6%, from the year-ago quarter and near the high end of our guidance range. No technology company has ever generated that much revenue in a single quarter and we are especially pleased to have generated that record besides foreign exchange headwinds, the year-over-year decline in iPod sales and the higher revenue deferral rates from iOS devices and Mac that we discussed last quarter. These three factors negatively impacted revenue by about $2.5 billion and without them our year-over-year revenue growth would have been about 10%.

Gross margin was 37.9%, above the high end of our guidance range, and operating margin was an all-time record of $17.5 billion, representing 30.3% of revenue.

Net income was $13.1 billion, translating to diluted earnings per share of $14.50, a new record.

As for the details of the quarter, I'd like to begin with iPhone. Despite the five constraints on iPhone 5s, we sold 51 million iPhones compared to 47.8 million in the year ago quarter. That's an increase of over 3 million phones or 7% and a new quarterly record.

iPhone sales growth was very strong year-over-year in Japan, thanks to the addition of NTT DOCOMO in September, and our continued partnership with SoftBank and KDDI. In fact, based on the latest data published by Kantar, iPhone accounts for 69% share of the smartphone market in Japan. We also generated strong year-over-year iPhone growth in Greater China, Latin America, the Middle East and Russia.

Read our Earnings Call Transcript disclaimer.
Add a Comment
E-mail me new replies.