Apple posted quarterly revenue of $58.3 billion, an increase of 1% from the year-ago quarter. The company also posted and quarterly earnings per diluted share of $2.55, up 4 percent.

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Origin: Apple Insider – Notes of interest from Apple’s second quarter 2020 earnings report

Highlights from the earnings report, and the conference call

    • Apple’s wearables and services were leaders, with wearables climbing over $1 billion from the year-ago quarter
    • Percentages for regions:
      Americas -0.5%
      Europe +9.5%
      Greater China -7.5%
      Japan -5.9%
      rest of Asia-Pacific +7.5%
    • Quarterly revenue record for Apple Retail
    • Cook expects to meet goal of doubling of 2016 services revenue by 2020
    • All-time records in several Services categories
    • Services gross margin: 65.4%     !!!!
    • “Slight elongation” in iPhone replacement cycle, active install base of iPhones is at an all-time high
    • All-time revenue records in App Store, Apple Music, Cloud Services, App Store Search Ad businesses
    • Third-party subscriptions grew over 40% year-over-year, all-time high
    • 515 million paid subscriptions across all services, up 125 million versus a year ago
    • Wearables the size of a Fortune 140 company by itself
    • 75% of Apple Watch purchasers in the quarter new to the product
    • Half of Mac and iPad purchasers new to the product
    • All-time high Mac and iPad user base
    • $22 billion returned to shareholders with $18.5 billion of that in buybacks
    • iPad and Mac expected to improve year-over-year
    • $40 billion remains in current share repurchase plan
    • Apple stock at $288.75 as of 5:30 P.M. Eastern Time

Q & A:

    • Wamsi Mohan – Bank of America: Given unprecedented times, how should we expect product development to proceed
    • Tim Cook: iPhone SE, MacBook Air shipped while company was under duress. “New products are our lifeblood”
    • Katy Huberty – Morgan Stanley: Where do you see structural changes on the back of this health crisis in regards to revenue streams?
    • Cook suspects remote learning trend will accelerate, working remotely will as well in some jobs
      Apple has significant solutions and products in this, and health
      Cook in regards to health: “You can bet that we’re looking at other areas”
    • Q: $50 billion share repurchase, lower than last few years. Context?
    • Maestri: No real change in buyback strategy or philosophy.
      Nothing has changed in regards to mergers and acquisitions. “We purchase companies on a very regular basis”
    • Jeriel Ong – Deutsche Bank: Will Services be materially impacted by coronavirus and other macro changes?
    • Maestri: Expect digital services to perform at the same level of performance & growth as during the previous quarter
      June quarter will see impacts to AppleCare (repairs & warranty specifically, because of store closures
      Uncertainty will also impact Advertising business on App Store, Apple News, and third-party agreements
    • Samik Chatterjee – J.P. Morgan : China increases & recoveries are driven by what?
    • Cook: Strong iPad, wearables, Services in China
      March, stores reopened and recovery began and continues into April.
      Store foot traffic not yet back to pre-lockdown in China, more move to online
      Not yet clear if this is a permanent shift
    • Chris Casons – Raymond James : What was behind the iPhone SE return and strategy?
    • Cook: “Always been about delivering the best product at a good price, that fundamental strategy has not changed at all”
      Don’t read anything more into that
    • Q: What do you expect for commodity pricing changes?
    • Cook: Displays, DRAM declined in the last quarter with an increase in NAND.
      DRAM, NAND expected to stay static, display expected to decline in the next quarter