Apple announces Q1 2019 profit of $19.97B and revenue of $84.3B, following its revision down from $89B-$93B, and projects $55B to $59B over the next quarter
here's what every major analyst says about Apple's earnings Lucas Matney / TechCrunch : Apple's global active install base of iPhones surpassed 900 million this quarter Abdullah / Gizchina : Apple reveals the number of active iPhones in the world for the first time Bogdan Popa / Softpedia News : Apple to Cut 2018 iPhone Prices in International Markets Tweets: Brad Sams / @bdsams : Apple says it's active install base reaches 1.4 billion devices - pretty much matching number of PCs in the world at 1.5 billion That's...a lot of device to monetize with services. Dare Obasanjo / @carnage4life : iPhone revenue down 15% year over year while services revenue up 19%. Apple's revenue growth now dependent on rent seeking with its 30% cut of IAPs & charging you for iCloud storage. These aren't customer-centric incentives versus selling more phones http://9to5mac.com/... Rene Ritchie / @reneritchie : Over 50 million Apple Music subscribers. iTunes had it's best revenues ever. Ian Sherr / @iansherr : $AAPL's @tim_cook: Now talking about Apple's lead in silicon. Pointing out how AI is being built into the technology. “It does all this while keeping personal information private.” No mention of FaceTime Bug though while banging the privacy drum. Alex Heath / @alexeheath : Apple CFO says that the Chinese government not approving new games in the country “clearly is affecting our business right now"Games are the biggest source of revenue from the App Store by a wide margin Neil Cybart / @neilcybart : iCloud revenue up 40% year-over-year last quarter. Apple News: 85M monthly active users in three countries (U.S., Australia, and U.K.) Walt Mossberg / @waltmossberg : It's true that @Apple likely overpriced the latest iPhones in a mature market, especially in China. And that it therefore overestimated revenues and earnings. But, people, please remember that the shortfall meant they took in “only” $84 billion in 90 days instead of $93 billion. Ian Sherr / @iansherr : Apple's @tim_cook: Customers are holding onto older iPhones longer than they have in the past. “It's important to understand what's going on from the customer perspective.” Neil Cybart / @neilcybart : 1.8B Apple Pay transactions (I think I heard that correct). Twice the volume versus a year ago. Woah. @zerohedge : AAPL Revenue in Turkey down $700 million “because of currency issues.” Ian Sherr / @iansherr : So, the first quarter we don't get iPhone units, we still get iPhone revenue (which was down 15% — in line with expectations) Mac, iPad, Wearables and Services all up. Shows how important iPhone still is to Apple. Roger Cheng / @rogerwcheng : Apple isn't giving out iPhone unit sales numbers anymore, but revenue fell 15% to $52 billion in FYQ1. @jeffersongraham : Apple—the numbers are in for the holiday quarter. iPhone sales down 15, revenue down 5% to $84.3B, Services (iTunes, AppleCare, iCloud) $10.9B all time high, up 19% from year ago quarter. @usatodaytech Todd Haselton / @robotodd : Apple missed on iPhone revenue - $51.98 billion, vs. $52.67 billion forecast by Refinitiv consensus estimates https://cnb.cx/2UsHOjo @sixcolorsevent : Good afternoon friends. Numbers are in: Apple reporting Q119 revenue of $84.3 billion (down 5% YOY) with quarterly earnings per share of $4.18 (up 7.5% YOY). iPhone revenue $52b (down 15% YOY), Services rev. $10.9b (up 19 percent). Active installed base all time high: 1.4b. Rene Ritchie / @reneritchie : From @tim_cook: “While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter's results demonstrate that the underlying strength of our business runs deep and wide."1/2 Rene Ritchie / @reneritchie : Apple Q2 Guidance:- revenue between $55 billion and $59 billion- gross margin between 37 percent and 38 percent- operating expenses between $8.5 billion and $8.6 billion- other income/(expense) of $300 million- tax rate of approximately 17 percent
Context & Ripple Effects
This quarter closes a slide that began earlier in the decade: after the 2016 quarter when revenue fell 15% YoY on shrinking iPhone units, Apple had leaned on rising prices to hold the line. The cut from $89B-$93B guidance to $84.3B actual breaks that pattern, and the damage is concentrated where the old playbook can't help — iPhone revenue down 15% YoY to $52B, plus roughly $700M lost in Turkey to currency and a China business dragged by unapproved games.
The strategic response is a change in what Apple reports at all: it stops disclosing iPhone unit sales and instead surfaces a record 1.4 billion active devices, including more than 900 million iPhones — the denominator for a Services line growing 19% YoY to $10.9B, with iCloud up 40%. That reframing sets up the arc the later numbers confirm, from $19.6B in quarterly Services revenue and 860M paying subscribers by mid-2022 back to this quarter as the pivot point.
First-order effects
- Investors lose the iPhone unit metric they priced Apple on for a decade; the new disclosed basis — 1.4B active devices against $10.9B in quarterly Services revenue — forces analysts to revalue the stock around monetization per device rather than shipment counts.
- Apple's own guidance of $55B-$59B for the March quarter, versus $61.1B a year earlier, puts a formal number on the contraction and hands Tim Cook and the CFO a credibility test after the miss against the original $89B-$93B range.
Second-order effects
- With demand softening abroad, Apple turns to price: reports of 2018 iPhone price cuts in international markets signal a shift from premium-price defense to volume defense in emerging markets, pressuring the average selling price that carried recent quarters.
- Suppliers and carriers built around iPhone unit volumes now face a customer that no longer publishes the metric they plan against, pushing component partners to diversify away from single-OEM dependence.
Third-order effects
- If the pattern holds, Apple completes its transition to a recurring-revenue company: the installed base becomes the asset, hardware becomes the acquisition channel, and the Services growth curve visible from this quarter through 2022's subscriber counts becomes the core of the valuation case.
- Emerging-market currency exposure — Turkey's ~$700M hit being the named example — pushes Apple toward localized pricing structures, an operational shift other global hardware vendors have already been forced into.
The trend: Apple is converting a maturing iPhone franchise into a services-and-installed-base business, and this quarter — the first guidance cut alongside the end of unit disclosures — is the moment that accounting and strategy visibly realigned.