Apple Q2 2011 Financial Results: $24.67 Billion Revenue, 4.69 Million iPads, 18.65 Million iPhones Sold

Apple has just posted their Q2 2011 financial results. The company posted revenue of $24.67 billion, with 4.69 million iPads sold, 18.65 million iPhones and 3.76 million Macs. Wall Street consensus estimate was EPS of $5.36 and revenue of $23.34B. Mac sales saw a 28% increase over the year-ago quarter, while with 9.02 million iPods sold Apple saw a 17% unit decline. Overall, the company posted quarterly revenue growth of 83% and profit growth of 95%. International sales were 59% for the quarter, with Asia and Pacific regions featuring a 182% increase year over year. The reported iPhone sales were stronger than expected by most analysts, with a 113% increase year over year. iPhone revenues, however, grew faster than sales with a 126% increase [source]. Overall, this was the biggest non-holiday quarter in Apple’s history.

With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” said Steve Jobs, Apple’s CEO. “We will continue to innovate on all fronts throughout the remainder of the year.

In Q1 2011, the company posted a record revenue of $26.74 billion with 7.33 million iPads sold, 16.24 million iPhones and 4.13 million Macs. In the year-ago quarter, Apple posted revenue of $13.50 billion and net quarterly profit of $3.07 billion. The company sold 2.94 million Macs, 8.75 million iPhones and 10.89 million iPods during the quarter.

Apple will provide a live streaming audio feed of its Q2 2011 financial results conference call at 2:00 PM Pacific, and we’ll update this story with the conference highlights.

Apple Earnings Call Liveblog

Call to start at 5 PM ET

- 3% contraction of PC market overall - March quarter 20th consecutive quarter outperforming PC market.

Fueled by MacBook Air, updated in December, strong sales of MacBook Pro.

Lion is set to ship to customers this summer; new features to be shown in June.

- iPods make up 70% of MP3 player in most countries based on GFK data.

- 17,000 ebooks in the iBookstore during the March quarter - 2,500 publishers in 20 categories.

Strong year over year sales growth in Asia and America Pacific doubling year over year.

- 186 carriers in 90 countries - 9.2 million iPhones in channel inventory.

- 88% of Fortune 500 testing or deploying iPhone.

- Great scale of iPhone deployment in businesses worldwide - Cisco, GE, American Airlines, Xerox.

4.7 iPads during March quarter - including both iPad and iPad 2 - distribution in 59 countries at end of March quarter.

$2.8 billion from iPad accessories.

In just over a year, 75% of Fortune 500 are testing or deploying iPad in enterprises - Fortune 500, Xerox, Automation, ADP, Boston Scientific, Disney, Striker.

- 189 million cumulative iOS device sales.

More than $2 billion in payments to developers in App Store.

May 19th, Apple Retail Store 10th anniversary.

1 billionth visitors in Apple retail stores.

Retail revenue - $3.19 billion, compared to $1.68 billion.

Half Macs sold during March quarter to new customers who never owned a Mac before.

March quarter, Personal Setup for over one million products.

Average revenue $9.9 million per store.

International stores - average international store volume exceeds US store volume.

Opening 40 new stores - 3 quarters of which outside of US with 5th store in China.

Tim Cook on Japan: Incredible tragedy and our hearts go out to everyone involved; Apple has many strong ties to people in Japan and we’re very sad about the situation. Economic impact pales in comparison to human impact.

Tim Cook: Japan disaster will reduce Q3 revenues by about $200 million.

Tim Cook: Regarding global supply chain, as a result of outstanding teamwork, we did not have any supply or cost impact in fiscal Q2 in result of the tragedy, and do not anticipate material impact in fiscal Q3 - we source hundreds of items from Japan – LCDs, optical drives, NAND, resin coatings and foil. Part of the production process in the back of the supply chains – earthquake caused lots of disruption and many were impacted by power interruption. We have been able to implement a number of contingency plans and we remain with our longterm partners in Japan – we and have displayed incredible resilience in lieu of distance .

Tim Cook: Demand on iPad 2 is staggering - we’re still amazed, heavily backed log at end of quarter and up to date.

- Tim Cook: However, I am extremely pleased with progress of manufacturing - we rolled out 25 additional countries at end of last month - shipping iPad 2 to additional 13 countries next week. I’m confident we can produce a very large number of iPads for the quarter.

Adding Verizon and beginning to offer iPhone to an enormous customer base - AT&T did extremely well in the quarter.

We continue to be on a tear in China - Greater China saw iPhone sales being up over 3 times - about … almost 250%.

Tim Cook on LTE networks: I was asked this question when we launched the iPhone with Verizon – what I said then, and I still see the case today, is that the first generation of LTE chipsets forced a lot of design compromises with the handset and some of those we’re not willing to make - we’re extremely happy with iPhone 4 and 3GS.

Growth on Mac has been enormous in Asia - up 76% in Asia Pacific.

Japan did quite well on the Mac for the quarter.

- US has a surprisingly strong quarter being up around slightly higher than 25%.

Tim Cook: Speaks very very well to the opportunity the Mac has - twenty quarters in a row where we’ve outgrown the PC market - the momentum is still there - and we seem to be the only guys who are building innovative products in that space.

- We had enormous growth in portables for quarter, however, part of that is we had a launch of the new MacBook Pro - I see lots of popularity for iMac and portable factors.

iPhone revenue increased in 1.7 million inventory.

Question to Tim Cook: How are you seeing different opportunities in large enterprises with MacBook and traditional markets in US and Western Europe given receptiveness of iPhones and tablets? – Clearly seems to be creating a halo effect for the Mac, and I think that’s one reason we’re seeing growth we’re seeing.

Question to Tim Cook: iPad constraint - when you do you think you’ll have equilibrium or channel limits that you’ll be where you’ll need to be? – Tim Cook: I’m confident we’re going to produce a very large number for the quarter - I don’t know if we can meet demand - demand has been staggering; I can only be confident on the supply side.

- Question to Tim Cook: Can we talk about CDMA iPhone and specifically which new markets you could enter.. the magnitude of spending you expect as you go through year with partners, investments, etc. – Tim Cook: I don’t want to get into specifics on CDMA or GSM for that matter, but we are constantly looking about where we should bring on incremental partners - we’ve brought on Verizon, STT, and Saudi Telecom, on top of ones we brought on in December where we added O2 and Vodafone in Germany.

Operations area expects to be biggest spending - arrangements with 3 suppliers. $3.5 billion in prepayments and capital expenditures; $900 million of that in march quarter.

Question to Tim Cook: With rise of Android, what might be similarities with iPhone and Android – could Android hurt the iPhone? – Tim Cook: Comscore data released yesterday reported that the iOS platform outreaches Android by 59% in US. This an enormous percentage, we just did 18.6 million iPhones in worldwide market, we’ve launched iPad 2 and sold every one we could make. We’re also gaining traction in enterprise.

- 350,000 apps for iPhone and 60,000 iPad specific, fewer than 100 on Android.

We feel very very good about where we are and we feeel great about our future product plan. We’ve paid $2 billion to developers and have 10 billion apps downloaded - we continue to believe, more and more everyday that the iPhone’s integrated approach is materially better than Android’s fragmented approach. The user appreciates that Apple takes full responsibility where fragmented approach turn customers into systems integrator - few customers I know WANT to be system’s integrator.

Steve Jobs is still on medical leave, but we do see him on a regular basis, and he continues to be involved in strategic decisions.

About pre-paid market: “We have some ideas about other countries as well”.

- Tim Cook: The key point here is that I’m extremely pleased with the progress we’re making on manufacturing. We’ve gotten off to a materially better start and produced more than the original ramp of iPad 1; we’re so confident with our ability to supply that we’ve already put on 25 additional countries at end of March, 13 more next week, and more at end of quarter.

Question to Tim Cook: Can you give us a split of iPad 2 / iPad 1 as percentage of 5 million? – Tim Cook: we’re purposely not giving that information out as to not help competitors.

Question to Peter Oppenheimer: What can you expect for Macs - are school budgets affecting you? – Peter Oppenheimer: we don’t see any evidence of share loss, and Macs are very populars at schools, and iPads are proving to be as well. We expect to see a significant increase in Mac sales.

- Question to Tim Cook: In the last several years, we’ve seen a new iPhone in June, and new iPod in September – Tim Cook: we never comment on unannounced products.

Cook: iPad has mother of all backlogs that we’re working very hard to get as quickly out to customers as we can.

- iPad today is subsidized in Korea and people sign a 24 month contract (plus Japan and a couple of european countries). Vast majority of people are using 3G on “pay as you go” or no commitment plan – carriers can do that, but many customers prefer “pay as you go.”

- Tim Cook: We are Samsung’s largest customer, and Samsung is a very valued component supplier to us, and I expect a strong relationship from this. The mobile division of Samsung has crossed the line, and after some time of trying to resolve the issue, we felt it was necessary to go to court.

- Peter Oppenheimer on the rumored cloud-based iTunes: We don’t talk about what we’ll do in the future with iTunes, we operate the most popular store in the world, we have provided more content to more customers than anybody – I can’t take it beyond there.

End of the call.

Graphical Visualization

We have compiled a series of graphs and charts to offer a graphical visualization of Apple’s second quarter.

Press Release

Full press release embedded below. Unaudited summary data available here.

Record March Quarter Drives 83 Percent Revenue Growth, 95 Percent Profit Growth

Record iPhone Sales Grow 113 Percent

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced financial results for its fiscal 2011 second quarter ended March 26, 2011. The Company posted record second quarter revenue of $24.67 billion and record second quarter net profit of $5.99 billion, or $6.40 per diluted share. These results compare to revenue of $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share, in the year-ago quarter. Gross margin was 41.4 percent compared to 41.7 percent in the year-ago quarter. International sales accounted for 59 percent of the quarter’s revenue.

“We will continue to innovate on all fronts throughout the remainder of the year.”

Apple sold 3.76 million Macs during the quarter, a 28 percent unit increase over the year-ago quarter. The Company sold 18.65 million iPhones in the quarter, representing 113 percent unit growth over the year-ago quarter. Apple sold 9.02 million iPods during the quarter, representing a 17 percent unit decline from the year-ago quarter. The Company also sold 4.69 million iPads during the quarter.

“With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” said Steve Jobs, Apple’s CEO. “We will continue to innovate on all fronts throughout the remainder of the year.”

“We are extremely pleased with our record March quarter revenue and earnings and cash flow from operations of over $6.2 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $5.03.”

Apple will provide live streaming of its Q2 2011 financial results conference call beginning at 2:00 p.m. PDT on April 20, 2011 at www.apple.com/quicktime/qtv/earningsq211. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors“ and “Management’s Discussion and Analysis of Financial Condition and Results of Operations“ sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 25, 2010, its Form 10-Q for the quarter ended December 25, 2010, and its Form 10-Q for the quarter ended March 26, 2011 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.