Yesterday, Apple published its financial results for Q2 2014, reporting $74.6 billion in revenue (which is a 30% increase YoY), and $18 billion in net profit (representing a 38% YoY increase). In terms of sales, the company sold 21.4 million iPads, a record 74.5 million iPhones, and 5.5 million Macs.
Highest Quarterly Profit Ever
Apple’s $18 billion profit for the 1st quarter of 2015 is the highest quarterly profit recorded by a company. Apple surpassed Gazprom (a Russian oil company) who had recorded a profit of $16.24 billion in 2011.
It’s safe to assume that the larger iPhone 6 and iPhone 6 plus had something to do with this. iPhone sales exhibited a YoY increase of 44%. The success Apple has seen during this quarter can also partially be attributed to the Mac, which saw a YoY increase of 14.5%, touching a record 5.5 million units in sales.
iOS Dependence – Is It A Weakness?
Apple sold an incredible 74.5 million iPhone’s during the quarter, breaking their previous quarterly record by a whopping 24 million units. Apple’s iPhone and accounted for 69% of the company overall revenue. The iPad, didn’t fair as well and actually registered a negative growth (YoY), but still ended up contributing 12% to Apple’s overall revenue.
When put together, the two segments accounted for 81% of Apple’s overall revenue. For any other company, this dependence would come across as a critical area of concern, but when you consider the fact that Apple manages to make $14.1 billion from other segments of its business, its clear that too much should not be made of this dependence.
Improved Margins and Earnings
As I mentioned earlier, Apple’s revenue for the 1st quarter exhibited a YoY increase of 30%, however the company saw its profit register a YoY growth of 38%. Gross margin was 39.9 percent compared to 37.9 percent in the year-ago quarter. This resulted in earnings per share going up by 48% to $3.06, an all-time quarterly record.
The Role of China and Other Emerging Economies
Apple has seen huge growth in China, with overall revenue from the Greater China region going up by an impressive 70%. The role of China and other emerging economies is evident when you look at the sales of the iPhone in the BRIC countries, which exhibited an unprecedented YoY increase of 97%. To build on this momentum Apple will be expanding its retail presence rapidly in these countries (with India being the obvious exception).