Today Apple announced their earnings for the first quarter of their 2017 fiscal year. As is normally the case now that the iPhone has moved to a fall launch, Q1 tends to be their big quarter, and this one was the biggest yet for revenue, with Apple announcing $78.351 billion in revenue for the quarter. This is up 9% from a year ago. Gross margin was not as strong though, down $247 million despite the almost $2.5 billion more in revenue, but as a percentage it is still a strong 38.5%. Operating income was also down for the quarter, at $23.359 billion, compared to $24.171 billion a year ago. Net income was down 2.56% to $17.891 billion, but thanks to the share buyback program, Apple has less outstanding shares, meaning Apple set a record for earnings per diluted share of $3.36, despite the drop in net income. Apple has announced a dividend of $0.57 per share as well.

Apple Q1 2017 Financial Results (GAAP)
  Q1'2017 Q4'2016 Q1'2016
Revenue (in Billions USD) $78.351 $46.852 $75.872
Gross Margin (in Billions USD) $30.176 $17.813 $30.423
Operating Income (in Billions USD) $23.359 $11.761 $24.171
Net Income (in Billions USD) $17.891 $9.014 $18.361
Margins 38.5% 38.0% 40.1%
Earnings per Share (in USD) $3.36 $1.67 $3.28

With the launch of the latest iPhone 7, there was certainly controversy over the loss of the headphone jack, but that did not stop people from buying it. Apple sold 78.29 million iPhones this quarter, up 5% from a year ago. This is a new record for iPhone sales in the quarter, up about 3.5 million units, which is a good sign for Apple after had several quarters in a row of slowed iPhone sales. We’ll see if they can keep it up for fiscal year 2017. As far as revenue, iPhone is still the juggernaut of Apple’s financials with $54.378 billion in revenue for the quarter. That is 69.4% of all of the revenue for Apple.

iPad continues to struggle, at least compared to the rest of Apple, with sales dropping another 19% this quarter to 13.081 million, and despite the higher priced iPads in the lineup, revenue dropped even further to $5.533 billion, which is down 22%. That puts an average selling price of just $422 on the iPad, down from $439 a year ago, despite the addition of the 9.7-inch iPad Pro last year with it’s $100 higher asking price of $599. New iPad models haven’t really saved this segment from continuing to contract, but with the addition of the larger iPhone I suppose this makes some sense.

Mac sales for the quarter were up 1% only, despite the launch of the refreshed MacBook Pro models in October, but they were not shipping in volume until later in the quarter, so there may be some impact from that. Despite the sales only being up 1%, revenue was up 7% to a new record high of $7.244 billion this quarter, and the Mac has slowly worked itself back up to being the second largest source of revenue for Apple. But I don’t think that’s going to last for much longer.

Apple Q1 2017 Device Sales (thousands)
  Q1'2017 Q4'2016 Q1'2016 Seq Change Year/Year Change
iPhone 78,290 45,513 74,779 +72% +5%
iPad 13,081 9,267 16,122 +41% -19%
Mac 5,374 4,886 5,312 +1% +7%

Apple’s Services segment, which includes digital content from iTunes, app revenue, AppleCare, Apple Pay, and other services, is now the fastest growing segment of Apple, with revenues for the quarter of $7.172 billion, which is up 13% from last quarter and up 18% from last year. At this rate, it will overtake the Mac revenue next quarter, depending on how Mac sales go. This has been a very strong market for Apple over the last while, and I would think the addition of Apple Music must be helping as well.

Other Products include Apple TV, Apple Watch, Beats, and accessories, and although the segment overall is down 8% to $4.024 billion, Apple did announce they sold a record for Apple Watch revenue, although they’ve never announced numbers for that.

Apple is projecting revenue for next quarter of $51.5 to $53.5 billion, and margins between 38 and 39 percent.

Source: Apple Investor Relations

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  • osxandwindows - Tuesday, January 31, 2017 - link

    Their services revenue is growing like crazy.
  • Samus - Wednesday, February 1, 2017 - link

    Two things come to mind, Apple Music, and ridiculously uncompetitive iCloud storage requiring people to subscribe to store just about anything other than an iCloud backup.
  • xype - Wednesday, February 1, 2017 - link

    "Apple’s Services segment, which includes digital content from iTunes, app revenue, AppleCare, Apple Pay, and other services"

    iCloud storage is the stuff people see because it’s a pain point (their pricing is lame), but App Revenue and Apple Pay are likely bringing in a lot of that bacon, too.
  • Speedfriend - Wednesday, February 1, 2017 - link

    Samus - App revenue is the big one in services, Apple Pay will bring in virtually nothing now and probably nothing in the future as Visa and Mastercard prevent it
  • Meteor2 - Wednesday, February 1, 2017 - link

    What do you mean, as Visa and MasterCard prevent it? It's just a vehicle for delivering Visa and MasterCard date to enable an transaction, isn't it?
  • akdj - Wednesday, February 1, 2017 - link

    I agree that iCloud is a mandatory upgrade but I believe, could be wrong (happens lots lol;)) but they dropped their pricing on the higher tier plans to bring in line with the other 'players'; Dropbox, Google Drive, One Drive, Amazon and other offering a TB/@$9.99 a month. Again, I believe that's the case and IMHO - even though each has a few 'pros' to using their services, if a user is strictly iOS/MacOS... iCloud is as competitive and compelling an offer as any of the others, if not, a significantly better option. With it's continuity, integration and aggregation between the OSs, both vertically and horizontally - file maintenance, backup and access hasn't been as intuitive and as friendly to the end user in computing history!

    I'm not embellishing or exaggerating the value of using macOS and iOS, watchOS/tvOS and the foundational ecosystem anchored by the largest, most diverse and useful library of software... again - In History... the App Store!

    Ten years ago, average folks, not us geeks... used a desktop computer tethered by 110v and a phone, eventual coax line to check email, 'Instant Message' (IM;)), browse, game, print, manipulate PDFs, photos and videos, navigate and plan, purchase and shop... literally everything today's smartphone is capable of handling
    And each year, less computers are sold while more smartphones continue to grow sales. I'm 45 and I'm familiar with Windows and OS X/macOS, iOS and Android. I'm a fan of all but my home and business run on macOS and iOS. The cross platform handoff and immediate updates for collaborative project continuity. With employees in the field using iPads, home base operating on iMacs and Mac Pros, others using MacBook pros on a business trip to sell the new client and a genuine peace of mind... as iCloud and the operation systems' ability and reliability is hands off - no network engineering experience needed operation success. Every time, and as rock solid a backup as any of the other competing services today

    iCloud is working well in browser using Windows 10 or Chromebooks as well - but the challenge facing competitors is the simple fact they lack the horizontal and vertical infrastructure Apple's created between mobile, office, home and 'on the go' - take a picture and when you get home it's available to edit on your Mac or MacBook or iPad or iPhone. Starting a resume on the iPad, finish as time permits on the MacBook or finish the email on the iPad you started, got interrupted... took a call, and an hour later when hanging up with your long lost pal... you move your Magic Mouse to wake up Mac and check out pictures your friend posted ... and being reminded that the email draft began an hour ago awaits your attention, isn't 'in your face' - but a reminder to finish, simple example - but HUGE and amazing advances in the reliability, dependability and ubiquity of Apple's services, IMHO, has certainly been a bright spot for the company and it's continued evolution and it's possibilities seem fascinating!

    If I'm wrong about the price of the tiers ($1.99/100 or 200GB, I believe and the TB @ $9.99) - I'll buy you a beer Samus!
    If right, and I also subscribe to the family MS Office 365 @ $9.99/month -- 5TB of storage with the world's most owned used and supported word processor, spreadsheet creator and presentation builder thrown in to boot! (5 accounts, with a TB each of online storage and the ability to install on five computers and five tablets, Windows or macOS, iOS or Android!) -- the two combined are a huge bargain for a family like mine, kids and their memories preserved and saved, backups of projects, school work, games and complete 'phones' or 'tablets' - allowing the purchase of a new device and foolproof, one button restoration of data to the new device. Without plugging in to your desk or laptop once!

    iCloud and the excellent options that exist all have plenty of upside, little downside but saying Apple's 'ridiculously uncompetitive iCloud storage requiring people to subscribe to store just about anything other than an iCloud backup' is not true. Amazon requires Prime @ $99/yr. Google is a ten dollar bill for a TB a month, as well as Dropbox and Microsoft Office Family.
    Maybe I'm missing something but I pay either two or three bucks a month for 200GB of iCloud storage and I have a wife with two kids. We all have an iPad and iPhone and the kids share an iMac. Mom and I use MacBooks - our business is separate.
    My point is the 200GB is more than enough for our entire family's pics, vids, contacts, calendars and data! Many thousands of pictures and videos need to be gone through but I still have 80GB open, music and video don't count against the cap is using iTunes music or Match. (.Video, as in movies from iTunes). Nor do apps - including unavailable ones.

    My two cents, as I'm constantly excited about new ways iCloud has helped me, my family and my business 'housekeeping' and organization. I spent a lot of time early in the days of iOS complaining with the "no file system" crowd and after 30 years of disorganized file system computing practices, iCloud has solved my dilemma and keeps my sleep sound... knowing my records are backed up if IRS comes knocking, kids' memories and important files are safely stored in the case of the worst at home, and with today's connectivity... my files are available anywhere, anytime, on any device!

    Another view
  • fanofanand - Wednesday, February 1, 2017 - link

    You forgot to add "This comment was bought and paid for by Apple Corp."
  • TEAMSWITCHER - Wednesday, February 1, 2017 - link

    I think you're operating on out-of-date (or downright faulty) information. Apple data plans are more affordable than Dropbox. They have two low cost pricing categories that dropbox refuses to offer - 50 GB for $.99 / month and 200 GB for $2.99/month. This is a small price to pay for cloud storage that is near-perfectly integrated with your MacBook.
  • Meteor2 - Wednesday, February 1, 2017 - link

    Loss of the headphone jack obviously a complete and utter non-event then. If anything, it was a good thing, as it enabled a device so compelling record amounts were paid for it!
  • baka_toroi - Wednesday, February 1, 2017 - link

    I wanna punch consumers in the face.

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