Apple blows analyst forecasts out the water as iPhone lure tests user loyalties

“We’re seeing a higher rate of people switching to iPhone than we’ve experienced in previous cycles."

Apple has today announced financial results for its fiscal 2015 second quarter ended March 28, 2015, posting quarterly revenue of US$58 billion and quarterly net profit of US$13.6 billion, or US$2.33 per diluted share.

Representing a significant rise year-on-year, Cupertino says these results compare to revenue of US$45.6 billion and net profit of US$10.2 billion, or US$1.66 per diluted share, in the year-ago quarter.

The general consensus among analyst firms however was that the company would report earnings of US$2.21 per share on US$56.85 billion in revenue but according to the tech giant, the growth was fuelled by record second quarter sales of iPhone and Mac and all-time record performance of the App Store.

Revealed today, the company’s reports show strong performance of iPhone, Mac and App Store divisions of the business, driving 27 percent revenue growth and 40 percent EPS growth, setting new second quarter records.

“We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever,” says Tim Cook, CEO, Apple.

“We’re seeing a higher rate of people switching to iPhone than we’ve experienced in previous cycles, and we’re off to an exciting start to the June quarter with the launch of Apple Watch.”

Revenue and profit aside, Apple also disclosed sales numbers or revenue for the these categories, recording iPhone, iPad and Mac at 61.1 million units, 12.6 million units and 4.5 million units respectively.

“The tremendous customer demand for our products and services in the March quarter drove revenue growth of 27 percent and EPS growth of 40 percent,” adds Luca Maestri, CFO, Apple.

“Cash flow from operations was also outstanding at US$19.1 billion.”

Meanwhile, gross margin was 40.8 percent compared to 39.3 percent in the year-ago quarter while international sales accounted for 69 percent of the quarter’s revenue.

Following the release, Apple is also providing the following guidance for its fiscal 2015 third quarter, predicting revenue between US$46 billion and US$48 billion, gross margin between 38.5 percent and 39.5 percent and operating expenses between US$5.65 billion and US$5.75 billion.

Capital Return Program

Apple also announced that its Board of Directors has authorised an increase of more than 50 percent to the company’s program to return capital to shareholders.

Under the expanded program, Apple plans to utilise a cumulative total of US$200 billion of cash by the end of March 2017.

As part of the revised program, the Board has increased its share repurchase authorisation to US$140 billion from the US$90 billion level announced last year.

“We believe Apple has a bright future ahead, and the unprecedented size of our capital return program reflects that strong confidence,” Cook adds.

“While most of our program will focus on buying back shares, we know that the dividend is very important to many of our investors, so we’re raising it for the third time in less than three years.”

In addition, the Cupertino expects to continue to net-share-settle vesting restricted stock units.

The Board has also approved an increase of 11 percent to the Company’s quarterly dividend, and has declared a dividend of US$.52 per share, payable on May 14, 2015 to shareholders of record as of the close of business on May 11, 2015.

From the inception of its capital return program in August 2012 through March 2015, Apple has returned over $112 billion to shareholders, including $80 billion in share repurchases.

To assist in funding the program, the Company plans to continue to access the domestic and international debt markets.

The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.

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