Apple Stores (Istanbul, Turkey, image 001)

Apple announced the financial results for its fiscal second quarter of 2016 this afternoon, and the numbers are pretty rough. While they fall within the company’s own guidance, iPhone sales are down 10 million units from the year-ago quarter, and revenue is down $7 billion.

We’ve just finished up the conference call, where Tim Cook and CFO Luca Maestri discussed Apple’s performance over the three-month period, and offered up some insights into its future. And as usual, we’ve rounded up the 15 most interesting points from the call below.

  • Cook: “It was a challenging quarter for the company.”
  • Apple now has $232.9 billion in cash and marketable securities.
  • Apple expanding capital return program by four quarters and $50 billion. Total buyback will be $250 billion.
  • Apple has made 15 acquisitions in the last 4 quarters, and is constantly on lookout
  • Apple Music now has 13 million paying subscribers
  • Services revenue (iTunes, etc.) was highest ever, up 20% to $6 billion
  • Now more than 10 million contactless locations in Apple Pay countries, 2.5 million in U.S. alone.
  • Cook: “iPhone SE demand exceeds supply, but we’re working hard to meet demand.”
  • Upgrade rate for iPhone 6s has been higher than 5s cycle two years ago, but lower than 6 cycle.
  • Customers are also incredibly loyal. 95% loyalty rate, highest for any smartphone.
  • Added more switchers (from Android, etc.) in first half of 2016 than any other six month period
  • Cook: “We’re really excited about the first year of Apple Watch, and it has an exciting future.”
  • Other Products revenue up 30% thanks to Apple Watch.
  • Customers very happy with Apple Watch, 94% customer satisfaction.
  • Cook: “In June quarter, we expect best iPad unit comparison in over two years thanks to new iPad Pro.”

If you want to listen to today’s earnings call, a replay will be available here for a limited time.

  • Yujin

    I think analyst are going to use this to profit with their fear tactics to have all of the people who are going to get scared and sell their shares. This isn’t doom. Historically this quarter and the next will be crap for Apple. Everyone is waiting for the iphone 7 which is when Apple makes the total design refresh and that not happen till September.

    In the mean time, iPhone 5Se is selling very well in China (google it). I say with over 250 billion in cash, they will be pretty well for a few decades even if their sales go flat and close all stores tomorrow. This isn’t just apple though. The entire industry is reaching that point where people don’t need to upgrade and technology is not bringing anything new. VR? 4K screen? Autonomous cars? Everyone is trying to survive and this is just what may bring the next wave of tech products, but in the meantime, be ready to wait.

    • n0ahcruz3

      I think u miss the point that iPhone sales declined for the first time in iPhone history. This never happened before. But we’ll see how it goes when the 7 is out. iPhone SE selling well while the flagship 6s not selling well resulting to iPhone sales decline, is not good. It’s only been 6 months since the 6s was released and people are already waiting for the 7? That means 6s is definitely not selling well.

      • Rowan09

        What do you consider selling well? It was going to happen sometime, nothing will keep up with that pace. It was still strong sales just not as big. People are starting to slow down on upgrading because there’s not really any reason to.

      • n0ahcruz3

        This is apple if other companies report this it would not be a big deal. iPhone is Apple’s cash cow, any decline would be bad to investors. I don’t care personally cause i dont own apple stock. But at some point it will go down. There’s still room for iphone growth but that will depend on what they’re gonna unveil. If the rumors/leaks are true I wouldn’t upgrade. i’ll stick with my 6 til they make a significant design change. Thats my 2 ¢. Dont get me wrong i love iPhone been an iphone guy since the first iphone.

      • Rowan09

        True and they are still making tons of cash from the iPhone hardware and software integration along with the AppStore, etc.

      • Phil Randle

        Sure its Apple’s BIGGEST seller, and thats by a significant margin, because of the profit they make per iPhone, no smartphone vender is even in the vicinity.

        With that being said, to say there other products aren’t doing well is rubbish, the iPad may not be selling the numbers they did a few years ago (people aren’t buying them as much as they were). There closest competitor (Microsoft) just announced there entire surface line (Surface Book included) made $1.5B, the iPad this quarter made $5.5B. When your product line is almost 5x your nearest competitor, you are doing okay.

      • n0ahcruz3

        If only Wall Street and investors think like you do.. APL down %7 btw.

      • Anonymous

        Tim cook is a numbers guy and told investor to hold on because this quarter would suck. With that said apples got products in the future that will be promising but you can not revolutionize in industry every year R&D takes time and a lot of resources

    • Anonymous

      Totally agree with you on the market perespective, pick up a few shares my self today and plan on getting more. However, i dont think the i7 will be a total disign refresh up a design update. I personally think the i8 will be a totally design refreash. And everything else i agree with you.

    • Legend

      Apple looks bad.

      iPhone Sales are account for more than 70% of Apple’s sales which shown slows of growth since last quarter, even worse this quarter.

      Other sales don’t fill the gap as you can see on both profit and revenue declines, and on top of that they increased the dividend, which of course goes against growth strategies… Another giant cash flow out the company on less sales. They will miss every quarter this year for sure.

  • its logical that iPhone sales declined, it was a big jump between iPhone 5s to the iPhone 6 due to the increase in screen size with regular and plus model. so a lot of people upgraded immediately once 6 was announced. Then 6s was not so big jump to upgrade. SE might be the driving force in sales numbers now for people that want to stick to that smaller screen size!

    Even myself who has upgraded every single year down from the 1st gan iPhone, i haven’t upgraded my iPhone 6 to the iPhone 6s. As products mature and satisfy customer needs they wont feel to upgrade sooner but later, the same is happening with the iPad! You see many people sticking with them for a lot more time since they are really well build and satisfy their needs.

  • Pedecia

    Bloody expensive overpriced pieces of junk. Over 1000 AUD for a phone what do they expect? I still have a 4s and will use it for years to come until the end of time or the phone whichever comes first. Screw you Apple!

    • Bill

      Hey, the door is over there….see ya. Drama queen…