Thread by @neilcybart

Apple just released 1Q20 earnings:

$91.8 billion of revenue
$4.99 earnings per share (EPS)

My estimates were:

$89.6 billion of revenue
$4.70 EPS

Wow.

Apple's 2Q20 revenue guidance:

$63B to $67B

My expectation: $57.5B to $60.5B (I included a $2B negative impact from coronavirus)

Consensus was $62.5B

Another wow. This is really strong guidance for Apple.

- iPhone revenue: $56.0B (my estimate: $51.9B)
- Services revenue: $12.7B (my estimate: $13.0B)
- Wearables / Home etc.: $10.0B (my estimate: $11.3B)
- Mac: $7.2B (my estimate: $7.0B)
- iPad: $6.0B (my estimate: $6.2B)

Apple's better-than-expected results were driven by iPhone.

Apple repurchased $20 billion of its shares in 1Q20.

That looks to be tied for the third-largest quarter for buyback in Apple's history.

Apple generated more year-over-year revenue growth from Wearables / Home / Accessories (+$2.7B) than Services (+$1.8B) in 1Q20.

It looks like Apple wearables quarterly revenue exceeded Mac revenue for the first time in 1Q20.

Tim Cook: “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion."

This means that there are 1.5 billion Apple devices being used in the wild.

The iPhone 11 was Apple's top-selling model every week.

The three flagship iPhones (iPhone 11, iPhone 11 Pro, iPhone 11 Pro Max) were the top three models.

No paid subscriber updates (at least in Tim Cook's prepared remarks) for Apple Arcade, Apple TV+, or Apple News+.

Apple Pay is on a 15B transactions per year run rate.

Apple saw all-time revenue records for wearables in every market.

Apple wearables revenue are now equivalent to a Fortune 150 company.

75% of people buying an Apple Watch are new to Apple Watch. That's a very healthy percentage.

The number of iPhone trade-ins via Apple retail have doubled year-over-year. (Apple began to actually push trade-ins)

Products gross margin was 34.2%.
Services gross margin was 64.4%.

Apple passes on providing an update on the size of the iPhone installed base instead saying it reached a record. It's likely close to 950M iPhone users.

Apple is increasing its goal for the number of paid subscriptions to 600M before the end of the year. Previous goal was 500M paid subscriptions.

(Potentially a good sign for Apple TV+.)

Half of customers purchasing Mac and iPad during the quarter were new to those categories.

Apple suffered from some supply issues for Apple Watch and AirPods. This means that wearables revenue could have been even higher.

(By the way: Apple didn't sell anywhere near the crazy number of AirPods that some publications & analysts were claiming.)

Apple has $207 billion of cash on the balance sheet.

Excluding the debt, Apple has $99 billion of net cash on the balance sheet.

Apple provided a slighter larger than usual revenue range for 2Q20. Apple's revenue guidance reflects potential impacts from coronavirus in China.

Apple wearables revenue was up 44% during the quarter.

(That is a very helpful figure. I will be able to back into accurate unit sales and revenue numbers for both Apple Watch and AirPods.)

Apple is measuring Apple TV+ success by the number of subscribers.

Apple has not disclosed the number of Apple TV+ subscribers.

Apple in China:

- Apple saw double-digit growth for iPhone, Services, and Wearables in Mainland China last quarter. (Wearables saw strong double-digit growth.)
- 75% of Mac purchasers in China are new to Mac.
- ~65% of iPad purchases in China are new to iPad.

Apple on coronavirus in China:

- Closed 1 Apple Store. Doing temp checks for employees.
- Retail foot traffic down across the country.
- Apple says they are working on mitigation plans in the event of potential production loses.

Apple claims 2Q20 guidance reflects all of that.

Apple expects to grow the number of paid subscriptions across its ecosystem by 120 million in 2020.

That's a big number. Paid video subscriptions are likely a big part of that.

You get one or two questions on Apple earnings calls. Don't waste them on 5G.

Apple Watch Series 3 supply should meet demand in the current quarter.

Apple doesn't know when AirPods Pro supply will meet demand.

Apple: We think customers want Apple TV+ to be an ad-free product.

The Apple TV+ promotion resulted in a modest amount of deferred products revenue. This revenue is recognized over time as Services. The revenue was immaterial in 1Q20.

One takeaway: That 34M Apple TV+ U.S. subs estimate found in the WSJ was way off.

https://twitter.com/neilcybart/status/1221505644701913090

Apple: Each one of our products drives sales of other Apple products. We think the iPhone comes first for many people but for some people Apple Watch is what brings them into the ecosystem.

Apple's earnings call is over. A transcript of these tweets will exist as long as Twitter is around.