Transcript: Apple CEO Tim Prepare dinner on the corporate's 2018 Q3 earnings

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Apple’s second-quarter outcomes for 2018 are in. This is our transcript of the decision.

Apple CEO Tim Prepare dinner and CFO Luca Maestri spoke with analysts through the firm’s Q2 2018 earnings name. This is our ongoing stay transcript of their remarks!

If you’d like extra data on Apple’s outcomes, we suggest checking out the awesome charts from Six Colors.

Prepare dinner’s opening remarks

Tim Prepare dinner

Thanks, Nancy, and because of everybody for becoming a member of us.

Right this moment we’re proud to report our greatest June quarter income and earnings ever, due to the sturdy efficiency of iPhone, companies, and wearables. We generated $53.three billion in income — a brand new Q3 report. That is a rise of 17% over final yr’s outcomes, making it our seventh consecutive quarter of accelerating development, our fourth consecutive quarter of double-digit development, and our strongest price of development prior to now 11 quarters. Our group generated report Q3 earnings per share of $2.34, a rise of 40% over final yr. We’re extraordinarily pleased with these outcomes and I would wish to share some highlights with you.

First, iPhone had a really sturdy quarter. Income was up 20% yr over yr and our energetic put in base grew by double digits, pushed by switchers, first-time smartphone patrons, and our current prospects whose loyalty we tremendously admire. iPhone X was the most well-liked iPhone within the quarter as soon as once more, with a buyer satisfaction rating of 98% in keeping with 451 Analysis. Primarily based on the most recent information from IDC, iPhone grew sooner than the worldwide smartphone market, gaining share in lots of markets together with the U.S., Larger China, Canada, Germany, Australia, Russia, Mexico, and the Center East and Africa.

Second, we had a stellar quarter in companies which generated all time report income of $9.5 billion, fueled partly by double-digit development in our total energetic put in base. We really feel nice concerning the momentum of our companies enterprise and we’re on course to succeed in our aim of doubling our fiscal 2016 companies income by 2020. Our report companies outcomes had been pushed by sturdy efficiency in numerous areas and I would wish to briefly point out simply a few of these. Paid subscriptions from Apple and third events have now surpassed 300 million, a rise of greater than 60% prior to now yr alone. Income from subscriptions accounts for a major and growing proportion of our total companies enterprise. What’s extra, the variety of apps providing subscriptions additionally continued to develop — there are virtually 30,000 accessible within the App Retailer as we speak.

The App Retailer turned 10 years previous this month and we set a brand new June quarter income report. The App Retailer has exceeded our wildest expectations, igniting a cultural and financial phenomenon that has modified how folks work, be taught, and play. Prospects all over the world are visiting the App Retailer extra typically and downloading extra apps than ever earlier than. And based mostly on third-party analysis estimates, the App Retailer generated almost twice the income of Google Play up to now in 2018. The app financial system is prospering and because of the App Retailer, it is producing jobs for tens of tens of millions of individuals all over the world. Our builders have earned over $100 billion from the App Retailer since its launch and we could not be extra pleased with them and what they’ve completed. We’re listening to numerous developer pleasure round our upcoming OS releases — which I will speak about extra in a second — and may’t wait to see what they will provide you with subsequent. We have skilled speedy development in our App Retailer search advert service, and as we introduced earlier this month, we’re increasing our geographic protection to Japan, South Korea, France, Germany, Italy, and Spain.

We’re additionally seeing sturdy development in most of the different companies as properly. Just some examples: Apple Music grew by over 50% on a yr over yr foundation; Apple Care income grew at its highest price in 18 quarters, partly as a consequence of our expanded distribution initiative; cloud companies income was additionally up over 50% yr over yr; our communications companies are experiencing report utilization — we have hit all time highs for each the variety of month-to-month energetic customers of Messages and the variety of FaceTime calls made, with development accelerating from the March to June quarters; Siri requests have already exceeded 100 billion up to now this fiscal yr; and the variety of articles learn on Apple Information greater than doubled yr over yr; Apple Pay continues to increase, with properly over 1 billion transactions final quarter — triple the quantity from only a yr in the past, with development accelerating for the March quarter. To place that large development into perspective, this previous quarter we accomplished extra complete transactions than nice corporations like Sq. and extra cell transactions than PayPal. Apple Pay is now stay in 24 markets worldwide with over four,900 financial institution companions and we stay up for including Germany later this yr. We’re excited to share that within the U.S., eBay is starting to allow its sellers to simply accept Apple Pay and CVS pharmacy and 7-Eleven will roll out Apple Pay acceptance in places nationwide this fall. Transit is one other necessary space of development and Apple Pay can be utilized with iPhone and Apple Watch to shortly and conveniently experience public transit in 12 metropolitan areas. Apple Pay Money, our peer-to-peer cost service is already serving tens of millions of shoppers throughout the U.S. lower than eight months following its launch.

Our third spotlight of the quarter is the excellent ends in wearables, which contains Apple Watch, AirPods, and Beats, and was up over 60% yr over yr with development accelerating from the March quarter. Our wearables income exceeded $10 billion over the past 4 quarters, a really exceptional accomplishment for a set of merchandise that has solely been available in the market for a couple of years. Apple Watch delivered report June quarter efficiency, with development within the mid 40% vary. And we’re thrilled to see so many purchasers having fun with AirPods, it jogs my memory of the early days of iPod after I began noticing white ear buds in all places I went.

Various different notable occasions within the quarter: We expanded distribution of HomePod to a few extra markets and we added new immersive-listening options with assist for HomePod stereo pairs and a brand new multi-room audio system. In June, we hosted a particularly profitable builders convention that previewed many main advances coming this fall to our 4 working methods: iOS, macOS, watchOS, and tvOS. Developer and buyer response has been very optimistic and we’ve over four million customers taking part in our new OS beta packages. Beginning with iOS 12, Siri will take a serious step ahead with Siri shortcuts which ship a brand new, a lot sooner approach to get issues achieved and permit any app to work with Siri. We consider it will make Siri much more helpful and considerably increase its adoption. We have additionally designed efficiency enhancements throughout iOS 12 to make on a regular basis duties sooner and extra responsive, digital camera launches as much as 70% sooner, the keyboard seems as much as 50% sooner, and apps can launch as much as twice as quick. We have at all times been about empowering customers to get essentially the most from our merchandise, however not about spending all of their time utilizing them. And so we’re including instruments to iOS to assist our prospects perceive and take management of the time each they and their households spend interacting with their iOS gadgets. Exercise Stories will present info on the quantity and nature of time spent on iPhones an iPads, and Display screen Time will allow dad and mom to watch and restrict their kids’s exercise from their very own iOS gadgets utilizing Household Sharing in iCloud. Builders will have the ability to construct much more clever apps with only a few traces of code utilizing the ability of machine studying with CoreML and CreateML. We have additionally included our third launch of ARKit in just one yr. With ARKit 2, iOS 12 will present an much more highly effective platform to make dynamic AR apps, integrating shared and chronic AR experiences, object detection, and picture monitoring. We consider AR can allow profound experiences and Apple is uniquely positioned to supply the very best AR expertise due to the seamless integration of our and software program. The brand new capabilities of ARKit 2 will construct on the potential of the 1000’s of AR apps already accessible within the App Retailer which can be altering the best way iPhone and iPad customers see and expertise the world. Turning to Mac, we wish to empower our builders to deliver their progressive apps from the iOS ecosystem to the Mac with minimal effort. Although iOS and macOS are completely different, they’ve shared widespread foundations from the very starting. So we have taken key frameworks from iOS and tailored them to particular Mac behaviors, like utilizing a mouse or trackpad, resizing home windows, copy and paste, and drag and drop. We have began with a few of our personal apps, so this fall, Information, Shares, Voice Memos, and Dwelling might be accessible on the Mac for the primary time with macOS Mojave, and we’ll be bringing these nice new instruments to our builders subsequent yr. We consider it will dramatically broaden the ecosystem to profit all Mac customers, creating much more nice causes to decide on Mac. Additionally this fall, the Mac App Retailer is getting a full redesign with wealthy editorial content material to assist prospects uncover nice Mac apps from our builders.

We consider privateness is likely one of the most necessary problems with the 21st century and we’re at all times working to make our merchandise extra non-public and safer for our customers. As we introduced at WWDC, starting this fall, Safari will forestall share buttons and remark widgets on net pages from monitoring customers with out their permission. Safari already protects private information as customers browse the net so they will not be retargeted by adverts. For Apple Watch, customers will see a major growth of options and performance in watchOS 5. Apple Watch will turn out to be an excellent stronger companion for health, communication, and fast entry to info, with options together with new exercises, exercise sharing competitions, auto exercise detection, superior working options, walkie talkie, Podcasts, and third-party apps on the Siri Watch face. For Apple TV we have seen main development in gross sales for the reason that introduction of Apple TV 4K final fall, as video suppliers all over the world select Apple TV 4K to ship their subscription companies. Later this yr, Constitution Communications will start providing Apple TV 4K to its prospects in almost 50 million U.S. households, offering entry to stay channels and tens of 1000’s of on-demand packages through the Spectrum TV app on Apple TV 4K, iPhone and iPad. And tvOS will take the cinematic expertise of Apple TV 4K to the subsequent degree this fall, with assist for Dolby Atmos audio and new options to simply discover well-liked reveals and flicks. Apple TV 4K already presents prospects the most important assortment of 4K HDR motion pictures, and this fall iTunes would be the residence to the most important assortment of Dolby Atmos supported motion pictures wherever.

I am proud that our group’s onerous work has an affect even past these progressive industry-leading services. We’re at all times working to depart the world higher than we discovered it, and as a part of our dedication to handle local weather change and enhance using renewable power in our provide chain, we lately introduced a first-of-its-kind funding fund in China. Initially, 10 suppliers will be a part of us in investing almost $300 million over the subsequent 4 years into the China Clear Power Fund. The fund will put money into and develop clear power tasks totaling greater than 1 gigawatt of renewable power in China — the equal of powering almost a million houses.

We’re seeing nice momentum in our Everybody Can Code and Everybody Can Create initiatives. Greater than 5,000 faculties and group faculties are actually instructing Everybody Can Code and greater than 350 faculties have dedicated to incorporating Everybody Can Create into their curricula for the upcoming faculty yr. Coding abilities are opening doorways for college students and job seekers all over the world as large development within the app financial system creates alternative in all places we glance. We’re additionally teaming up with main educators for blind and deaf communities throughout the USA who will begin instructing Everybody Can Code this fall.

Wanting forward, we could not be extra excited concerning the services in our pipeline, in addition to limitless functions for augmented actuality and machine studying know-how. We’re working with key companions within the enterprise to vary the best way work will get achieved with iOS and Mac. We’re welcoming communities and providing studying alternatives at our retail places by means of a whole lot of 1000’s of Right this moment at Apple periods every quarter. We’re increasing our attain into rising markets and seeing sturdy double-digit development in income. And we’re making nice progress towards our aim of considerably increasing our companies enterprise. And now for extra particulars on the report June quarter outcomes, I would like to show the decision over to Luca.

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