Three months on from posting the largest financial quarter in corporate history, all eyes will be on Apple to repeat the trick – and all attention will be on how the iPhone 6 is performing in China, now it has been on sale there for its first full quarter.
Apple has issued guidance for the second quarter of between $52bn (£34bn) and $55bn revenue and a gross margin of 38.5% to 39.5%. Typically, the company is conservative with its guidance so it can announce much higher figures on the day, prompting a surge in its share price, so following its estimates too closely is difficult.
- China key to second massive quarter
Where most players in the smartphone market see relatively conservative second quarters due to a post-Christmas lull and expectations of manufacturers announcing new models in the spring, Apple will be buoyed by the iPhone 6 and 6 Plus arriving in China in time for the country's new year celebrations.
Although Apple is unlikely to reveal Chinese sales specifically, Kantar Worldpanel estimates that for the three months to the end of February, the company captured 27.6% of the country's smartphone market. This is up from 18% during the same period in 2014 and replaces local company Xiaomi as the country's top vendor, despite the iPhone costing far more than its Chinese rivals.
These positive factors have encouraged analysts to expect another strong performance from Apple. Yahoo Finance surveyed 36 analysts and came up with an average revenue estimate of $55.91bn, slightly above the top end of Apple's own guidance. Analysts' estimates ranged from a conservative $51.37bn to a bullish $59.46bn.
- iPhone sales surge
Brokerage and investment firm Stifel has increased its iPhone sales estimates for the second quarter from 53.6 million to 59.6 million units, well above the Wall Street average of 54.9 million. This revised estimate is a result of stronger than expected demand in China, where long queues were still seen six weeks after the iPhone 6 and larger 6 Plus arrived there. For context, Apple sold 74.5 million iPhones during the first quarter.
The firm said its supplier checks indicated iPhone sales have been "more robust than previously expected", reports ValueWalk.
- iPad sales a concern
Away from the evergreen iPhone, investor concern will be focused on the iPad. Sales fell 18% compared to the same time in 2014, while revenue from its tablet range fell even further, down 22%. The iPad Air 2 was a decent upgrade, arriving mid-way through the first quarter, but the iPad mini 3 was seen as a tiny improvement over its year-old predecessor.
There's no real reason for iPad sales to change their direction in the second quarter, as they are not due to be replaced or upgraded until around October. Cutting the original iPad mini's price to just £199 might have helped spur some sales to consumers shopping in the lower end of the tablet market.
There are mounting rumours of a larger and more powerful iPad Pro arriving in 2015 but this will have no bearing on the second quarter results or Apple's expectations going into the third.
- Flat Mac sales
Apple's first quarter saw it shift 5.5 million Mac computers - the same as the first quarter of 2014. There is no real reason for this number to rise or fall drastically, especially as the new MacBook only went on sale on 24 April, the same day as the Apple Watch, and its sales will not be included in the earnings results published three days later.
- Apple Watch pre-orders
But... we might finally find out how many MacBooks – and, more importantly – Watches were pre-ordered over the last two weeks. Initial estimates suggest Apple saw one million orders in the US during the first 24 hours alone, with that figure doubling inside a week. One thing we do know, is Apple will not be talking about fans queueing up for the Watch, as no official store had any stock on launch day; instead, all orders were handled exclusively by Apple's website.
Stifel expects Apple to shop 3.3 million Watches in its first full quarter (Q3 of 2015), with an average selling price of $475. For its full 12 months, Stifel expects the Watch to shift 19.6 million units.
- How to follow Apple 21 2015 earnings call online
Apple's earning call takes place at 2pm local time in Cupertino on 27 April and will be available for all to follow on Apple's website. Here is a list of the time the earnings call will begin around the world:
- San Francisco - 2pm
- Cupertino - 2pm
- New York - 5pm
- London - 10pm
- Paris - 11pm
- Amsterdam - midnight
- Johannesburg - 1am (28 April)
- Moscow - 2am (28 April)
- Bangkok - 5am (28 April)
- Hong Kong - 6am (28 April)
- Seoul - 7am (28 April)
- Sydney - 9am (28 April)
Here are the system requirements for listening to the call:
Streaming audio requires iPhone, iPad, or iPod touch running iOS 4.2 or above, a Mac running OS X 10.6.8 or above or a PC running QuickTime 7 or later. Safari, Internet Explorer, Firefox or 32-bit Chrome also required. If you do not have QuickTime installed on your Windows PC, it is available at www.apple.com/uk/quicktime.