Live transcript: Here’s what Apple is saying at its earnings call right now

Apple CEO Tim Cook and CFO Luca Maestri spoke with analysts during the company's Q1 2020 earnings call. Here's our ongoing live transcript of their remarks! If you want some quick analysis on Apple's results, we recommend checking out the awesome charts from Six Colors.

Cook's opening remarks

Tim Cook

Good afternoon, everyone. Thanks for joining us today. I hope you're staying safe and well. Today, Apple reports $58.3 billion dollars in revenue, an all-time record for services, and a quarterly record for wearables, home, and accessories. It was also a quarterly revenue record for Apple retail. Powered by phenomenal growth in our online store. Amid the most challenging global environment in which we've ever operated our business, we're proud to say that Apple grew during the quarter. But before we dive more deeply into the numbers, I want to speak just for a bit on COVID-19. This is something Apple has been contending with since January. And I think that how we have responded, what we have been inspired to do tells an important story about Apple's great durability as a business and the enduring importance of our products and our customer's lives. It also speaks to Apple's unmatched capacity to be creative, to think always in terms of the long term, and to forge ahead when others may feel an instinct to pull back. Before COVID-19 was on the horizon. We anticipated that Q2 was going to be a prolific and energetic period for Apple. And when the pandemic did strike, our teams not only succeeded in growing the business, in introducing powerful new products and in meeting our customers' needs, but they also rose to the occasion in terms of meeting our broader obligations to the communities in which we live and work. Let's look quickly across the business. At the same time that they were leaving no stone unturned to get our latest generation of devices manufactured and into our customers' hands, our worldwide network of supply chain partners, logistics and operations spokes and every part of the company were also sourcing more than 30 million masks for frontline medical workers, ensuring they are donated to places of greatest need in every region around the world. While our product teams were preparing to launch a new iPad Pro, Magic Keyboard, MacBook Air, and the new iPhone SE, all of which have been very well received by reviewers and consumers alike, they were also working with our suppliers to design, test manufacture and distribute more than seven and a half billion face shields. And we continue to ship more than one million of these every week to the doctors, nurses, and medical personnel on the front lines. In a quarter where services teams achieved strong growth, which Luca will dig into in a minute, and which speaks to the real durability of our services strategy, these teams were also putting COVID-19 front and center. As Apple News reached 125 million monthly active users, we elevated trusted information from reliable sources through a special COVID-19 vertical. We let customers skip payments without incurring interest on Apple card for March and April in light of financial hardship for many families. We worked with everyone from Oprah to Lady Gaga to inform, entertain and get back through Apple TV and services like FaceTime and Messages set new all-time records for daily volume during this quarter as users relied on their devices to stay connected in a new reality. In software, at the same time that our teams work with great creativity and excitement as we prepare to deliver our first ever all online Worldwide Developers Conference later this quarter, they also worked with the same creativity and speed to put together our COVID-19 symptom checking Website, and app in partnership with the CDC. As of today, the app has been installed nearly two million times and the web tool has received over three million unique visits. and just this month to accelerate contact tracing. We are launching a joint effort with Google to enable the use of Bluetooth technology to help governments and health agencies to reduce the spread of the virus with user privacy and security central to the design. We've paired these programmatic efforts with a broader strategy to give back what's needed most. We've made major corporate donations to response efforts around the world to support Global Citizen, as well as a new fund for Americans experiencing food insecurity as a result of the crisis. When you tally these things up and consider our ongoing two-to-one match for employee donations. Apple's contributions to the global response are significant, diverse and a great source of pride for the whole team. We're also doing what we can to help our employees, their families and by extension, their communities stay safe and well by modifying our operations where appropriate. This extends, of course, to our retail employees. They are Apple's face to our customers and an instrumental part of our business, and we're compensating them normally despite store closures. During a quarter where circumstances evolve by the hour, we have been gratified by the resilience and adaptability of our global supply chain. While we felt some temporary supply constraints in February, our operations team suppliers and manufacturing partners have been safely returning to work and production was back at typical levels toward the end of March. At this time of social distance of shuttered schools and gathering places of delayed plans and new ways of socializing, we have seen significant evidence that our products have taken a renewed importance for our customers. Teachers and students around the world are relying on our technology to teach, learn, and stay connected with each other. We are in the process of deploying major orders of iPads to school systems, working to keep learning going strong at a distance, including tens of thousands in Ontario, Canada, Glasgow, Scotland, and Puerto Rico. A hundred thousand to the city of Los Angeles and three hundred fifty thousand to New York City. Our largest educational iPad deployment ever. Since early March, we've seen unprecedented demand for our pro apps from students, enthusiasts, and creative professionals. These folks are keeping us all entertained and inspired as we stay at home, and to help them do it, we made Final Cut Pro X and Logic Pro X available for free for 90 days for everyone. And the reaction has been overwhelming, driving software downloads and usage to record levels. Doctors and medical professionals are making even greater use of Apple Watch and other health features to communicate with patients and to treat them safely from a distance when necessary. With new FDA guidance on non-invasive remote patient monitoring, for example, the ECG app on Apple Watch is increasingly being used to facilitate remote ECG measurements and recordings for telemedicine usage, reducing patient and health care provider contact and exposure. Many hospitals, such as Geisinger Health System, NYU Langone Health, and Stanford Health Care are using apps on iPad and iPhone to support communication and video conferences between hospitalized patients and their care teams. This enables the care teams to keep a close watch on patients without entering isolation rooms, which helps to minimize exposure and reduces some of the need for personal protective equipment. Now, when you step back and tally all this up, when you consider all the ways COVID-19 has touched Apple, our customers, and the way we work, this may not have been the quarter it could have been absent this pandemic. But I don't think I can recall a quarter where I'd been prouder of what we do or how we do it. As I said at the outset, we achieve revenue of $58.3 billion. And underneath that was product revenue of $45 billion. The performance of our product business had three very different phases during the March quarter. Based on Apple's performance during the first five weeks of the quarter, we were confident we were headed toward a record second quarter. At the very high end of our expectations. In the next five weeks of the quarter, as COVID-19, started impacting China, iPhone supply was temporarily affected as well as demand for our products within China. This caused us to withdraw our revenue guidance in February. At that point, demand for our products outside of China was still strong and in line with our expectations. During the last three weeks of the quarter, as the virus spread globally and social distancing measures were put in place worldwide, including the closure of all our retail stores outside of Greater China on March 13th and many channel partner points of sales around the world, we saw downward pressure on demand, particularly for iPhone and wearables. Given the lack of visibility and uncertainty in the near-term, we will not be issuing guidance for the coming quarter. Over the long term, though, we have a high degree of confidence in the enduring strength of our business. Our global supply chain is profoundly durable and resilient. We have shown the consistent ability to meet and manage temporary supply challenges like those caused by COVID-19. We have continued to deliver innovative new products across multiple categories that appeal to a broad cross-section of customers, including the all-new iPhone SE, which achieved unmatched technological capacity at an incredible value. Our teams worldwide have tackled the complexities of this moment with unmatched creativity, good humor, and dedication to our customers. For a company whose business is innovation, there are real upsides in periodically having to figure out how to do just about everything in a brand new way. Our long-running investment in our services strategy is succeeding. This business is growing and is a reflection of our enduring large and growing robust cash position and our best product pipeline ever. Major investments, including our five year commitment to contribute $350 billion dollars to the economy here in the United States are moving forward, full speed ahead. It's in these moments that we set ourselves apart. We've always managed through difficult moments by doubling down and investing in the next generation of innovation. And that's our strategy today. And so while we can't say for sure how many chapters are in this book, we can have confidence that the ending will be a good one. Apple will continue to do everything we can do to help the global response and to keep our customers learning, creating, sharing and connecting so that life can remain as normal as it can during this challenging time. With that, I'll hand things off to Luca.

Transcripts ongoing...