The following report covers the traditional opening commentary from Apple's CEO Tim Cook on the highlights for their latest financial quarterly results. It's an accurate transcript that any Apple fan could rely on for facts about Apple's Q4 2016 highlights.
Tim Cook: Q4 2016 Highlights
"We're in the middle of a very busy season for Apple and Thursday of this week we're holding another event here at the Apple Campus. All of us are excited and we think that our customers are going to love these latest innovations.
Our results for the September quarter were very strong. We generated $46.9 billion of revenue in the quarter, towards the high-end of our guidance range. Gross Margin was 38% at the very top of our guidance range. We sold 45.5 million iPhones reflecting continued improvement in year over year performance compared to the last two quarters as we forecasted in January.
iPhone sales were up year over year in 33 of our top 40 markets. As you know, iPhone customers are the most satisfied and loyal customers in the world and fiscal 2016 saw more customers switch from Android to iPhone than ever before. This is due to the superior customer experience that we deliver with our product and its something that no other company can match.
We had a record setting quarter for services with revenue growth accelerating by 24% reaching 6.3 billion. App store revenue continued to skyrocket where music revenue grew by 22% thanks to the growing popularity of Apple Music. In fact, J.D. Power recently announced that Apple Music enjoyed the highest customer satisfaction rating in the streaming music market.
Earlier this month, I visited Japan where Apple Pay went live yesterday. Japanese customers are already making it a habit to contactless payments where they commute, dine and shop and so we expect a strong response and rapid adoption of Apple Pay.
Around the world we're seeing very strong growth in transactions volume through Apple Pay which also launched in Russia and New Zealand this month and is coming to Spain in the next few months.
Apple Pay transactions were up over 500% year on year for the September quarter. In fact, we completed more transactions in the month of September than we did across all of fiscal 2015. And with Apple Pay support now built into Safari, hundreds of thousands of websites are bring Apple Pay to their customers. Our major partners tell us that Apple Pay shows the highest conversion rate of any digital wallet.
We remain very confident about the future of our services business given the unmatched level of engagement, satisfaction and loyalty of our growing installed base. We have almost doubled the size of our services revenue in the last four years, and as we've said before, we expect it to be the size of a fortune 100 company in fiscal 2017.
As for our newest products, we're thrilled with the customer response response to iPhone 7 and iPhone 7 Plus. These are the best iPhones that we've ever made with Breakthrough camera systems, immersive stereo speakers and the best iPhone performance in battery life ever thanks to the custom designed A10 Fusion chip.
We're also off to a great start with the Apple Watch series 2, the next generation of the worlds most popular smartwatch packed with new features and built-in GPS, water resistance, a dramatically brighter display and a powerful dual processor. Individuals and businesses alike are recognizing the potential of Apple Watch to help people stay healthy, motivated and connected.
One recent example is Aetna which has announced a new initiative to revolutionize its member's health experience by subsidizing Apple Watch for individual customers and select large employers. In addition, Aetna is also providing an Apple Watch to almost 50,000 of its employees to encourage them to live a healthier day.
We just rolled out new versions of iOS, macOS and watchOS and customers are loving the many great new features including Siri on the Mac, enhanced health and fitness capabilities for Apple Watch and a delightful new way to experience your photos on iOS with a feature we call 'Memories'.
We've made massive advances in 'Messages' making them more expressive and fun than ever with powerful animations, invisible ink and handwritten notes. We're seeing great offerings from developers in the all-new App Store for messages and there has been a marked increase in our monthly active users.
One of the great new features of iOS 10 is the Home app which is making home automation easy to set up and intuitive to use. Customers could easily set up and securely control all their home accessories from lights to cameras, garage doors and air conditioning all from their favorite iOS devices. We expect over 100 HomeKit compatible products to be on the market by the end of this year all reviewed and approved by Apple to help ensure customers security when using them. Our Apple Stores are wonderful places to discover and learn about these great products for the connected home.
With our latest operating system, machine learning is making our products and services smarter, more intuitive and even more personal. We've been using these technologies for years to create better user experiences and we've also been invested in heavily both through R&D and acquisitions. Today, machine learning drives improvements in countless features across our products. It enables the proactive features in iOS 10 which offers suggestions of which you might want to use or which contacts you might want to include in an email. Our camera and photo software uses advanced face recognition to help you take better pictures and object and scene recognition to make them easier to sort and find.
Machine learning makes the fitness features in Apple Watch more accurate and even helps to extend battery life across our products. Machine learning continually helps Siri get even smarter in areas such as understanding natural language. With extended Siri to work in many new ways by opening it to developers and most recently by making Siri available to Mac users in macOS Sierra.
We're already seeing great momentum in just the first few weeks from devlopers leveraging the Siri and speech API's and we're very happy with the engagement its driving with Siri.
Looking ahead, we're seeing some very exciting developments in India. Reliance Jio is rolling out a first of its kind all IP network in India with 4G coverage in 18,000 cities and 200,000 villages across the country. They're offering a free year of service to purchasers of new iPhones and we're partnering with them to ensure great iPhone performance on their network.
Our iPhone sales in India were up over 50% in fiscal 2016 compared to the prior year and we believe we're just beginning to scratch the surface of this large and growing market opportunity.
We're also very happy with our progress with Enterprise market initiatives which continue to expand. Just last month we announced a partnership with Deloitte to help companies quickly and easily transform the way they work by maximizing the power, ease of use and security of the iOS platform.
Deloitte is creating a unique Apple practice with over 5,000 strategic advisors focused on helping businesses transform work in fuctions across the enterprise. We're also collaborating on the development of EnterpriseNext, a new Deloitte consulting service designed to help clients across more than 20 industries take full advantage of the iOS ecosystem and quickly develop custom solutions through rapid prototyping.
As we close the book on another incredible year I'd like to thank our talented employees for their hard work and passion for making the best products in the world, our amazing developer community for their relentless creativity and our wonderful customers, business partners and shareholders for their loyalty and support."
Random Notes from Commentary from Apple's CFO
The following are just a few random notes that stood out from Apple's CFO commentary during his segment on Apple's latest quarter.
Even though sales were down in China in Fiscal Q4, Apple's CFO stated that Apple would return to growth in China in the December quarter.
Demand for iPhone 7 is outstripping supply, especially for iPhone 7 Plus
App Store growth rate has accelerated for five straight quarters
App Store generated 100% more revenue than Google Play in the September quarter
"We'll have some exciting news to share with current and future Mac owners very soon"
For the September quarter, Apple had 82% market share in tablets over $200
Among US consumers considering the purchase of a tablet in the next six months, 73% plan to purchase an iPad, which is more than 8 times the purchase intention rate of next highest brand measured. The iPad Pro is the number one tablet consumers are considering.
Revel Systems, a leading iPad point of sale solution partner, recently announced a global agreement with Shell retail to implement Revel's iPad-based POI system and services at 34,000 Shell locations worldwide, including support for Apple Pay in countries where Apple Pay is available.
IBM has just released its new data on the great results of its Mac roll-out. With more employees choosing Mac than ever before, there are now more than 90,000 Macs across the organization in addition to 48,000 iPads and 81,000 iPhones. IBM reports that PCs are three times the cost to manage, drive twice the number of support calls, and are five times more likely to require a follow-up appointment to resolve an issue than Macs. Thanks to much lower support cost and significantly higher residual value, the company is saving as much as $535 per computer when comparing the total cost of Mac ownership to a PC over a four-year life cycle.