Over the most recent four fiscal quarters ended in June, Apple reached $100 billion in revenue. In this four-quarter period revenue rose at the rate of 75.73% and eps rose 90.2%. Apple's revenue growth is fueled not only by the popular iPhone and iPad which accounted for 61% of the $100 billion in revenue, it's also fueled by a broadening of the company's global reach.
Apple manages its business on a geographic basis. In this article I'm providing an overview of Apple's sales by region for the first nine months of the current fiscal year ended in June. During this nine-month period revenue rose 78.2% to $79.979 billion and operating income increased 93.85% leading to an eps gain of 96.2% over the prior-year period. Apple's remarkable cost discipline kept operating expenses under 9% of revenue in the June quarter and sustains the rates of eps growth above the rates of growth in revenue.
While it's easy to view Apple and Apple's revenue and earnings growth as a function solely of the company's popular products, further study indicates the company's expanding global distribution of products, including new iPhone carriers and new retail stores are important components of the company's continuing success.
The graph and table data below detail sales and operating income by region and illustrate Apple's broadening global reach as the iPhone, iPad and Macintosh line of personal computers are made available to a growing number of the world's consumers.
Revenue Thru | Revenue Thru | % YOY | Operating | Operating | % YOY | |
Region | 6/25/2011 | 6/26/2010 | Gain | Income 2011 | Income 2010 | Gain |
Americas | 28,667 | 17,312 | 65.59% | 10,250 | 5,482 | 86.98% |
Europe | 20,381 | 13,234 | 54.00% | 8,414 | 5,457 | 54.19% |
Japan | 4,326 | 2,580 | 67.67% | 1,996 | 1,185 | 68.44% |
Asia-Pacific | 16,062 | 5,524 | 190.77% | 6,869 | 2,553 | 169.06% |
Retail | 10,543 | 6,232 | 69.18% | 2,665 | 1,447 | 84.17% |
Total | 79,979 | 44,882 | 78.20% | 30,194 | 16,124 | 87.26% |
Stock-Based Compensation Expense Other Corporate Expenses, net | -870 | -655 | ||||
-4,244 | -2,531 | |||||
Total Operating Income | 25,080 | 12,938 | 93.85% | |||
Apple's Expanding Global Reach
In the first nine months of the current fiscal year, Apple's reported revenue from the Asia-Pacific region, exclusive of Japan, rose 191% to $16.062 billion. This extraordinary revenue performance increased the region's percentage of Apple reported revenue to 20% from 12.3% in the prior-year period. New iPhone carrier agreements in the region and strong sales of the iPad as distribution continued to expand, catapulted the region's revenue totals to levels well above past results.
Apple Retail Stores
Apple ended the nine-month period with 327 retail stores open for business versus 293 stores as the the end of June in 2010. Over the recent nine-month period average revenue per retail store rose 48% to $32.6 million. The retail stores are not only at the epicenter of the Apple product mutual halo effect, the stores are essential to the growth in Macintosh unit sales. Management has repeatedly stated 50% of Mac buyers at the retail stores are new to the Macintosh platform.
Americas
In the first nine months of the current fiscal year, the Americas region, exclusive of the retail stores, accounted for 36% of Apple's reported revenue and experienced 65.59% growth in revenue fueled in part by the addition of Verizon as an iPhone carrier in the United States. Carrier expansion to reach new domestic iPhone customers was a primary source of revenue growth for Apple in the company's biggest revenue region.
Operating Income
Apple's operating income reached 31.36% of revenue in this nine-month period. This was achieved through careful management of operating expenses and high gross margins on product sold. Expanding the global reach of the company's high gross margin products is the most effective way to maintain rates of operating income growth that are greater than the rates of growth in revenue. Please see my July article titled Apple's Net Income Relative To Revenue Continues To Rise for more information.
The graph below illustrates Apple's revenue composition by region for the first nine months of the fiscal year. I expect the Asia-Pacific region to increase its contribution to total revenue in the September quarter and for the increasing number of retail stores to buoy continued strong revenue growth in the holiday quarter that begins less than three weeks from today.
Disclosure: The author is long Apple shares
Robert Paul Leitao
