Tim Cook spoke at length at Monday’s second quarter 2015 earnings call about Apple’s earnings, Apple Pay, HealthKit, and more. Here’s our ongoing transcript of his remarks and Q&A responses.
Tim’s opening remarks
Good afternoon, everyone, and thanks for joining us. We have a lot of great news to talk about, so I’ll jump right in. Today, we’re reporting our strongest March quarter ever, with 27 percent revenue growth, and 40 percent earnings per share growth year over year.
We’re seeing fantastic results for iPhone, with revenue growth of 55 percent year on year, and we’re seeing a higher rate of switchers than we’ve experienced in previous iPhone cycles. The success of iPhone has been extremely strong in emerging markets, where unit sales were up 63 percent year on year. The app store had its best quarter ever, with a record number of customers making purchases, driving a new record for revenue, and 29 percent year on year growth. We also reached an all-time quarterly record of 5 billion dollars in total services revenue.
We also continued to defy the trend of declining global PC sales, with double-digit Mac unit growth in a market IDC estimates contracted by seven percent.
We’re now halfway through fiscal 2015, and our year-to-date results have been simply staggering. We’ve sold over 135 million iPhones, 34 million iPads, and 10 million Macs in the first six months of the year. Our revenue has grown by 28 percent, to over 132 billion; net income has increased 36 percent, to over 31 billion; and EPS has grown by 44 percent.
We’re making many strategic investments in Apple’s future, in research and development, in our supply chain, and in our infrastructure, and we’ve made 27 acquisitions in the last six quarters. We’re in the very fortunate position of generating more cash than we need to run our business and keep making these important investments. So today, we’re announcing another significant update to our capital return program, expanding its size to 200 billion dollars through March of 2017 to reflect our strong confidence in what lies ahead for Apple. [Apple CFO] Luca [Maestri] will go into this in more detail in a moment.
We’re also making great progress in many other areas. The Apple ecosystem continues to expand in exciting ways. We’re seeing great momentum with Apple Pay: Discover announced today that its cardmembers in the United States will be able to make contactless payments in participating stores through Apple Pay beginning this Fall. And last month, we said that the number of locations accepting Apple Pay has tripled, and we continue to see great progress with merchants. Best Buy, which has been a longtime strong partner of ours, has just announced that it’s now offering Apple Pay in-app, and later this year will offer Apple Pay in all of their U.S. stores.
And merchants aren’t the only ones jumping on board. Earlier this month, a leading health care payment network announced acceptance of Apple Pay for its clients, so over 50 major hospitals across the country — including Stanford Health Care and Aspen Valley — will accept Apple Pay this year for co-pays and bill payments at registration and check-in.
We’re also incredibly inspired by the momentum we’re seeing in health-related solutions. Since we released HealthKit with iOS 8 last September, over 1000 apps have been developed to transform how people track, manage, and interact with their health, and they’re now available on the App Store.
Just this weekend, Cedar Sinai in Los Angeles turned on the largest HealthKit integration to date, giving more than 87,000 patients the ability to share their health and fitness data seamlessly with their MyCS Link app, which syncs with their electronic medical records. And last month, we announced ResearchKit, an open-source software framework that helps doctors and scientists gather data for medical research participants more efficiently and accurately using iPhone applications.
The response so far has been simply amazing, far exceeding our expectations. The first research apps developed using ResearchKit study asthma, breast cancer, cardiovascular disease, diabetes, and Parkinson’s disease, and have enrolled over 60,000 iPhone users in just the first few weeks of being available on the App Store.
Over 1000 researchers have contacted us expressing interest in performing studies through ResearchKit. We think these types of solutions have the potential to revolutionize medical studies in life-changing ways, and we’re proud that Apple is helping make this possible.
Last quarter, we also announced a major economic investment in Europe, where we will spend two billion dollars to build data centers in Ireland and Denmark. These will be our largest data centers in the world. Apple is now responsible for creating over 670,000 jobs across the European continent. Most of them have grown out of the success of the App Store, which has generated more than 7.5 billion dollars for European developers since just 2008. We feel great about the economic contribution we’ve been able to make in Europe.
The two data centers we’re building will run on 100 percent renewable energy from day one. This is just part of the work we’re doing to protect the environment and leave the world better than we found it. Today, 100 percent of Apple’s U.S. operations and 87 percent of global operations are powered by renewable energy. Just before Earth Day, we announced our plan to move to renewables in China. We’re undertaking a groundbreaking partnership with several companies to build a 40-megawatt solar farm in Sichuan Province that will generate far more than the amount of energy used by all of our offices and retail stores in China combined.
We also announced an innovative new partnership with the Conservation Fund to permanently protect more than 36,000 acres of working forest in Maine and North Carolina to offset the impact of our packaging has on the world’s supply of sustainable version fiber. Apple is deeply committed to these initiatives and will continue to make them a priority.
The June quarter is off to an exciting start with great new products and services. Three of them in particular are giving our customers a glimpse of the future, and we are very happy with the reception that each of them is receiving.
First, the all-new MacBook began shipping just over two weeks ago, and we’re very happy with the response we’re getting from customers. The new MacBook is our lightest, most compact Mac notebook ever — and you really have to see it to believe it. It features a stunning 12-inch Retina display, a new Force Touch trackpad, all-day battery life, and a revolutionary new keyboard. We believe — and I think most everyone agrees — this is the future of the notebook.
Second is the new streaming service from HBO, which is available on Apple TV and iOS. We teamed up with HBO last month to help launch HBO Now, a stand-alone service that lets customers stream the content they love from HBO on the devices they love from Apple — all without requiring a subscription to cable.
HBO Now has been incredibly popular with Apple users since its debut, and it has been one of the top-downloaded apps on the U.S. App Store as well.
And third, of course, is Apple Watch. It’s been really great to see the reaction of customers since their Watches began arriving on Friday morning. All around the world, we’ve seen the excitement on social networks as people start using their Apple Watch. The response has been overwhelmingly positive.
Adding to the surprise and delight of Apple Watch are the more than 3500 apps that are already available. Our developer community has already seen the potential in this new category, and put some of their best thinking into what wearable technology can do. We can’t wait to see more of the inspiring apps developers dream up for Apple Watch as we head into our Worldwide Developers Conference six weeks from now.
I’d like to thank all of those developers, and our hundreds of millions of customers, for their loyalty and support. I’d also like to thank all of the Apple employees around the world for their creativity, tireless effort, and passion for delivering the very best products in the world.
More coming as the call continues.