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TAKEAWAYS:
Apple's Net Income Margin has remained roughly flat at around 21% between 2016 and 2019
(FY ends September) Apple's Total Expenses have trended steadily higher from around $170 billion in 2016 to about $205 billion in 2019 Below, we take a look at the key drivers of Apple's expenses and net margins.
Apple's Net Income Margin was 21.2% in 2019 Total Expenses were $205 Billion, with Operating Expenses of $196 Billion, and $10 Billion in Tax Expenses
Total Expenses
Breakdown of Apple's Total Expenses in 2019 :
Total $205 Bil
Cost of Goods Sold $162 Bil
Operating Expenses $34 Bil
Provision for income taxes $10 Bil
Non-operating (income)/expense -($2) Bil
Apple's Total Expenses Have Increased From $170 Billion in 2016 to $205 Billion in 2019
Below, we take a look at how the company's key expense components have trended and the key reasons for the change.
Total Expenses
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Changes In Total Expenses
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Apple's total expenses have grown from $170 billion in 2016 to about $205 billion in 2019.
Related Analysis
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1. Cost of Sales :
Cost of Sales have increased from $131 Bil in 2016 to $162 Bil in 2019, driven by higher costs of memory and other propriety components. As Cost of Sales has grown at a faster rate than Revenues, the Gross Profit Margin has shrunk from over 39% to below 38% over the same period.
Cost of Sales
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Gross Profit Margin
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2. Operating Expenses :
Apple's Operating Expenses include 2 key components:
A. Selling, General & Administrative (SG&A) Costs
B. Research & Development (R&D) Costs
Total operating expenses
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Breakdown of Apple's Operating Expenses in 2019 :
Total $34 Bil (100%)
SG&A Costs $18 Bil (53%)
R&D Costs $16 Bil (47%)
(A) SG&A expenses have increased from $14.2 billion in 2016 to $18.2 billion in 2019. As a % of Revenues, SG&A has increased from 6.6% in 2016 to 7% in 2019
Selling, General and Administrative
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SG&A as % Revenue
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(B) R&D Expenses increased from $10 billion in 2016 to about $16.2 billion in 2019 as Apple is likely to be investing in more long-term projects, which may not immediately impact revenues. As a % of Revenue, R&D expenses have grown from 4.7% in 2016 to 6.2% in 2019
Research and Development
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R&D as % Revenue
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3. Non-Operating Income :
Apple's Non-Operating Income Has Increased From $1.3 billion in 2016 to $1.8 billion in 2019 Driven by higher Interest and Dividend Income from its investments, although it has been partly offset by higher interest expenses relating to more long-term debt.
Non-Operating Expense / (Income)
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Interest Expense Rate As % Debt
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Interest Income As % Cash & Cash Equivalents
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4. Tax Expense:
Apple's Income Tax Expense has declined from $15.7 billion in 2016 to about $10.5 billion in 2019, driven by U.S. Federal Income Tax Reforms, with Effective Tax rate declining from 26% to 16%.
Provision for Income Taxes
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Apple Effective Tax Rate
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