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C O M PA N Y N O T E

April 8, 2019

Apple, Inc. (AAPL) Overweight


Teen Survey: iPhone Ownership Up, With 'Intent to Buy' Flat; Reit OW & $201 PT

CONCLUSION
PRICE: US$197.00
Apple's share of smartphone ownership was up slightly in the Piper Jaffray Taking Stock
TARGET: US$201.00
With Teens survey. Of ~8,000 respondents, 83% have an iPhone, the highest percentage 15x CY20E EPS of $13.39
we have seen in our survey. The iPhone may have room to move higher, however, with
86% of teens anticipating their next phone to be an iPhone, tied for the highest ever in our Michael J. Olson
Sr Research Analyst, Piper Jaffray & Co.
survey (flat from Fall-18). Android was the runner up with 9%, down from 10% in the fall.
612 303-6419, michael.j.olson@pjc.com
The Apple Watch was the top smartwatch among teens, garnering 20% share, with the
Yung Kim
Samsung Gear next on the list at 2%. 22% of teens plan to purchase an Apple Watch in Research Analyst, Piper Jaffray & Co.
the next six months, down slightly from 23% in the fall. Overall, we view the survey data as 212 284-9312, yung.r.kim@pjc.com
a sign that Apple's place as the dominant device brand among teens remains well intact.
Changes Previous Current
Reiterate OW & $201 PT.
Rating — Overweight
Price Tgt — US$201.00
• iPhone Maintains Strong Lead Among Teens. Teen ownership of the iPhone was up FY19E Rev (mil) — US$252,968
slightly at 83%, the highest share we have seen in our semi-annual Taking Stock With FY20E Rev (mil) — US$264,032
Teens survey of about 8,000 high school students. Apple's share was up slightly from FY19E EPS — US$11.78
82% in the fall. We believe iPhone may have further room to grow with 86% of teens FY20E EPS — US$13.05
anticipating their next phone purchase to be an iPhone, still our highest recorded iPhone 52-Week High / Low US$233.47 / US$142.00
purchase intent and flat from 86% in the fall. Android was the runner up in purchase Shares Out (mil) 4,773.0
intent with 9% (down from 10% and the third consecutive decline we have recorded). Market Cap. (mil) US$940,281.0
Avg Daily Vol (000) 30,417
Book Value/Share US$25.00
• Apple Watch Remains Top Smartwatch; Interest Slightly Down. The Apple Watch
Net Cash Per Share US$27.30
remained the #1 smartwatch among teens. While 73% of respondents do not own a smart
Debt to Total Capital 44.1%
watch (down from 79% in the fall), 20% own an Apple Watch, up significantly from 16%. Div (ann) US$2.92
The Samsung Gear was the runner up with 2% (flat). Purchase intent declined slightly, Yield 1.48%
with 22% of teens saying they plan on buying an Apple Watch in the next 6 months vs. Fiscal Year End Sep
23% in our Fall-18 survey. Price Performance - 1 Year
USD
240
• Services Focus Will Be Ongoing Theme for AAPL in FY19. FY19 will likely prove to
be a year with limited catalysts for Apple on the product side, so we expect the news 220

flow for the next several quarters will continue to be centered around potential for driving 200

increasing services revenue per user/device. With lengthening hardware upgrade rates 180
and uncertainty around new device uptake, Apple is increasingly looking to leverage its
160
~1.4B installed base of active devices through services. Based on the deceleration in
growth of services revenue per active device that is implied in our model and the plethora 140

of new services coming from the company, we believe Apple has the potential to show 120
Apr-18 Jun-18 Aug-18 Oct -18 Dec-18 Feb-19 Apr-19
services revenue upside in FY19.
Source: Bloomberg
R I S K S TO A C H I E V E M E N T O F P T & R E C O M M E N D AT I O N
Trends in end-markets; component pricing; competitive pressures.
C O M PA N Y D E S C R I P T I O N
Apple is the leader in the mobile device and digital content distribution markets.

REVENUE (US$ m) EARNINGS PER SHARE (US$)


YEAR
Dec Mar Jun Sep FY CY FY RM CY RM Dec Mar Jun Sep FY CY FY P/E CY P/E
2018A 88,293.0 61,137.0 53,265.0 62,900.0 265,595 261,612 3.5x 3.6x 3.89 2.73 2.34 2.91 11.91 12.16 16.5x 16.2x
2019E 84,310.0A 57,966.0 51,329.0 59,362.0 252,968 255,978 3.7x 3.7x 4.18A 2.40 2.32 2.86 11.78 12.16 16.7x 16.2x
2020E 87,321.0 60,966.0 54,144.0 61,601.0 264,032 270,436 3.6x 3.5x 4.59 2.78 2.54 3.11 13.05 13.39 15.1x 14.7x

Piper Jaffray does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only
a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information,
including an attestation under Regulation Analyst certification, found on pages 7 - 8 of this report or at the following site:
http://www.piperjaffray.com/researchdisclosures .
Apple, Inc. Page 1 of 8
C O M PA N Y N O T E
April 8, 2019

Details on Apple from our PJC Teen Survey - Device Ownership Spring-15 Fall-15 Spring-16 Fall-16 Spring-17 Fall-17 Spring-18 Fall-18 Spring-19
Own an iPhone 66% 67% 69% 74% 76% 78% 82% 82% 83%
Spring-19 Teen Survey Expect next phone to be:
iPhone 72% 74% 75% 79% 81% 82% 84% 86% 86%
Android 21% 19% 19% 17% 13% 13% 11% 10% 9%
Blackberry 1% 1% 1% 1% 1% 0% 0% 0% 1%
Other smartphone 4% 4% 3% 2% 2% 1% 1% 1% 1%
Non-smartphone 2% 2% 3% 2% 1% 1% 1% 0% 1%
Other Android 0% 0% 0% 0% 2% 2% 1% 1% 1%
Google Pixel 0% 0% 0% 0% 1% 1% 1% 1% 1%

Own a Smartwatch 5% 9% 12% 12% 16% 17% 20% 21% 27%


Plan to buy Apple Watch in next 6 months 11% 8% 10% 11% 13% 17% 20% 23% 22%
Source: Piper Jaffray

Survey Details and Methodology


• Our 37th semi-annual Taking Stock With Teens survey included responses from ~8,000 teens
with an average age of 16.3 years.

• Approximately 46% of respondents were female and 54% were male.

• We divide our survey into two distinct income groups: upper-income with household incomes
approximating $100,000 and average-income with household incomes approximating $55,000
based on zip code analysis and census data.

• Respondents from the South composed the largest segment at 45%, followed by the Midwest
with 20%, West at 19% and Northeast at 16%.

Apple, Inc. Page 2 of 8


Apple, Inc.
Income Statement Yung Kim, Analyst Mike Olson, Sr. Research Analyst
Last Updated 04/04/2019 Yung.R.Kim@pjc.com Michael.J.Olson@pjc.com
(212) 284-9312 (612) 303-6419

Income Statement 2018 2019E 2020E


($ in millions except EPS) FY17 Dec-17 Mar-18 Jun-18 Sep-18 FY18 Dec-18 Mar-19E Jun-19E Sep-19E FY19E Dec-19E Mar-20E Jun-20E Sep-20E FY20E FY21E
Net Sales $229,234 $88,293 $61,137 $53,265 $62,900 $265,595 $84,310 $57,966 $51,329 $59,362 $252,968 $87,321 $60,966 $54,144 $61,601 $264,032 $280,344
Cost of Sales 141,049 54,381 37,715 32,844 38,816 163,756 52,279 36,152 31,272 36,349 156,053 53,617 37,257 33,100 37,707 161,682 172,507
Gross Profit 88,186 33,912 23,422 20,421 24,084 101,839 32,031 21,814 20,057 23,013 96,915 33,704 23,709 21,044 23,894 102,350 107,837
R&D 11,581 3,407 3,378 3,701 3,750 14,236 3,902 3,710 3,490 3,539 14,641 4,041 3,963 3,736 3,758 15,498 16,250
SG&A 15,261 4,231 4,150 4,108 4,216 16,705 4,783 4,811 3,901 3,979 17,474 4,954 5,121 4,169 4,189 18,433 19,368
Total Op Expense 26,842 7,638 7,528 7,809 7,966 30,941 8,685 8,521 7,391 7,518 32,115 8,995 9,084 7,905 7,947 33,931 35,617
Operating Income $61,344 $26,274 $15,894 $12,612 $16,118 $70,898 $23,346 $13,293 $12,665 $15,495 $64,800 $24,709 $14,625 $13,139 $15,947 $68,419 $72,220
Int & Other Expense 2,745 756 274 672 303 2,005 560 300 300 300 1,460 300 300 300 300 1,200 1,200
Pre-Tax Income 64,089 27,030 16,168 13,284 16,421 72,903 23,906 13,593 12,965 15,795 66,260 25,009 14,925 13,439 16,247 69,619 73,420
Income Taxes 15,738 6,965 2,346 1,765 2,296 13,372 3,941 2,311 2,204 2,685 11,141 4,251 2,537 2,285 2,762 11,835 12,481
Net Income $48,351 $20,065 $13,822 $11,519 $14,125 $59,531 $19,965 $11,282 $10,761 $13,110 $55,119 $20,757 $12,387 $11,154 $13,485 $57,784 $60,939
GAAP EPS $9.21 $3.89 $2.73 $2.34 $2.91 $11.91 $4.18 $2.40 $2.32 $2.86 $11.78 $4.59 $2.78 $2.54 $3.11 $13.05 $14.58
Diluted Shares 5,252 5,158 5,068 4,927 4,848 5,000 4,773 4,711 4,648 4,586 4,680 4,523 4,461 4,398 4,336 4,430 4,180

% of Sales:
Gross Margin 38.5% 38.4% 38.3% 38.3% 38.3% 38.3% 38.0% 37.6% 39.1% 38.8% 38.3% 38.6% 38.9% 38.9% 38.8% 38.8% 38.5%
R&D 5.1% 3.9% 5.5% 6.9% 6.0% 5.4% 4.6% 6.4% 6.8% 6.0% 5.8% 4.6% 6.5% 6.9% 6.1% 5.9% 5.8%
SG&A 6.7% 4.8% 6.8% 7.7% 6.7% 6.3% 5.7% 8.3% 7.6% 6.7% 6.9% 5.7% 8.4% 7.7% 6.8% 7.0% 6.9%
Operating Margin 26.8% 29.8% 26.0% 23.7% 25.6% 26.7% 27.7% 22.9% 24.7% 26.1% 25.6% 28.3% 24.0% 24.3% 25.9% 25.9% 25.8%
Tax Rate 24.6% 25.8% 14.5% 13.3% 14.0% 18.3% 16.5% 17.0% 17.0% 17.0% 16.8% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%

Yr/Yr growth:
Net Sales 6.3% 12.7% 15.6% 17.3% 19.6% 15.9% -4.5% -5.2% -3.6% -5.6% -4.8% 3.6% 5.2% 5.5% 3.8% 4.4% 6.2%
Operating Income 4.4% 11.8% 10.1% 17.5% 18.0% 13.8% -11.6% -15.9% -2.4% -3.8% -9.1% 4.6% 9.8% 3.7% 2.9% 5.1% 5.5%
Net income 5.8% 12.2% 25.3% 32.1% 31.8% 23.1% -0.5% -18.4% -6.6% -7.2% -7.4% 4.0% 9.8% 3.7% 2.9% 4.8% 5.5%
GAAP EPS 10.8% 15.9% 30.1% 40.4% 41.0% 29.3% 7.5% -12.2% -1.0% -1.9% -1.1% 9.7% 15.9% 9.5% 8.8% 10.8% 11.8%
Current disclosure information for this company is located at: http://www.piperjaffray.com/researchdisclosures
Source: Piper Jaffray estimates and Company Filings

Apple, Inc. Page 3 of 8


Apple, Inc. 4/4/19
Balance Sheet 2018 2019E 2020E
$ In Millions FY17 Dec-17 Mar-18 Jun-18 Sep-18 FY18 Dec-18 Mar-19E Jun-19E Sep-19E FY19E Dec-19E Mar-20E Jun-20E Sep-20E FY20E FY21E
Current Assets:
Cash & Equivalents 20,289 27,491 45,059 31,971 25,913 25,913 44,771 35,075 35,613 47,704 47,704 66,207 64,389 65,602 79,226 79,226 115,898
Short-Term marketable securities 53,892 49,662 42,881 38,999 40,388 40,388 41,656 41,656 41,656 41,656 41,656 41,656 41,656 41,656 41,656 41,656 41,656
Accounts Receivable 17,874 23,440 14,324 14,104 23,186 23,186 18,077 12,760 12,843 20,932 20,932 17,509 13,420 13,547 21,721 21,721 22,906
Inventories 4,855 4,421 7,662 5,936 3,956 3,956 4,988 7,345 5,652 3,705 3,705 5,116 7,569 5,982 3,843 3,843 4,034
Vendor Non-Trade Receivables 17,799 27,459 8,084 12,263 25,809 25,809 18,904 19,093 19,284 19,477 19,477 19,672 19,868 20,067 20,268 20,268 21,091
Other current assets 13,936 11,337 12,043 12,488 12,087 12,087 12,432 12,556 12,682 12,809 12,809 12,937 13,066 13,197 13,329 13,329 13,870
Total Current Assets 128,645 143,810 130,053 115,761 131,339 131,339 140,828 128,485 127,729 146,282 146,282 163,096 159,968 160,051 180,043 180,043 219,454

Long-Term Marketable Securities 194,714 207,944 179,286 172,773 170,799 170,799 158,608 150,678 143,144 135,987 135,987 129,187 122,728 116,591 110,762 110,762 90,216
PP&E, net 33,783 33,679 35,077 38,117 41,304 41,304 39,597 42,597 45,597 48,597 48,597 51,597 54,597 57,597 60,597 60,597 60,597
Goodwill 5,717 5,889 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Acquired Intangible Assets 2,298 2,149 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other Non-Current Assets 10,162 13,323 23,086 22,546 22,283 22,283 34,686 34,686 34,686 34,686 34,686 34,686 34,686 34,686 34,686 34,686 34,686
Total Assets 375,319 406,794 367,502 349,197 365,725 365,725 373,719 356,445 351,156 365,552 365,552 378,566 371,979 368,926 386,088 386,088 404,954

Current Liabilities
Accounts Payable 49,049 62,985 34,311 38,489 55,888 55,888 44,293 40,576 41,063 53,426 53,426 52,392 42,676 43,315 55,441 55,441 58,465
Accrued Expenses 25,744 26,281 26,756 25,184 33,327 33,327 36,703 37,070 37,441 37,815 37,815 38,193 38,575 38,961 39,351 39,351 40,948
Deferred Revenue 7,548 8,044 7,775 7,403 5,966 5,966 5,546 5,823 6,114 6,420 6,420 6,741 7,078 7,432 7,804 7,804 9,486
Commercial Paper 11,977 11,980 11,980 11,974 11,964 11,964 11,969 11,969 11,969 11,969 11,969 11,969 11,969 11,969 11,969 11,969 11,969
Current Portion LT debt 6,496 6,498 8,498 5,498 8,784 8,784 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772
Total Current Liabilities 100,814 115,788 89,320 88,548 115,929 115,929 108,283 105,211 106,359 119,402 119,402 119,068 110,071 111,449 124,336 124,336 130,640

Deferred Revenue, non-current 2,836 3,131 3,087 2,878 0 0 0 0 0 0 0 0 0 0 0 0 0


Long-Term Debt 97,207 103,922 101,362 97,128 93,735 93,735 92,989 92,989 92,989 92,989 92,989 92,989 92,989 92,989 92,989 92,989 92,989
Other non-current liabilities 40,415 43,754 46,855 45,694 48,914 48,914 54,555 54,555 54,555 54,555 54,555 54,555 54,555 54,555 54,555 54,555 54,555
Total Liabilities 241,272 266,595 240,624 234,248 258,578 258,578 255,827 252,755 253,903 266,946 266,946 266,612 257,615 258,993 271,880 271,880 278,184

Total Liab & SH Equity 375,319 406,794 367,502 349,197 365,725 365,725 373,719 356,445 351,156 365,552 365,552 378,566 371,979 368,926 386,088 386,088 404,954

Key Ratios:
DSO 23 20 23 32 18 20 23 32 18 20 23 32
Inventory Turns 49.2 19.7 22.1 39.2 41.9 19.7 22.1 39.2 41.9 19.7 22.1 39.2
AP/Sales 0.3 0.4 0.5 0.5 0.4 0.7 0.8 0.9 0.6 0.7 0.8 0.9
Book Val/Shr 27 25 23 22 25 22 21 22 25 26 25 26
Cash/Shr 31.54 28.68 26.21 25.29 27.30 23.92 22.74 24.12 27.04 25.57 24.81 26.97
LTD/Cap 42.6 44.4 45.8 46.7 44.1 47.3 48.9 48.5 45.4 44.8 45.8 44.9
Source: Piper Jaffray estimates and Company Filings

Apple, Inc. Page 4 of 8


Apple, Inc. 4/4/19
Cash Flow 2018 2019E 2020E
$ In Millions FY17 Dec-17 Mar-18 Jun-18 Sep-18 FY18 Dec-18 Mar-19E Jun-19E Sep-19E FY19E Dec-19E Mar-20E Jun-20E Sep-20E FY20E FY21E
CF FROM OPERATING ACTIVITIES:
Net income 48,350.5 20,065.0 13,822.0 11,519.0 14,125.0 59,531.0 19,965.0 11,282.3 10,761.2 13,110.1 55,118.7 20,757.2 12,387.5 11,154.0 13,485.3 57,784.0 60,938.5
Adjustments to net income:
Depreciation and amortization 10,157.0 2,745.0 2,739.0 2,665.0 2,754.0 10,903.0 3,395.0 3,429.0 3,463.2 3,497.9 13,785.1 3,532.9 3,568.2 3,603.9 3,639.9 14,344.8 14,927.2
Share-based compensation expense 4,840.0 1,296.0 1,348.0 1,351.0 1,345.0 5,340.0 1,559.0 1,605.8 1,653.9 1,703.6 6,522.3 1,754.7 1,807.3 1,861.5 1,917.4 7,340.9 8,262.2
Deferred income tax expense 5,966.0 (33,748.0) (487.0) 1,126.0 519.0 (32,590.0) (1.0) (1.0) (1.1) (1.1) (4.2) (1.1) (1.2) (1.2) (1.2) (4.7) (5.3)

Chg in operating assets and liabilities:


Accounts receivable, net (2,093.0) (5,570.0) 9,093.0 233.0 (9,078.0) (5,322.0) 5,130.0 5,317.1 (82.8) (8,089.0) 2,275.3 3,422.6 4,088.9 (126.8) (8,174.1) (789.4) (1,184.7)
Inventories (2,723.0) 434.0 (3,241.0) 1,693.0 1,942.0 828.0 (1,076.0) (2,356.5) 1,692.6 1,947.4 207.4 (1,411.1) (2,453.4) 1,586.7 2,139.3 (138.4) (191.1)
Vendor non-trade receivables (4,254.0) (9,660.0) 19,375.0 (4,179.0) (13,546.0) (8,010.0) 6,905.0 (189.0) (190.9) (192.8) 6,332.2 (194.8) (196.7) (198.7) (200.7) (790.8) (822.9)
Other current and non-current assets (5,484.0) (197.0) (856.0) 988.0 (802.0) (867.0) (886.0) (12,872.3) (249.9) (252.4) (14,260.6) (128.1) (257.5) (260.0) (262.6) (908.2) (945.1)
Accounts payable 9,618.0 12,602.0 (25,822.0) 2,081.0 20,314.0 9,175.0 (8,501.0) (3,716.5) 486.7 12,362.9 632.1 (1,033.8) (9,716.1) 639.0 12,125.9 2,014.9 3,023.7
Deferred Revenue (626.0) 569.0 (91.0) (581.0) 59.0 (44.0) (370.0) (370.0) (370.0) (370.0) (1,480.0) (370.0) (370.0) (370.0) (370.0) (1,480.0) (1,480.0)
Other current and non-current liabilities (154.0) 39,757.0 (750.0) (2,408.0) 1,891.0 38,490.0 570.0 0.0 0.0 0.0 570.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash provided by op activities 63,597.5 28,293.0 15,130.0 14,488.0 19,523.0 77,434.0 26,690.0 2,128.8 17,163.0 23,716.5 69,698.3 26,328.4 8,857.0 17,888.3 24,299.2 77,373.0 82,522.6

CF FROM INVESTING ACTIVITIES:


Purchase of marketable securities (159,486.0) (41,272.0) (7,177) (7,684) (15,223) (71,356.0) (7,077.0) (20,000) (20,000) (20,000) (67,077.0) (7,077) (20,000) (20,000) (20,000) (67,077.0) (67,077.0)
Proceeds from maturities of marketable securities 31,775.0 14,048.0 17,836 14,406 9,591 55,881.0 7,203.0 15,000 15,000 15,000 52,203.0 7,203 15,000 15,000 15,000 52,203.0 52,203.0
Proceeds from sales of marketable securities 94,564.0 16,801.0 22,141 2,672 6,224 47,838.0 9,723.0 12,000 12,000 12,000 45,723.0 9,723 12,000 12,000 12,000 45,723.0 45,723.0
(329.0) net
Payments made in connection with business acquisitions, (173.0) (132.0) (126.0) (290.0) (721.0) (167.0) (167.0) (167.0) (167.0) (668.0) (167.0) (167.0) (167.0) (167.0) (668.0) (668.0)
(12,451.0)
Payments for acquisition of property, plant and equipment (2,810.0) (4,195) (3,267) (3,041) (13,313.0) (3,355.0) (3,000) (3,000) (3,000) (12,355.0) (3,000) (3,000) (3,000) (3,000) (12,000.0) (12,000.0)
Payments for acquisition of intangible assets (344.0) 0.0 0 0 0 0.0 0.0 (100) (100) (100) (300.0) (100) (100) (100) (100) (400.0) (400.0)
Payments for strategic investments (395.0) (141.0) 141 (1,478) (40) (1,518.0) (427.0) 0 0 0 (427.0) 0 0 0 0 0.0 0.0
Other 220.0 (43.0) 96 (576) (222) (745.0) (56.0) 0 0 0 (56.0) 0 0 0 0 0.0 0.0
Net cash provided by investing activities (46,446.0) (13,590.0) 28,710.0 3,947.0 (3,001.0) 16,066.0 5,844.0 3,733.0 3,733.0 3,733.0 17,043.0 6,582.0 3,733.0 3,733.0 3,733.0 17,781.0 17,781.0

CF FROM FINANCING ACTIVITIES:


Proceeds from issuance of common stock 555.0 0.0 327.0 1.0 341.0 669.0 0.0 300.0 300.0 300.0 900.0 300.0 300.0 300.0 300.0 1,200.0 1,200.0
Excess tax benefits from equity awards 627.0 0.0 0.0 0.0 0.0 0.0 0.0 60.0 60.0 60.0 180.0 60.0 60.0 60.0 60.0 240.0 240.0
Payments for taxes related to net share settlementof
(1,874.0) (1,038.0)
equity awards (152.0) (1,077.0) (260.0) (2,527.0) (1,318.0) (650.0) (650.0) (650.0) (3,268.0) (700.0) (700.0) (700.0) (700.0) (2,800.0) (2,800.0)
Payments for dividends and dividend equivalents (12,769.0) (3,339.0) (3,190.0) (3,653.0) (3,530.0) (13,712.0) (3,568.0) (3,568.0) (3,568.0) (3,568.0) (14,272.0) (3,568.0) (3,568.0) (3,568.0) (3,568.0) (14,272.0) (14,272.0)
Repurchase of common stock (32,900.0) (10,095.0) (22,756.0) (20,783.0) (19,104.0) (72,738.0) (8,796.0) (18,700.0) (18,500.0) (18,500.0) (64,496.0) (17,500.0) (17,500.0) (17,500.0) (17,500.0) (70,000.0) (70,000.0)
Proceeds from issuance of term debt, net 28,662.0 6,969.0 0.0 0.0 0.0 6,969.0 0.0 7,000.0 7,000.0 7,000.0 21,000.0 7,000.0 7,000.0 7,000.0 7,000.0 28,000.0 28,000.0
Repayments of term debt (3,500.0) 0.0 (500.0) (6,000.0) 0.0 (6,500.0) 0.0 0.0 (5,000.0) 0.0 (5,000.0) 0.0 0.0 (6,000.0) 0.0 (6,000.0) (6,000.0)
Change in commecial paper, net 3,852.0 2.0 (1.0) (11.0) (27.0) (37.0) 6.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash provided by financing activities (17,347.0) (7,501.0) (26,272.0) (31,523.0) (22,580.0) (87,876.0) (13,676.0) (15,558.0) (20,358.0) (15,358.0) (64,950.0) (14,408.0) (14,408.0) (20,408.0) (14,408.0) (63,632.0) (63,632.0)

Net increase (decrease) in cash and cash equiv. (195.5) 7,202.0 17,568.0 (13,088.0) (6,058.0) 5,624.0 18,858.0 (9,696.2) 538.0 12,091.5 21,791.3 18,502.4 (1,818.0) 1,213.3 13,624.2 31,522.0 36,671.6
Cash and cash equivalents at beginning of period 20,484.0 20,289.0 27,491.0 45,059.0 31,971.0 20,289.0 25,913.0 44,771.0 35,074.8 35,612.8 25,913.0 47,704.3 66,206.7 64,388.8 65,602.1 47,704.3 79,226.3
Cash and cash equivalents at end of period 20,288.5 27,491.0 45,059.0 31,971.0 25,913.0 25,913.0 44,771.0 35,074.8 35,612.8 47,704.3 47,704.3 66,206.7 64,388.8 65,602.1 79,226.3 79,226.3 115,897.9
Source: Piper Jaffray estimates and Company Filings

Apple, Inc. Page 5 of 8


Apple, Inc. 4/4/19
Sales Analysis 2018 2019E 2020E
($M and units in millions) FY17 Dec-17 Mar-18 Jun-18 Sep-18 FY18 Dec-18 Mar-19E Jun-19E Sep-19E FY19E Dec-19E Mar-20E Jun-20E Sep-20E FY20E FY21E
iPhone
Revenue $141,319.0 $61,104.0 $37,559.0 $29,470.0 $36,755.0 $164,888.0 $51,982.0 $31,925.2 $24,754.8 $30,139.1 $138,801.1 $51,982.0 $31,925.2 $24,754.8 $29,837.7 $138,499.7 $143,122.3
% of Sales 62% 69% 61% 55% 58% 62% 62% 55% 48% 51% 55% 60% 52% 46% 48% 52% 51%
Y/Y Rev Growth 3% 12% 13% 19% 27% 17% -15% -15% -16% -18% -16% 0% 0% 0% -1% 0% 3%
iPad
Revenue $19,222.0 $5,755.0 $4,008.0 $4,634.0 $3,983.0 $18,380.0 $6,729.0 $4,168.3 $4,773.0 $4,182.2 $19,852.5 $6,796.3 $4,210.0 $4,820.8 $4,140.3 $19,967.4 $19,877.8
% of Sales 8% 7% 7% 9% 6% 7% 8% 7% 9% 7% 8% 8% 7% 9% 7% 8% 7%
Y/Y Rev Growth -7% 4% 3% -7% -18% -4% 17% 4% 3% 5% 8% 1% 1% 1% -1% 1% 0%
Mac
Revenue $25,850.0 $6,824.0 $5,776.0 $5,258.0 $7,340.0 $25,198.0 $7,416.0 $5,891.5 $5,626.1 $7,340.0 $26,273.6 $7,416.0 $5,950.4 $5,626.1 $7,340.0 $26,332.5 $26,392.0
% of Sales 11% 8% 9% 10% 12% 9% 9% 10% 11% 12% 10% 8% 10% 10% 12% 10% 9%
Y/Y Rev Growth 13% -6% -1% -6% 2% -3% 9% 2% 7% 0% 4% 0% 1% 0% 0% 0% 0%
Wearables, Home & Accessories
Revenue $12,863.0 $5,481.0 $3,944.0 $3,733.0 $4,223.0 $17,381.0 $7,308.0 $4,653.9 $4,479.6 $5,194.3 $21,635.8 $8,185.0 $5,584.7 $5,375.5 $6,025.4 $25,170.6 $29,032.7
% of Sales 6% 6% 6% 7% 7% 7% 9% 8% 9% 9% 9% 9% 9% 10% 10% 10% 10%
Y/Y Rev Growth 16% 36% 37% 36% 31% 35% 33% 18% 20% 23% 24% 12% 20% 20% 16% 16% 15%

Product Revenue $199,254.0 $79,164.0 $51,287.0 $43,095.0 $52,301.0 $225,847.0 $73,435.0 $46,638.9 $39,633.5 $46,855.5 $206,562.9 $74,379.3 $47,670.3 $40,577.1 $47,343.4 $209,970.1 $218,424.8
% of Sales 87% 90% 84% 81% 83% 85% 87% 80% 77% 79% 82% 85% 78% 75% 77% 80% 78%
Y/Y Rev Growth 4% 11% 12% 13% 19% 13% -7% -9% -8% -10% -9% 1% 2% 2% 1% 2% 4%
Product Revenue Gross Margin -- 36.1% 33.7% 34.3% 32% 33% 33% 33% 35% 33% 32% 32% 33% 32%
Product Gross Profit -- $25,188.21 $15,017.7 $13,039.4 $15,509.2 $68,754.5 $25,809.60 $15,731.2 $12,903.5 $15,339.3 $69,783.6 $70,685.6

Services Revenue $29,980.0 $9,129.0 $9,850.0 $10,170.0 $10,599.0 $39,748.0 $10,875.0 $11,327.5 $11,695.5 $12,506.8 $46,404.8 $12,941.3 $13,295.7 $13,566.8 $14,257.8 $54,061.5 $61,919.6
% of Sales 13% 10% 16% 19% 17% 15% 13% 20% 23% 21% 18% 15% 22% 25% 23% 20% 22%
Y/Y Rev Growth 23% 27% 40% 40% 25% 33% 19% 15% 15% 18% 17% 19% 17% 16% 14% 16% 15%
Services Revenue Gross Margin -- 58.3% 61.1% 62.8% 60% 60% 60% 61% 61% 60% 60% 60% 60% 60%
Services Gross Profit $6,829.5 $6,796.5 $7,017.3 $7,504.1 $28,147.4 $7,894.2 $7,977.4 $8,140.1 $8,554.7 $32,566.3 $37,151.8

Total Revenue $229,234.0 $88,293.0 $61,137.0 $53,265.0 $62,900.0 $265,595.0 $84,310.0 $57,966.4 $51,329.0 $59,362.4 $252,967.8 $87,320.5 $60,965.9 $54,143.9 $61,601.2 $264,031.5 $280,344.4
Y/Y Rev Growth 6.3% 12.7% 15.6% 17.3% 19.6% 15.9% -4.5% -5.2% -3.6% -5.6% -4.8% 3.6% 5.2% 5.5% 3.8% 4.4% 6.2%

Active Installed Base (million) 1,220 1,270 1,300 1,325 1,355 1,355 1,400 1,417 1,444 1,477 1,477 1,512 1,530 1,545 1,595 1,595 1,707
Y/Y Installed Base Growth 14% 13% 13% 12% 11% 11% 10% 9% 9% 9% 9% 8% 8% 7% 8% 8% 7%
Annual (TTM) Services Rev Per Active $24.6 $25.1 $26.7 $28.4 $29.3 $29.3 $29.6 $30.3 $30.8 $31.4 $31.4 $32.1 $33.0 $33.9 $33.9 $33.9 $36.3
Y/Y Services Rev/Device Growth 8% 11% 16% 21% 19% 19% 18% 13% 8% 7% 7% 8% 9% 10% 8% 8% 7%
Source: Piper Jaffray estimates and Company Filings

Apple, Inc. Page 6 of 8


C O M PA N Y N O T E
April 8, 2019

IMPORTANT RESEARCH DISCLOSURES

Rating and Price Target History for: Apple, Inc. (AAPL) as of 04-05-2019
04/26/16 07/26/16 10/25/16 12/16/16 05/03/17 08/02/17 09/22/17 10/31/17 05/02/18 08/01/18 09/07/18 12/13/18 01/03/19 03/25/19
OW:$153 OW:$151 OW:$155 T:OW:$155 OW:$158 OW:$190 OW:$196 OW:$200 OW:$214 OW:$218 OW:$250 OW:$222 OW:$187 OW:$201
240
220
200
180
160
140
120
100
80
Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2

Created by: BlueMatrix

Notes: The boxes on the Rating and Price Target History chart above indicate the date of the fundamental Equity Research Note, the rating and the price
target. Each box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the
first Note written during the past three years.
Legend:
I: Initiating Coverage
R: Resuming Coverage
T: Transferring Coverage
D: Discontinuing Coverage
S: Suspending Coverage
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Distribution of Ratings/IB Services


Piper Jaffray

IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [OW] 419 65.47 112 26.73
HOLD [N] 210 32.81 19 9.05
SELL [UW] 11 1.72 0 0.00

Note: Distribution of Ratings/IB Services shows the number of companies currently covered by fundamental equity research in each rating category from
which Piper Jaffray and its affiliates received compensation for investment banking services within the past 12 months. FINRA rules require disclosure
of which ratings most closely correspond with "buy," "hold," and "sell" recommendations. Piper Jaffray ratings are not the equivalent of buy, hold or sell,
but instead represent recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight
with sell. See Stock Rating definitions below.

Analyst Certification — Michael J. Olson, Sr Research Analyst


The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

Time of dissemination: 8 April 2019 03:17EDT.

Apple, Inc. Page 7 of 8


C O M PA N Y N O T E
April 8, 2019

Research Disclosures
Piper Jaffray was making a market in the securities of Apple, Inc. at the time this research report was published. Piper Jaffray will buy and sell Apple,
Inc. securities on a principal basis.

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Apple, Inc. Page 8 of 8