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Apple Earnings Beat Expectations in 2018 Q3 But With Average iPhone Sales

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Apple Inc. released a record third-quarter earnings report on July 31, 2018. The tech giant saw 41,300 iPhone sales worldwide, illustrating a flat unit sales growth but 20 percent revenue increment when calculated year-on-year basis.

The iPhone maker posted a quarterly revenue of $53.3 billion, 17 percent up from 2017 Q3 results. The figures easily surpassed Wall Street forecasts and fell at the higher end of Apple’s own projection made between $51.5 billion to $53.5 billion for the June quarter. The international sales contributed 60 percent to the overall third-quarter revenue.

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” mentioned Tim Cook, Apple’s CEO during the third quarter earnings call yesterday. “Our Q3 results were driven by continued strong sales of iPhone, Services, and Wearables, and we are very excited about the products and services in our pipeline.”

Detailed Apple Earnings Statistics

Describing the previous quarter as “Apple's best third quarter ever,” the company’s net income grew to $11.5 billion from $8.7 billion in 2017 Q3, which is a 32 percent escalation and a new June record too.

Further, the diluted EPS (earning per share) were $2.34, 4 percent up year-on-year basis. Apple accounted $14.5 billion as operating cash and net cash position of $129.1B at the end June 30, 2018.

Apple also announced a quarterly cash dividend payment of $0.73 per share, due on August 16 to investors of record as of close business on August 13.

“We returned almost $25 billion to investors through our capital return program during the quarter, including $20 billion in share repurchases,” said Luca Maestri, Apple’s CFO.

Apple was trading 2.5 percent up at after-hours trading hours, even when the market was shaken up by Facebook’s and Twitter’s disappointing results.

Product Wise Revenue Split

iPhone sales revenue grew 20 percent Y-o-Y contributing $29.9 billion to the total income.  The company highlighted that the iPhone average sales price (ASP) raised to $724, from $606 in the year-ago quarter. The move was influenced by “strong performance” of iPhone X, iPhone 8 and iPhone 8 Plus globally. Apple sold 41.3 units of iPhone worldwide, a slight more from 2017 Q3 duration, but a major drop from the previous quarter where it posted 52,217 iPhone sales. With the introduction of iOS 12 this September, Apple is expecting a major boost in the iPhone sales segment.

Similar results were seen in iPad sales report, a flat growth with 11,553 unit sales when compared to last year’s third quarter. Though the product saw a 5 percent fall in revenue contribution too.

Besides this, Apple accounted major negative figures in Mac division. With mere 3,720 Mac units sold and $5.33 billion revenue earned in this year’s Q3, the product saw 13 percent and 5 percent dip in unit sales and revenue, respectively. However, the company said hints to turn the tables with the launch of MacOS Mojave later this year.

On a positive note, Apple's Wearables category revenue out passed $10 billion over the previous four quarters. Primarily led by Apple Watch, AirPods, and Beats, the wearable segment grew 60 percent year-over-year basis. Splitting further, Apple Watch witnessed a record June quarter, with an increment of about the mid-40 percent.

Apple Q3 2018 iPhone Sales

Apple 2018 Q3 Product Revenue Summary. Source: Apple

Apple Services

It includes Digital Content and Services encompassing the App Store, Apple Care, Apple Pay, iTunes and cloud services “Best results ever for Services. All-time record $9.5B revenue. Included the favorable $236M amount from various lawsuits,” Cook said during the earnings call.

The Apple Music rose by over 50 percent against a year-ago quarterly result. Even AppleCare revenue jumped at its highest point in 18 quarters, thanks to Apple’s expanded distribution strategy. In addition, Apple Cloud services revenue soared above 50 percent in year-over-year comparison.

Notable, Apple Pay outperformed the bigger companies like Square and PayPal. The CEO said, "Apple Pay continues to expand with well over 1 billion transactions last quarter, triple the amount from just a year ago, with growth accelerating from the March quarter."

Region Wise Revenue Performance

The Steve Jobs’ Company saw a double-digit unit growth in all the markets, including the Americas (20 percent), Europe (14 percent), Greater China (19 percent), and Asia (16 percent) excluding Japan with 7 percent revenue growth.

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