This afternoon, Apple announced their earnings for the third quarter of the 2018 fiscal year, and as we’ve all come to expect, they did very well again. Revenue for the quarter was up 17% year-over-year to $53.3 billion. Margins were a very healthy 38.3%, although down slightly from 38.5% last year. Operating income for the quarter was $12.6 billion, with a net income of $11.5 billion. This resulted in earnings per share of $2.34, up from $1.67 a year ago.
| Apple Q3 2018 Financial Results (GAAP) | |||||
| Q3'2018 | Q2'2018 | Q3'2017 | |||
| Revenue (in Billions USD) | $53.265 | $61.137 | $45.408 | ||
| Gross Margin (in Billions USD) | $20.421 | $23.422 | $17.488 | ||
| Operating Income (in Billions USD) | $12.612 | $15.894 | $10.768 | ||
| Net Income (in Billions USD) | $11.519 | $13.822 | $8.717 | ||
| Margins | 38.3% | 38.3% | 38.5% | ||
| Earnings per Share (in USD) | $2.34 | $2.73 | $1.67 | ||
As usual, the iPhone continues to be the major source of revenue for the company. This quarter, Apple sold 41.3 million iPhones, which is up 1% from the same quarter a year ago, but revenue for iPhone was up an impressive 20%, meaning the higher priced models are selling well. Average sales price for an iPhone is now $724.12, which is much higher than in the past. Just a year ago, the ASP was barely over $600, and two years ago it was $595.26. This is a pretty significant jump.
Generally, we’d discuss Mac and iPad next, but both are now dwarfed by Apple’s Services segment, which is revenue from the App Store, digital content, AppleCare, Apple Pay, licensing, and other services. This has been the fastest growing segment of Apple for the past couple of years, and this quarter revenue was up another 31% from a year ago, to $9.55 billion. Clearly much of this is also tied to the iPhone, which just reinforces the profits from that device.
iPad was almost flat for the year, up 1% to 11.5 million units sold, but revenue here is down 5% to $4.7 billion, which isn’t surprising with Apple recently lowering the entry level cost to their tablet. iPad sales aren’t small by any means, but the demand for them has definitely tapered off over the last couple of years.
Mac sales were down rather sharply, with 13% less units sold this quarter compared to the same quarter a year ago. Apple sold 3.72 million Macs, which is 572,000 less than a year ago. Revenue wasn’t affected quite as strongly, being down just 5% to $5.33 billion, so the average selling price of a Mac is now $1432. A year ago, ASP for the Mac was $1302, so as with the iPhone, Apple is making more per Mac now, but unlike the iPhone the sales are down significantly when the PC market as a whole actually grew.
Apple’s “Other Products” which includes AirPods, Apple TV, Apple Watch, Beats, Home Pod, iPod, and accessories, had a strong quarter as well, with revenue up 37% to $3.74 billion. We don’t get to see a breakdown of products in this segment to see what’s performing and what’s not, but Apple has been slowly adding to their Other Products lineup, and the group as a whole is doing well.
| Apple Q3 2018 Device Sales (thousands) | |||||
| Q3'2018 | Q2'2018 | Q3'2017 | Seq Change | Year/Year Change | |
| iPhone | 41,300 | 52,217 | 41,026 | -21% | +1% |
| iPad | 11,553 | 9,113 | 11,424 | +27% | +1% |
| Mac | 3,720 | 4,078 | 4,292 | -9% | -13% |
For Q4, Apple is expecting revenue between $60 billion and $62 billion, with margins between 38 and 38.5%.
Source: Apple Investor Relations
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