Apple boosts revenue 20% in Q2

Apple has reported increased revenue but virtually flat iPhone sales in its second quarter (Image Apple)

Apple on Thursday released its earnings report for the fourth quarter ending on September 30. Overall revenue reached US$62.9 billion, marking a 20% boost from the year-ago quarter, and quarterly earnings per diluted share amounted to US$2.41, marking a 41% increase.

International sales played a big role in this success story, as they were responsible for 61% of Apple’s revenue. This was a led by a 34% increase in revenue from Japan and by a 22% increase from the rest of east Asia.

While there was plenty of good news, Apple stock fell by 7.3% in after-hours trading. That’s enough to bring it below its famous US$1 trillion valuation, particularly if it stays that way through the night.

Part of the reason for the stock slide is that Apple’s posted guidance for revenue in the holiday quarter is between US$89 billion and US$93 billion, which is better than the US$84 billion and US$87 billion posted last year but less than the roughly US$98 million many analysts were hoping for.

iPhones, iPads, and Macs

iPhones sales were virtually flat in year-over-year sales, as Apple reported it that sold 46.89 million iPhones during the quarter, compared to the 46.7 million iPhones it sold last year. Note that the iPhone XR didn’t start shipping until October 19, and that the iPhone XS had only been available for 10 days of the quarter.

But that isn’t really affecting the amount of money Apple is making on the iPhones, considering how pricey the units are these days. Apple reported an average selling price (ASP) of US$793, beating the US$618 from the year-ago quarter by a whopping 28%.

As a reminder, the iPhone XS has a starting price of US$999, while the iPhone XS Max starts at US$1,100. As usual, Apple didn’t specify the sales numbers for each individual phone—in fact, it will no longer report the unit sales numbers for the entire iPhone line in the future, as Apple financial chief Luca Maestri said on Thursday’s call that the “number of units sold in the quarter is not representative of the underlying state of business.”

Apple’s report showed that the iPad continues its gentle decline, as the line earned revenue of US$4.01 billion from 9.7 million units sold, down 15% from the US$4.8 billion it reported last year. This decline could reverse by next year, though, if consumers find that the new iPad Pro models are as impressive as they look.

Macs saw a slight increase in revenue even though the number of units sold (5.3 million) dropped by 2%. In total, the revenue was up 3% to 7.4 billion this year, compared to the 7.1 billion a year ago. The iMac Pro, released toward the end of 2017, might have been partly responsible for the boost.

Glad to be of service

Apple has been touting its strength in services lately, and that strength shows up in the US$9.98 billion services revenue Apple reported. That’s an impressive increase of 17% over last year, but it failed to reach Wall Street estimates in the neighborhood of US$10.2 billion. “Services” is a broad and vague term, but it includes things such as subscriptions to Apple Music and App Store sales.

Other items of business

Apple also did well in its Other Products category, a similarly vague bracket that includes devices like the Apple Watch and AirPods. Last quarter, revenue here reached US$4.23 billion, an increase of 31% over the US$3.2 billion reported last year.

Leif Johnson

Macworld

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