Apple Q3 2016 Earnings: iPhone Sales, Revenue, Profit Declined But Tim & Team Look Confident

Apple iPhone sales 2016

Today, Apple Inc. (NASDAQ:AAPL) has announced the earning results of fiscal Q3 2016 (Calender Q2 2016), ending on June 30, 2016. The revenue and profit posted by Apple for the quarter have provided a sigh of relief for the Silicon Valley giant after the dismal fiscal Q2 2016 earnings as it managed to beat the expectations of Wall Street. The company posted quarterly revenue of $42.4 billion and quarterly net profit of $7.8 billion, or $1.42 per diluted share. The company granted $13 billion to its investors in a form of dividends and share purchases.

Tim Cook may appear quite relieved with the numbers but the Year over Year comparison exhibits a completely different picture. The overall revenue is dropped by a considerable 16% on QoQ and 15% on YoY basis, from $49.6 billion in Q3 2015 to 42.3 billion in Q3 2016.

“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of quarter” said Tim Cook

In last quarter, Apple had already predicted its revenue for Q3 2016 somewhere between $41 billion and $43 billion. And a number of analysts also predicted the Q3 earnings call of the company to be around $42.059 billion with 37.94% gross margins. However, Apple managed to beat the expectations of Wall Street analysts and itself.

Apple Revenue Q3 2016: By Devices and Services

The device segments of Apple witnessed a considerable YoY and QoQ decline. The only bright side for Apple was its services segments that posted $5.9 billion revenue, a whopping 19% YoY surge in Q3 2016.

“Our services business grew 19% YoY and App Store revenue was the highest ever, as our installed base continues to grow and transacting customers hit an all-time record,” said Luca Maestri, CFO of Apple.

  • 40.3 million units of iPhones sold in the quarter but sadly, the sales of Apple’s flagship device declined by 21% QoQ and by 15% YoY in Q3 2016. Samsung Galaxy S7 and Galaxy S7 edge stole the show after its launch in March in a number of countries like India and the US.
  • Surprisingly, the sales number of Apple iPad declined by 3% QoQ and 9% YoY in the last quarter but resulted in 10% QoQ and 7% YoY increase in its revenue in the same quarter. Higher pricing is the prime reason for positive revenue from iPad for Apple in this segment.
  • Mac sales number and revenue were positive on the QoQ basis in Q3 2016, but the numbers slumped if we compare them on YoY basis. The revenue saw a considerable 3% QoQ surge in the quarter but recorded a 13% YoY decline.

Apple iPhone, iPad, Mac Sales & Revenue: Region-wise

Apple’s Q3 revenue witnessed a considerable YoY slump in every region except Japan.

  • In the US, Apple witnessed 11% YoY decline in its overall revenue in Q3 2016. The majority of its grounds lost to the overwhelming sales of Samsung’s flagship device Galaxy S7 (launched in March).
  • Europe posted a considerable 7% YoY decline in Apple’s overall revenue. Europe is burning with currency issues and the value of the pound in the UK has dropped considerably. Thus Apple iPhone sales have taken a hit in Europe.
  • In China, to everyone’s surprise, the Cupertino giant suffered a huge 33% YoY slump in its revenue. Apple has run into a number of troubles apparently orchestrated by the Chinese Government recently from patent issues to banning its services in the country and releasing a clone of upcoming iPhone 7. The prime aim of Chinese government behind troubling the Silicon Valley giant is to promote its own smartphone manufacturers and services.
  • Rest of Asia Pacific posted a 20% decline in Apple quarterly revenue. Whereas the only positive figures were recorded in Japan with a considerable 23% YoY increase in Apple’s revenue in its fiscal Q3 2016.

Apple also lists its guidance for the next quarter

  • The revenue will lie in the range of $45.5 billion and $47.5 billion.
  • Gross margin is slated to be between 37.5% and 38%.
  • Operating expenses to be around $6.05 billion and 6.15 billion.
  • And other income to be around $350 million
  • Tax rate of 25.5%

Final words

Though, Apple has managed to beat Wall Steet expectations, but there are many questions that are looming large:

  • How the result of fiscal Q2 2016 will affect Apple ?
  • Why is Apple sanguine despite the negative figures?
  • How will Apple manage to increase its device sales in the coming quarters?
  • Why Apple is not worrying as Apple’s potential markets; the US and China have witnessed a considerable decline?
  • Has the obsession towards iPhone among people started fading ?
  • Is it time for Apple to revisit its iPhone design and sales strategy ?

To get the answers of all above and many other questions that may be are forming in your mind, we are digging deep. We are trying to read the best brains of the industry on the subject matter and soon, will come back with a follow-up analysis. Till then, stay tuned and keep reading other upcoming interesting data-driven statistical analysis on Dazeinfo.

Has the obsession towards iPhone among people started fading ?

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