Apple Q3 2018 Results: Fourth Consecutive Quarter of Double-Digit Revenue Growth

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Navni Bajpai
Avid Reader. Aspiring Writer.

Today Apple Inc. (NASDAQ:AAPL) announced its fiscal Q3 2018 results, which shows the strongest June quarter the company has ever witnessed in the terms of revenue growth. The Cupertino giant has, once again, proved that it is quality, not quantity, that matters, in the end. Apple posted a quarterly revenue of $53.3 billion, up 17% compared to the same period a year ago. However, it is a notable 13% decline from the previous quarter, when a whopping $61.1 billion revenue was generated.

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” said Tim Cook, Apple’s CEO.

Apple Q3 2018: Main Highlights

The data released by Apple shows that the odds are in favour of the company which has performed well in all sectors.

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  • Apple sold 41.3 million iPhones in fiscal Q3 2018, a marginal 1% YoY increase. However, the sales of iPhones declined 21% compared to the last quarter when Apple sold 52.2 million units of iPhones.

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  • Total 11.6 million iPads were sold in Q3 2018, a significant increase of 27% QoQ. 
  • The sales of Mac declined by a notable 13% YoY and 9% QoQ to just 3.7 million units in fiscal Q3 2018.
  • Apple posted a whopping $53.3 billion in revenue in the third fiscal quarter of 2018. International sales accounted for 60% of the total revenue.
  • This is the fourth consecutive quarter for Apple to record double-digit revenue growth.
  • iPhone accounted for 56.15% of Apple’s total revenue generated in fiscal Q3 2018. That’s a significant 20% YoY increase, but 21% QoQ decrease.
  • About 46% of Apple’s total revenue came from the Americas in fiscal Q3 2018.
  • Apple’s revenue from services soared to new all all-time high $9.5 billion in fiscal Q3 2018. That’s an impressive 31% YoY and 4% QoQ increase.
  • Apple recorded a net income of $11.5 billion and operating cash flow of $14.5 billion in fiscal Q3 2018.
  • Paid subscription from Apple and third parties crossed $300 million in fiscal Q3 2018, up 60% from 2017.

“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’s Goals For The Upcoming Quarter

The Cupertino giant has highlighted the goals it has set for its fiscal fourth quarter. These can be summarised in the following points.

  • The revenue is expected to be between $60 billion and $62 billion.
  • The gross margin is expected to fall between 38% and 38.5%.
  • The operating expenses are expected between $7.95 billion and $8.05 billion.
  • Other income/(expense) is excepted to be $300 million.
  • A tax rate of approximately 15% before discrete items.

What Led To This Stellar Performance By Apple in Q3 2018?

Apple owes most of its success in this quarter to the iPhone. The growth of the iPhone sales in the quarter was driven by switchers, first-time users and existing loyal customers. Out of all the iPhones, the iPhone X was the best performing model, which scored 98 percent customer satisfaction in 451 Research.

The revenue from Services reaches a new all-time high. It has increased from $7.3 billion in fiscal Q3 2017 to $9.5 billion in Q3 2018, an impressive 31% YoY growth. 

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“We feel great about the momentum of our services business and we’re on target to reach our goal of doubling our fiscal 2016 services revenue by 2020,” said Tim Cook.

Additionally, the App Store, which recently turned ten this year, has been growing steadily. The number of unique apps in the App Store has increased to over 2 million in 2018. In Q2 2018, the global consumer spend on Apple App Store grew 20% YoY, according to App Annie.

“Apple Music grew by over 50% on a year-over-year basis,” Cook said during Tuesday’s earnings call, where he also mentioned that more than 300 million users now pay for subscriptions of apps available on the App Store.

Similarly, Apple’s revenue from Cloud Services also grew 50% YoY. Services such as Apple Pay and Apple Care have seen an increase too.

Apple also witnessed a commendable growth in its wearable division. The sales of Apple’s wearable devices, such as iWatch, Air Pods and Beats, increased 60% YoY in fiscal Q3 2018.

Despite all odds and criticism, Apple has performed well in the third quarter. However, it would be interesting to see what strategies the Cupertino giants will employ in wake of increasing competition, especially from the Chinese players, in the global market.

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