Apple Has Record-Breaking September Quarter with $62.9 Billion in Revenue

Apple reported $62.9 billion earlier this month, with $37.2 billion in revenue from the sales of 46.9 million iPhones

Image via Apple

“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,”

— Tim Cook, Apple CEO

Apple’s sales results beat records and forecasts for the past three-month period for the last quarter of 2018, the highest growth rate in three years with earnings-per-share of $2.91 growing per year. All-time quarterly records were made with $62.9 billion is a year-on-year increase from $52.6 billion last year. Apple shipped out 46.9 million iPhones during the September quarter, with revenue up to $37.2 billion, increasing year after year.

The average selling price or ASP of the iPhone is $793, going up from the $617.99 ASP from just one year ago in 2017. Premium pricing for the Phone X, iPhone XS, and iPhone XS Max has been driving the ASP increase. Analysts estimate that Apple would sell 47.5 million iPhones in the fourth quarter within the range of 46.7-48.1 million.

Apple provided live streaming for its Q4 2018 financial results conference call on November 1, 2018. The webcast is available for replay for up to two weeks after.

“We concluded a record year with our best September quarter ever, growing double digits in every geographic segment. We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac.”

— Luca Maestri, Apple’s CFO

iPad, Mac and Services Revenue

The iPad raked in $4.1 billion in revenue with 9.7 million units sold, lower than analyst expectations of 10.5 million for the quarter. Mac revenue was $7.4 billion, higher than a year ago. Apple services has grown to $10 billion, up from $8.5 billion in 2017 for the same quarter. The Services arm keeps growing fast with analysts expecting ongoing growth in the future.

Consolidated Financial Statements

Data Summary

Changes in Reporting for 2019

Apple surprised many when the company also announced that they would no longer be reporting iPhone, iPad and Mac unit sales in earnings reports. This surprised many analysts given that this data was used as an indicator of growth and ASP calculations. However, the decision makes sense when iPhone sales are slowing down, while ASPs keep going up.

Apple will report revenue, sales growth, and guidance as before. However, given that a unit of sale is very different today than it was eleven years ago, sales of Apple products do not represent completely the product’s business health.

“A unit of sale is less relevant today than it was in our past.”

— Luca Maestri, Apple CFO

Pricing varies by a larger range today such as the iPhone ranging from $449 (iPhone 7) to $1,449 (iPhone XS). Maestri also pointed out that segment competitors do not provide unit sales.  

For First Quarter of 2019

Analysts expect the first quarter of 2019 to also best records, with Apple predicting revenues of $89-$93 billion with gross margin between 38-38.5 percent. Operating expenses are expected at $8.7-$8.8 billion, while a tax rate of approximately 16.5 percent is expected.

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A Day After Its Stock Hit $200, Apple Becomes the First Company to Hit $1 Trillion Market Cap

Just two days after Apple reported its fiscal third quarter earnings, Apple has reached a $1 trillion market cap - the first company in history to reach a 12-figure company valuation ever.

Image via Apple

Customers First

Despite Apple's tremendous achievement, Apple's CEO Tim Cook remained humble about the success, noting that the mark was a "significant milestone to be proud of" but that customer service, product design and company values come first,  in a memo sent to Apple's 120,000 employees, shared with Reuters. 

“Financial returns are simply the result of Apple’s innovation, putting our products and customers first, and always staying true to our values.”

— Tim Cook, Apple CEO

Image via Apple in Chicago Store

“Steve founded Apple on the belief that the power of human creativity can solve even the biggest challenges — and that the people who are crazy enough to think they can change the world are the ones who do.”

— - Tim Cook in Apple Memo

Strongest Third Fiscal Quarter Ever

On July 31st, Apple reported its strong Q3 earnings with record results, posting quarterly revenue of $53.3 billion with iPhone sales of 41.3 million units, an increase of 17 percent from one year prior, and quarterly earnings per diluted share of $2.34, up 40 percent. 60 percent of the quarter’s revenue came from international sales. A day prior, Apple had revealed an adjusted share count of 4,829,926,000, meaning that Apple stock (AAPL) would need to reach $207.05 in order to hit the $1 trillion value, reported by CNBC. 

“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. “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.”

Apple's new store in Milan. Image via Apple

Revenue overall was up 17 percent and EPS up to 40 percent this past June and record growth in service revenue. “Our strong business performance drove revenue growth in each of our geographic segments, net income of $11.5 billion, and operating cash flow of $14.5 billion,” said Luca Maestri, Apple’s CFO. “We returned almost $25 billion to investors through our capital return program during the quarter, including $20 billion in share repurchases.”

View Consolidated Statements here. View Data Summary here.

Apple's stock rose 5 percent in the next 24 hours after its earnings announcement, passing the $200 mark. The day after its stock hit the $200 mark, Apple became the first $1 trillion company in history, the first company ever in business to cross a 12-figure company valuation. 

You can listen to the investor earnings call at www.apple.com/investor/earnings-call/. This webcast is available for approximately two weeks from the day of posting (July 31).