Apple posted the best 3rd quarter financial results in the company’s history this week. They posted revenue of $53.3 billion and a net quarterly profit of $11.5 billion, or $2.34 per diluted share, compared to revenue of $45.4 billion and net quarterly profit of $8.7 billion, or $1.67 per diluted share, in the year-ago quarter.
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.
The $55.3 billion in revenue was almost $900 million more than analyst estimates. Same story on profits with the $2.34/share, smashing estimates that were around $2.18.
That is not the whole story as Apple also predicted revenue of between $60 and $62 billion for the 4th quarter (July-Sept) This is buoyed by what is expected to be Apple’s biggest product launch cycle ever with updates across the product line predicted.
While Apple missed slightly on the number of iPhones sold, they did sell 41,300,000 iPhones during the 3 months, which is a staggering number, and, better yet, the average sale price for iPhones rose by 20% year over year to about $725. So, missing by a few thousand iPhones sold is pretty insignificant when you sell more than 41,000,000 iPhones for 20% more.
iPads also were looking good with Apple posting a 1% increase in sales. While the average sale price declined a bit on iPad there is certainly a refresh coming that could mitigate that.
Mac sales, which is Small Dog’s sweet spot, declined by 13% but the sales price increased by 10% so it didn’t hurt Apple that much. I place much of the responsibility for this decline at Apple’s feet. I am a long-time Apple fanboy but when was the last time you saw ANY marketing for Mac? Couple that with a dramatic decrease in marketing support to the sales channel and a product line that is a bit long in the tooth you can set the stage for some Mac growth with expected new products and just a bit of promotion to stimulate sales. We are heading into the busy back-to-school season and that is Mac time!
Services continue to show remarkable growth with $9.55 billion in sales which is 31% growth and $350 million ahead of estimates. The other products category which includes Apple Watch, Beats and AirPods also did well with 37% growth.
The Apple capital return program which has the goal of making Apple a “cash neutral” company consists of dividends ($0.73 per share for this quarter) and stock buy-backs. This quarter Apple spent $20 billion buying their own stock.
Apple’s research and development spending also increased in the quarter with $3.7 billion in R&D this quarter. While that is a lot, it is still quite a bit lower than rivals Amazon and Google, but, then again, those guys have a lot of catching up to do.
Other tidbits from the financial disclosures included:
60 percent of quarterly Mac sales came from new users.
More than 5000 schools and colleges have adopted Everyone Can Code programs.
100 billion Siri requests this fiscal year
AirPods sold as fast as Apple could make them (hey, we have some in stock!)
More than half of iPad sales in the quarter were sold to new users
iPad customer satisfaction of 94 percent, 75 percent of businesses planning to buy tablets will buy iPads.
Congratulations to the entire Apple Team for yet another chapter in the most amazing business story in American history! Now, let’s spend some of that cash hoard on promoting the Mac and your loyal independent resale channel!