I have run out of superlatives to describe Apple’s quarterly financial successes. All the “know it all” analysts were smug in their predictions that Apple would exceed their 3rd Quarter financial guidance but Apple posted earnings that surprised even the most bullish of the crowd. Posting sales of $45.8 Billion with a profit of $8.7 Billion. WOW!.
This was the first quarter of growth in iPad sales in 4 years as the new iPad Pros began to have traction and it was the best non-holiday quarter in two years. Apple grew all sectors of their business, including iPhone, iPad, services and the Mac. In fact, it was a an all time record for Services revenue for Apple, too.
These results alone would be remarkable but Apple also gave strong guidance for the next quarter. The back-to-school quarter is one of the most critical for Apple and even in the light of rumored shortages and other unsubstantiated churn, Apple is predicting sales of $49-$52 Billion and a strong quarter to come.
Investors rewarded the good news with Apple stock opening at a record $159 per share, up some 6%. The Apple board of directors declared a $0.63 quarterly dividend to reward shareholders, too.
The iPhone was responsible for about 55% of Apple’s revenue and they sold 41 million iPhones in the quarter. This brought the total number of iPhones sold since its introduction 10 years ago to 1.2 BILLION iPhones! Apple quoted a 95% customer satisfaction rating for the iPhone from 451 Research and a 99% rating for the iPhone 7+ which is truly remarkable.
Services were a big part of Apple’s success story this quarter with their record $7.3 Billion in service revenue which is 22% growth. Much of this revenue comes from the widely popular App Store, although they reported that they have over 185 million subscriptions to Apple Music, too! Apple Pay also showed continued growth. Services is becoming a huge part of Apple’s amazing success story.
The Mac did not do so well in the 2nd quarter but rebounded significantly this quarter with the introduction of the new Macs and rewarded Apple with 7% year over year growth compared to a decline for most other computer makers. They also trotted out some research again from 451 Research that showed a 97% customer satisfaction rate!
Apple sold 11.4 million iPads which is 15% growth after several quarters of decline. The rumors of the demise of the iPad were definitely fodder for my new URL – www.falserumors.com. iPad sales were strong across the globe and among tablets costing more than $200, Apple holds a significant 89% marketshare. They announced that Walmart, Bank of America, Medtronic and Panera Bread would be rolling out large numbers of iPads in their operations.
Apple ended the quarter with $261.5 Billion in cash, most of which is outside the USA. Apple spent over $3 billion on R&D with efforts on autonomous systems and other amazing new stuff that we will see in the coming months and years. Tim Cook was particularly upbeat on autonomous systems:
“We are very focused on autonomous systems from a core technology point of view, we do have a large project going and are making a big investment in this from our point of view. Autonomy is sort of the mother of all AI projects,” Cook said today, echoing statements made last month. Autonomous systems can be used in a variety of ways and a vehicle is only one.”
That got me thinking about some of these other ways that autonomous systems can be used. They hinted at some upcoming news on “Made in the USA” and certainly manufacturing is one area where autonomous systems can be utilized. I think we have only scratched the surface of a new manufacturing revolution.
Congratulations to everyone at Apple for a stellar quarter. My retirement account thanks you, too! As an independent reseller of Apple products we feel privileged to be a part of this success. It is a tough business and I hope that Apple remembers the little guys that helped them grow, too. As one of the world’s largest businesses, Apple has a greater responsibility than anyone to be socially responsible and should and is held to a much higher standard. Great job on the quarter!