Apple reported another strong result during the third quarter of the fiscal year on Wednesday. The earnings beat street estimates but iPhone sales did not match consensus from most analysts. The highlight was the revenue from services division, which hit an all-time high during the third quarter.
In terms of consolidated numbers shared by the company, Apple sold 41.3 million iPhones during the fiscal third quarter ending June 30, 2018. The numbers were marginally lower that Wall Street estimates of around 41.7 million, but Apple made up for that decline with an increased average selling price, which stood at $724. The bump in ASP of iPhone is mainly owed to demand for the newer iPhone X, which starts at $999.
“[The] iPhone X was the most popular iPhone in the quarter once again, with a customer satisfaction score of 98% according to 451 Research,” Apple CEO Tim Cook said during the earnings call. He added, “We priced iPhone X at a level that represented the value of it and we could not be happier that it has been the top selling iPhone since the launch, and so we feel terrific about iPhone X.”
During the quarter, the revenue from iPhone sales stood at $29.9 billion, which is a 20 percent gain over the same period last year. Sequentially, the revenue from iPhone sales declined by 21 percent due to lack of new model and increased competition in the premium segment. Apple is expected to introduce three new iPhone models with design similar to that of premium iPhone X in September and the fourth quarter sales would be higher due to demand for new models.
During the quarter, Apple said revenues from the services business came in at $9.54 billion, a 31 percent year-over-year growth. The services business also registered sequential growth of 4 percent further proving Apple’s strong play in the software and services business. Apple recently celebrated 10 years of the App Store and announced that it has paid $100 billion to developers. The Services revenue includes sales from App Store, Apple Care, Apple Pay, iTunes and cloud services.
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Cook said the services revenue is mainly driven by more people entering the Apple ecosystem and announced that paid subscriptions surpassed 300 million, a 60 percent year-over-year growth. Apple says there are now 30,000 apps that offer subscriptions and Apple Music has become the leading music streaming service in markets like North America.
The total revenue from other products, which includes Apple Watch, AirPods and Beats headphones, came in at $3.7 billion, a 37 percent jump year-over-year. Apple says wearable sales was higher by 60 percent during the quarter. While the numbers were in line with street estimates for iPhone, Services and Other products, Apple’s iPad and Mac sales declined during this quarter.
Apple sold 11.5 million units of iPad during the quarter, a 5 percent year-over-year decline in revenue totalling $4.7 billion. The Mac sales were down by 13 percent to 3.7 million units while the revenue declined by 5 percent to $5.3 billion. The total revenue stood at $53.26 billion, a growth of 17 percent over same period last year.
Apple’s guidance towards fourth-quarter revenue is between $60 billion and $62 billion, way ahead of Wall Street estimates of $59.47 billion. The guidance suggests that the new iPhones will be available for shipping a week after its launch. Cook did not mention India during the earnings call, indicating its declining prospects in the world’s fastest growing smartphone market.