Apple beats Q3 expectations, posts solid Q4 outlook

Apple reported[1] its third quarter financial results Tuesday, beating market expectations while maintaining a healthy outlook for Q4, when the highly anticipated iPhone 8 should be released. The Cupertino company posted diluted earnings of £1.67 a share on £45.4 billion of revenue. A year prior, it posted earnings of £1.42 a share on revenue of £42.36 billion.

Wall Street was looking for earnings of £1.57 a share on revenue of £44.89 billion. “With revenue up 7 percent year-over-year, we’re happy to report our third consecutive quarter of accelerating growth and an all-time quarterly record for Services revenue,” CEO Tim Cook said in a statement. “We hosted an incredibly successful Worldwide Developers Conference in June, and we’re very excited about the advances in iOS, macOS, watchOS and tvOS coming this fall.”

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Apple sold 41 million iPhones in Q3, up 2 percent year-over-year. That brought in £24.8 million in revenue, up 3 percent year-over-year.

Services revenue came in at £7.27 million for the quarter, up 22 percent year-over-year. Services is Apple’s second-largest operating segment after the iPhone. Apple also posted strong iPad and Mac sales: It sold 11.4 million iPads, up 15 percent year-over-year.

That brought in £4.97 million in revenue, a 2 percent year-over-year increase. The company sold 4.3 million Macs, a 1 percent year-over-year increase. That accounted for £5.59 million in revenue, up 7 percent year-over-year.

While overall sales and earnings beat expectations for Q3, Apple still posted a solid outlook for Q4, potentially signaling the iPhone 8[2], Apple’s 10th anniversary phone, should have a strong launch next quarter as expected. Apple said it expects Q4 revenue between £49 billion and £52 billion and a gross margin between 37.5 percent and 38 percent.

Analysts said earlier than an outlook of more than £51 billion, in line with Apple’s September quarter record in fiscal 2015, would be a good sign. They predicted an outlook for Q4 margins of 38 percent.

International sales accounted for 61 percent of Q3 revenue, Apple noted. Revenue was up year-over-year in every global region except Greater China, which declined by 10 percent. Apple’s revenues in the Greater China market have been trending down[3] for a few years now, seemingly because of weak iPhone sales there.

Yet Apple has far from given up on the region, continuing to invest there[4] — it’s opening its first data center in China to comply with new cyber security laws — and agreeing to controversial government requests,[5] like removing VPN apps from the China App Store.

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References

  1. ^ reported (www.businesswire.com)
  2. ^ the iPhone 8 (www.zdnet.com)
  3. ^ trending down (www.zdnet.com)
  4. ^ invest there (www.zdnet.com)
  5. ^ agreeing to controversial government requests, (www.zdnet.com)

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