Yesterday, Apple released the results for its 2018 fiscal third quarter (which ran from April 1, 2018 to June 30, 2018) and held a call with analysts to discuss the results. This is typically not a big fiscal quarter for Apple; the important quarter for Apple every year is the first fiscal quarter (containing the holiday sales season). During the fiscal third quarter, most potential Apple customers — which for the most part means iPhone customers — are waiting to see what new products Apple will introduce in the Fall. Even so, Apple had their best fiscal third quarter ever, with quarterly revenue of $53.3 billion. Apple CEO Tim Cook attributed the impressive revenues to three factors: iPhone sales, service revenue such as the App Store and Apple Music, and wearable product sales such as the Apple Watch and AirPods. If you want to get all of the nitty gritty details, you can download the audio from the announcement conference call from iTunes, or you can read a transcript of the call prepared by Seeking Alpha, or a transcript prepared by Jason Snell of Six Colors. Apple's official press release is here. As always, I'm not as interested in the financial details as I am the statements of Apple executives during the call that are of interest to iPhone and iPad users. Here are the items that stood out to me.
iPhone
- During the past quarter, Apple sold 41.3 million iPhones, just slightly more than the 41 million iPhones sold in 2017's third fiscal quarter. The all-time record for iPhone sales in a fiscal Q3 was in 2015, when Apple sold 47.5 million iPhones.
- While the increase in the number of iPhones sold versus 2017 Q3 was modest, the increase in revenue from iPhone sales was more impressive thanks to sales of the more expensive iPhone X. iPhone revenue was $24.8 billion in 2017 Q3, but it rose to $29.9 billion in 2018 Q3, a 20% increase.
- By my count, Apple has sold 1.421 billion iPhones since they first went on sale in 2007.
- What kinds of iPhones are people buying? For the second quarter in a row, the top-of-the-line iPhone X was the best-seller. The critics who predicted that few folks would want to pay more for a more powerful iPhone were clearly wrong.
iPad
- Apple sold just over 11.5 million iPads in the fiscal third quarter, around 100,000 more iPads than Apple sold a year ago.
- I don't know if Apple will ever return to the larger iPad sales numbers that the company saw many years ago, including a high of 19.5 million iPads in 2013 Q2. Nevertheless this is now the fifth quarter in a row that the average number of iPads sold has increased, if you look at a four quarter average.
- By my count, Apple has sold over 415 million iPads since they first went on sale in 2010.
- Apple CFO Luca Maestri said that almost half of iPad purchases in the past quarter were by customers new to iPad.
Other
- A relatively new area of revenue for Apple is app subscriptions, such as apps that are free to download but for which you pay a monthly or yearly subscription fee to access more advanced features. Cook said that the App Store now includes almost 30,000 apps which offer subscriptions.
- Because the App Store turned 10 years old last month, Cook spent some time noting its impressive numbers, and the App Store saw its largest ever quarterly revenue in 2018 Q3. He did not disclose how much of that was spent on the game Fortnite.
- Cook noted that this past quarter saw all-time highs for both the number of monthly active users of the Messages app and for the number of FaceTime calls made. If my son is an accurate guidepost, then a lot of those text messages and FaceTime calls are the result of kids being on summer vacation.
- In the first three quarters of fiscal 2018, there were over 100 billion Siri requests.
- Here in New Orleans, the two major pharmacies are Walgreen's and CVS. One of the reasons that I typically choose Walgreen's is that it works great with Apple Pay. But Cook announced that this Fall, Apple Pay will start to be accepted at CVS (and 7-Eleven too).
- Cook said that when iOS 12 comes out, the iPhone will be noticeably faster. The camera on the iPhone will launch up to 70% faster, the keyboard will appear up to 50% faster, and apps will be able to launch up to twice as fast.
- Cook discussed the impact of President Trump's recent trade war. He said that tariffs are "a tax on the consumer and wind up resulting in lower economic growth." Having said that, Cook said that none of Apple's products were directly affected by three recent tariffs, and that Apple was still evaluating another one. Cook concluded by saying that he was "optimistic that the countries will get through this, and we are hoping that calm heads prevail."
- Everyone knows that Apple is now developing TV shows and movies and that it will at some point have some service to announce. Cook said that he wasn't yet ready to share the details, but that he "couldn't be more excited about what's going on there, and we've got great talent in the area that we've sourced from different places, and [we] feel really good about what we will eventually offer."
- Over 50 million people are now using Apple Music, although an (undisclosed) number of those are in a free trial period.
