Yesterday, Apple released the results for its 2019 fiscal fourth quarter (which ran from June 30, 2019 to September 28, 2019) and held a call with analysts to discuss the results. Apple's fiscal fourth quarter is typically a transitional quarter. It is the quarter that we are in now — Apple's first fiscal quarter — which will contain all of the revenue from holiday sales and will thus be Apple's best fiscal quarter of the year. But even though the fiscal fourth quarter is less important, there are always some interesting nuggets. Yesterday, Apple announced quarterly revenue for the past quarter of $64 billion, up from $62.9 billion this time last year. That makes this past quarter the best fiscal fourth quarter in Apple's history. The $64 billion was composed of $51.5 billion for products and $12.5 billion for services, the most revenue that Apple has ever seen for services. 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. Here are the items that stood out to me.
iPhone
- Apple is no longer reporting each quarter the number of iPhones sold, and instead now reports iPhone revenue. iPhone revenue this past quarter was $33 billion, which is down from almost $37 billion this time last year. However, Apple CEO Tim Cook pointed out that this 9% decline from last year is better than the average 15% decline for Apple's first three 2019 fiscal quarters.
- Although Apple didn't say this, I suspect that one cause of the decline is that the iPhone 11 is less expensive than the higher-end iPhones Apple was selling this time last year. In what appears to be a reference to the price of the iPhone 11, Cook said: "And we did decide to to be more aggressive and looking at the results in the early going, I think it was the right call."
- Apple CFO Luca Maestri said that Apple "saw great customer response to the launch of iPhone 11, 11 Pro, and 11 Pro Max at the end of the quarter" and said that the overall number of people using an iPhone has reached a new all-time high.
- Apple will soon add the ability to purchase a new iPhone by using an Apple Card (Apple's credit card) and pay for the iPhone over 24 months with no interest. And like any other Apple product that you purchase using the Apple Card, you earn 3% cashback with no fees. Since most folks use an iPhone for at least two years before upgrading, this seems like a nice way to spread out the cost.
iPad
- iPad revenue this past quarter was almost $4.7 billion, up from almost $4 billion this time last year.
- Over half of all customers purchasing an iPad in the last fiscal quarter were new to the iPad. That's surprising to me considering that the iPad has been around since 2010.
- Apple said that surveys show that among both consumers and businesses who plan to purchase a tablet before the end of 2019, more than 80% plan to purchase an iPad.
Misc.
- Apple calls one category of its products "Wearables, Home and Accessories," and that includes the Apple Watch, AirPods, and Beats products. Apple sold $6.5 billion in products in this category, compared to $4.2 billion this time last year. Cook said that Apple's "wearables business showed explosive growth and generated more annual revenue than two-thirds of the companies in the Fortune 500."
- Cook said that 75% of Apple Watch customers this past quarter were buying their first Apple Watch.
- The new record in Apple services revenue includes over 450 million paid subscriptions, which includes Apple Music, App Store apps with subscriptions, and iCloud. And starting in this current fiscal quarter, subscription revenue will also include Apple Arcade and Apple TV, so subscriptions will become even more important for Apple in the future.
