This afternoon, Apple announced their earnings for the third quarter of the 2018 fiscal year, and as we’ve all come to expect, they did very well again. Revenue for the quarter was up 17% year-over-year to $53.3 billion. Margins were a very healthy 38.3%, although down slightly from 38.5% last year. Operating income for the quarter was $12.6 billion, with a net income of $11.5 billion. This resulted in earnings per share of $2.34, up from $1.67 a year ago.

Apple Q3 2018 Financial Results (GAAP)
  Q3'2018 Q2'2018 Q3'2017
Revenue (in Billions USD) $53.265 $61.137 $45.408
Gross Margin (in Billions USD) $20.421 $23.422 $17.488
Operating Income (in Billions USD) $12.612 $15.894 $10.768
Net Income (in Billions USD) $11.519 $13.822 $8.717
Margins 38.3% 38.3% 38.5%
Earnings per Share (in USD) $2.34 $2.73 $1.67

As usual, the iPhone continues to be the major source of revenue for the company. This quarter, Apple sold 41.3 million iPhones, which is up 1% from the same quarter a year ago, but revenue for iPhone was up an impressive 20%, meaning the higher priced models are selling well. Average sales price for an iPhone is now $724.12, which is much higher than in the past. Just a year ago, the ASP was barely over $600, and two years ago it was $595.26. This is a pretty significant jump.

Generally, we’d discuss Mac and iPad next, but both are now dwarfed by Apple’s Services segment, which is revenue from the App Store, digital content, AppleCare, Apple Pay, licensing, and other services. This has been the fastest growing segment of Apple for the past couple of years, and this quarter revenue was up another 31% from a year ago, to $9.55 billion. Clearly much of this is also tied to the iPhone, which just reinforces the profits from that device.

iPad was almost flat for the year, up 1% to 11.5 million units sold, but revenue here is down 5% to $4.7 billion, which isn’t surprising with Apple recently lowering the entry level cost to their tablet. iPad sales aren’t small by any means, but the demand for them has definitely tapered off over the last couple of years.

Mac sales were down rather sharply, with 13% less units sold this quarter compared to the same quarter a year ago. Apple sold 3.72 million Macs, which is 572,000 less than a year ago. Revenue wasn’t affected quite as strongly, being down just 5% to $5.33 billion, so the average selling price of a Mac is now $1432. A year ago, ASP for the Mac was $1302, so as with the iPhone, Apple is making more per Mac now, but unlike the iPhone the sales are down significantly when the PC market as a whole actually grew.

Apple’s “Other Products” which includes AirPods, Apple TV, Apple Watch, Beats, Home Pod, iPod, and accessories, had a strong quarter as well, with revenue up 37% to $3.74 billion. We don’t get to see a breakdown of products in this segment to see what’s performing and what’s not, but Apple has been slowly adding to their Other Products lineup, and the group as a whole is doing well.

Apple Q3 2018 Device Sales (thousands)
  Q3'2018 Q2'2018 Q3'2017 Seq Change Year/Year Change
iPhone 41,300 52,217 41,026 -21% +1%
iPad 11,553 9,113 11,424 +27% +1%
Mac 3,720 4,078 4,292 -9% -13%

For Q4, Apple is expecting revenue between $60 billion and $62 billion, with margins between 38 and 38.5%.

Source: Apple Investor Relations

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  • TEAMSWITCHER - Wednesday, August 1, 2018 - link

    I just love the psychology on demonstration here. Anything that you cannot afford has to be something that is constantly deemed as not worth having. I have gone FULL APPLE ECOSYSTEM - iPhone, iPad, MacBook Pro, and iMac desktop. The level of interoperability between these devices is something that no other Manufacturer can match right now. Granted I am not a gamer, and have maybe only two games in my Steam account. But that's because I'm actually using these devices to make a living. So ... in short .. I think you are all wet, and I know for fact that what I have is working better for me than ANY alternative. SUCK IT!
  • duploxxx - Wednesday, August 1, 2018 - link

    what eco system? you mean the lazy, prefabbed old school grandpa items you can do with apple devices? pls give a hint what can't be done on other devices :).
  • duploxxx - Wednesday, August 1, 2018 - link

    what level of interoperability? all become slow when you upgrade them! yeah that is a nice feature to have.
  • uhuznaa - Wednesday, August 1, 2018 - link

    Things like reading and writing texts (SMS and iMessage) on any of your Apple devices you may happen to use at that moment? iPhone, iPad, MacBook, iMac, whatever. How do you do that with other devices?
  • smilingcrow - Wednesday, August 1, 2018 - link

    You can do that with Android and Windows 10 and it even supports iOS so not tied to one eco-system:

    But seriously, you'd have to be a texting addict to move all your devices to a different premium priced platform for one simple feature.
  • baka_toroi - Wednesday, August 1, 2018 - link

    @duploxxx: congratulations. You're the kind of imbecile that guarantees Apple's success. I bet you think Android and iOS are equivalent in stability and functionality.

    Here's a hint for you: it's called UX. Apple still cares about it. No other company does it as well as them, partly because "great customer service" is an alien concept to Asian companies.
  • rocky12345 - Wednesday, August 1, 2018 - link

    Apple and great customer service should never be in the sentence ever. Yes they are all smiles and there to sell you their stuff but god forbid you ever have to get it fixed. They make you jump through so many hoops and if you miss one of them they have the right to refuse service to their customers. It is right in their agreement all you have to do is read the fine print.

    Then again it seems some of the other companies are starting to do this as well just not to the extent Apples has been doing it over the years.
  • Samus - Wednesday, August 1, 2018 - link

    That's the best market for the iPhone: the aging population. There is no doubt iOS is significantly simpler and easier to use so the learning curve is very adaptable. Of course this comes at the cost of functionality and capability but those things are irrelevant to people who only need basic features.

    I think the iPhone has always been one of the most well-rounded phones. It excels at nothing (except raw SoC performance) but does everything above average: camera, battery life, easy of use, app store selection, ecosystem integration, features, etc. The only things that it really fails at are obviously price, and durability\repairability, which are just awful. I hate fixing iPhones, partially because they are pretty difficult, but the parts are expensive and Apple has this BS policy of trying to fuck over 3rd party manufacture compatibility. The error 53, battery calibration, and ambient light sensor issues being the obvious recent takeaways. But it goes as far back as MFi certification for charging's getting ridiculous.

    And why the hell haven't they adopted USB-C like the rest of the modern world yet. Even Nintendo has accepted USB-C as the standard charging port (The 3DS actually uses a standard although not well known USB port as well) and they (Nintendo) have historically been the most proprietary console developer.
  • iwod - Wednesday, August 1, 2018 - link

    Tell that to people who buy BMW, Benz, when they could have buy Toyota.
  • prisonerX - Wednesday, August 1, 2018 - link

    There are an endless number of Apple lemmings in the world, they just don't know any better, or are willing to pay for the Apple logo.

    I just bought a phone for 125 euros, and it has pretty much all the features of flagships from 18 months ago. It's a great, highly function phone by any measure, except perhaps fashion - it has no notch.

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