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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  • baka_toroi - Wednesday, August 1, 2018 - link

    There's nothing better than Apple and for the record I fucking hate that. Your €125 chinkphone is a piece of crap and I'm basing my assessment on the fact that it's Android based.
  • rocky12345 - Wednesday, August 1, 2018 - link

    This is a typical Apple fanboy/fangirl type of comment and Apple really likes people like you since it guarantees they will stay in business and make boat loads of money off of you from their over priced stuff. Lets not get into all of the crap they released that had major bugs and flaws and when they are called on it they say things like "You are holding it wrong" or some other dumb ass type statement and almost never admit they made a mistake in the design. Mac book pro comes to mind since it left the factory with what Apple says was some missing code in the firmware and then release what they call a bug fix which is just clearly a patch job on something that will still be prone to over heating but hey that's a feature it will keep you warm in the winter as it throttles itself into mush lower than expected performance levels good thing you did not buy cheap china based products there for sure.
  • baka_toroi - Wednesday, August 1, 2018 - link

    Yeah, right. The world of Samsung's exploding batteries is so much better!

    Are you familiar with this industry or was your first OS Windows XP? What you describe is nothing compared to all the shit HP, Dell, Sony and many, many others have done and continue doing.

    If you're gonna describe Apple's shittiness you better use a frame of reference. Otherwise you end up saying retarded shit like you did.
  • nikon133 - Thursday, August 2, 2018 - link

    There are endless number of Lemmings in the world.

    I have just chosen LG G7 ThinQ as my work phone. It matches Galaxy S9+ quite well, spec to spec - a bit below for some, a bit better for some other specs... for 2/3 of a price in local shops.

    Price wasn't even the factor - I had budget approved for either. I have been using LG products at home and, in general, are happier with the brand, compared to Samsung products I have encountered. And yet, Samsung sells more phones than anyone else in the world. Even if they are overpriced compared to direct Android competitors.

    With that said, I am considering iPhone as my personal phone replacement (currently Lumia 950XL). Even if I live in Windows world. Android and are still not playing nice - various issues with syncing contacts and calendar... and I cannot make my Android send SMS and other notifications to my BT hands-free. Aging Win phone not only plays all notifications over BT speakerphone, but is also clever enough to activate Cortana when on BT, and informs me who the SMS is from, and would I like to hear it.

    It might be that I am failing to figure out how to achieve the same on Android, but for the time I have invested looking for option, I haven't found any...?
  • Samus - Wednesday, August 1, 2018 - link

    In a free market, people can buy whatever they want, however they want. It isn't like the government is subsidizing iPhones for "lifeline" programs or something. People are spending their own money on this stuff. And in a lot of cases people want an iPhone because it holds resale value longer than any Android phone (because of the support cycle and the perception of 'quality') and there is no debate everyone these days practically needs a modern smartphone. We live off of them. Decent cellular connectivity, camera, and battery performance are essential.
  • eva02langley - Wednesday, August 1, 2018 - link

    Except from the Apple tax and the Mac OS, there is nothing outstanding in owning a Mac book.
  • prime2515103 - Wednesday, August 1, 2018 - link

    Looks like they might have to wait until around Q4 '19 to break the trillion dollar value mark. But then, the valuation might not be entirely based on net income, I'm not a business major.
  • prime2515103 - Wednesday, August 1, 2018 - link

    Wait, that's not right... They went from being valued at $750B to $935B in less than a year, so I would guess they'll break a trillion by year's end or Q1 '19.
  • smilingcrow - Wednesday, August 1, 2018 - link

    Investing 101: Stock prices can go down as well as up.
    With the current trade-war who knows how that will impact the economy. Plus with Ronald McDonald in the big White Twitter House anything goes.
  • alphasquadron - Wednesday, August 1, 2018 - link

    All my professional friends all own an iphone. Probably because the price is not that big of a deal to them. And it's probably easier for them to use than an Android. They also own a nice car like a Mercedes/BMW. But I'm sure the readers here find anyone driving a bmw or mercedes are just dumb as hell. Just like those CEOs that own fancy cars or a jetliner. Those guys are so dumb unlike us Android users. How could they waste so much money on stuff like a Lamborghini. Right guys?

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