Today Apple released their earnings for Q3 of fiscal year 2015, which ended June 27th. In what seems to be a never-ending sequence of records, once again, Apple posted a record third quarter. Revenue for the quarter came in at $49.6 billion, up 33% from a year ago. Gross margin was $19.7 billion, also up 33% from Q3 2014. Operating income was up almost 37% to $14.1 billion, and net income was $10.7 billion for the quarter, a gain of 37.8% year-over-year. Earnings per share was $1.85, up from $1.28 in Q3 2014.

Apple Q3 2015 Financial Results (GAAP)
  Q3'2015 Q2'2015 Q3'2014
Revenue (in Billions USD) $49.605 >$58.010 $37.432
Gross Margin (in Billions USD) $19.681 $23.656 $14.735
Operating Income (in Billions USD) $14.083 $18.278 $10.282
Net Income (in Billions USD) $10.677 $13.569 $7.748
Margins 39.7% 40.8% 39.4%
Earnings per Share (in USD) $1.85 $2.33 $1.28

Apple’s iPhone business has been the primary factor in these record breaking quarters, and the iPhone 6 and 6+ sales continued to be strong. For the quarter, Apple sold 47.5 million iPhones, which is a gain of 35% in units. Even more impressive is that these 35% more units resulted in 59% more revenue, with iPhone sales totalling $31.4 billion for this quarter alone.

Mac sales have also been strong, and while Apple has generally outpaced the PC market in sales growth for a while, Apple saw an additional 5% in Mac unit sales for Q4 compared to Q3, and 9% from a year ago. This is at a time where the rest of the PC market is contracting, so Mac sales were an impressive 4.8 million units, with revenue of just over $6 billion for the quarter. The resurgence of the Mac has been quite the rise, with Mac revenue being eclipsed quite a bit by the iPad not very long ago. Times have changed though and Apple’s PC business is currently the only one that has seen an increase in sales according to the reports floated around in the last couple of weeks.

iPad sales though are not so rosy. The iPad sales were very strong, and while sales are not exactly terrible, the number of units being sold has been dropping for some time. Much debate has been about why this is, but certainly owners of the iPad have not felt the need to refresh their devices anywhere nearly as quickly as phones. For the quarter, there were 10.9 million iPads sold, which resulted in revenue of $4.5 billion. The number of units sold is down 13% from Q2, and down 18% year-over year.

Apple Q4 2014 Device Sales (thousands)
  Q3'2015 Q2'2015 Q3'2014 Seq Change Year/Year Change
iPhone 47,534 61,170 35,203 -22% +59%
iPad 10,931 12,623 13,276 -13% -18%
Mac 4,796 4,563 4,413 +5% +9%

Services, which include iTunes sales, AppleCare, Apple Pay, and will include Apple Music in the future, saw a nice jump as well with just over $5 billion in revenue for the quarter. This is up 1% from last quarter, and up 12% from last year.

“Other Products” which is Apple TV, Apple Watch, Beats, iPods, and accessories had a big quarter, and while individual numbers were not announced, it is likely due to initial sales of the Apple Watch which came out in the quarter. For Q3, this group had sales of $2.6 billion, up 56% from last quarter and up 49% year-over-year. Likely most of the increase can be attributed to the Watch, but without knowing average selling price, it would be pretty difficult to try and extrapolate unit sales without more information.

Apple Q2 2015 Revenue by Product (billions)
  Q3'2015 Q2'2015 Q3'2014 Revenue for current quarter
iPhone $31.368 $40.282 $19.751 63.2%
iPad $4.538 $5.428 $5.889 9.1%
Mac $6.030 $5.615 $5.540 12.2%
iTunes/Software/Services $5.028 $4.996 $4.485 10.1%
Other Products $2.641 $1.689 $1.767 5.3%

This pipeline post is quite a bit shorter than the Microsoft earnings, but for all of the right reasons. There is less to say when things are going as well as they are for Apple right now. iPhone sales are still a huge part of their balance sheet, and seem to have no sign of slowing down. People obviously wanted a larger iPhone and sales have skyrocketed since the iPhone 6 and 6+ were launched. But I think we were all expecting this based on past performance. I think what is most interesting is how much of the PC market Apple has managed to chip away with Mac sales, which are up an amazing 9% when the rest of the market contracted.

For Q4, Apple is expecting revenue of $49 to $51 billion, with a gross margin of 38.5 to 39.5%.

Source: Apple Investor Relations

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  • modulusshift - Tuesday, July 21, 2015 - link

    The Watch isn't completely innovation-less, you know. Despite what you may think of it as a device, it contains Apple's new few important focuses all at once. It has the Taptic Engine, which has been very widely praised in every single review for the Watch and the new MacBooks. It has Force Touch, which of course isn't a solution to every interface problem, but is definitely something that will be seen as a jump head and shoulders over the game once people see it in action on a more dynamic touchscreen device. It has an OLED display, which Apple has now shown is up to their standards and ready to arrive in more of their devices in the next couple years.

    And that's just the jumps Apple is ready to make in hardware. In software, the Watch starts a new design for Apple, one that starts with their font and reaches out a lot farther with time. No more linen, but no more vanishingly light fonts, either. Simple, clean, and functional.

    Even if Apple didn't sell a single Watch, this product wouldn't be a flop, because it's a vanguard of the technology that Apple is putting into all their new hardware and software, and that will bring some much needed improvements in stability, optimization, and better design.

    So why, again, does it matter that it's a little limited in functionality? Apple hasn't issued such an effective call to action since the iPhone, and everyone complained even more about that when it came out.
    Reply
  • retrospooty - Tuesday, July 21, 2015 - link

    I just vomited a little in my mouth as I read that. OMG people are weird. Reply
  • kspirit - Wednesday, July 22, 2015 - link

    I know right?

    "Even if Apple didn't sell a single Watch, this product wouldn't be a flop, because it's a vanguard of the technology that Apple is putting into all their new hardware and software, and that will bring some much needed improvements in stability, optimization, and better design." ??!??!?!?

    HAHAHAH
    Reply
  • whatsa - Wednesday, July 22, 2015 - link

    right up there with belief in fairies, if it doesn't exist( for people) its just the ramblings of the deluded brethen Reply
  • p1esk - Tuesday, July 21, 2015 - link

    Sure, there are some innovations in iWatch. But they seem to be relatively minor, given the potential of Apple as a company.
    I'm talking about bigger picture: for example, imagine that you could actually talk to the watch like you would talk to a human assistant. As is, their Siri software is mediocre. It's not intelligent. But think of what would it mean if they could make it (more) intelligent? Sure, this is a tough problem, but why can't they at least try? Why would they want to wait for Google, or anyone else to solve it for them? Why not hire 200 PhDs, and give them 5 years to make Siri as intelligent as an average human secretary? Even at $200k of salary per year, this would amount to only $200k x 5 x 200 = $200M. Let's say they would need to build custom hardware to run it, say another $300M. $0.5B - I think we all agree that Apple can afford this kind of budget, especially if this might lead to a killer application for their devices.
    I hope they are secretly doing that, but looking at their announcements about Siri development since they bought it 5 years ago, I don't think they are serious about it.
    Reply
  • mdriftmeyer - Tuesday, July 21, 2015 - link

    Imagine a stranger punching you in the face for being such a douchebag talking into your watch. Reply
  • xype - Wednesday, July 22, 2015 - link

    I disagree politely on two points:

    1) You’re assuming they aren’t hiring "200 PhDs" and doing all they can—which could very well be wrong (and most likely is). I doubt people at Apple are looking at their tons and tons of money and thinking "We shouldn’t be hiring all those expensive people!". If not more, read the rumors (and confirmed hires) in the automotive space.

    2) You’re assuming the "innovations" are easy and Apple’s "potential" has anything to do with how much and how fast they can innovate. The problem with innovation (as we understand it in the computer tech space) is that there are two types of it; one is the pie-in-the-sky, we-have-half-a-prototype-half-working that a lot of companies are doing openly (see Microsoft’s Slate and how everyone thought they’ll kill the iPad in a few months after the concept video was out), the other is the kind of innovation that is actually being manufactured into working, on-sale products that you can actually buy. Apple sits tight in the second camp, and because that is less flashy than half-working "imagine how cool it would be!" concepts, people think they are not innovating or that their innovations are minor.

    The thing is, Apple has stuff on sale _right now_. Thinking that whatever they sell is for some weird reason not at the very edge of what’s possible (and possible to manufacture) is assuming Apple is run by retards.

    The truth of the matter is that Apple has been leading the industry in achieving the best compromise—sell what’s technically feasible to produce in insanely large quantities at the price people are still willing to pay for it.

    It’s just sad that what seems really, really clear and obvious if you look at Apple and their success is something that escapes most "industry professionals" and "analysts".
    Reply
  • p1esk - Wednesday, July 22, 2015 - link

    Nothing Apple sells right now (or has ever sold) is "at the edge of what's possible". Their products are good implementations of good ideas. Nothing less, nothing more. Yes, they are leading the industry, yes, they are successful. What are you arguing with? All I'm saying is their innovations are minor, compared to the best inventions made at companies like Xerox or AT&T. Reply
  • xype - Wednesday, July 22, 2015 - link

    iWatch is so God damn medicore that it’s the best smart watch out there, according to reviews.

    Apple doesn’t speak publicly about their "crazy R&D", that’s the main difference between them and other companies. Microsoft showed a Slate concept video and everyone shit their pants, Apple put the iPad on store shelves and everyone went "medicore, meh"—but just compare that to the Android/Windows tablets that were _shipping_ and tell me they don’t do any R&D.

    Seriously, you think they closed down their R&D departments after the iPhone shipped? Do you think the Apple Watch is _trivial_ to make? Why isn’t everyone outdoing Apple, then? Why is Apple’s own A line of CPUs not less than half as good as what others are offering, if that stuff is so easy?

    Heck, why don’t other manufacturers constantly beat Apple on build quality, if Apple is not doing any R&D work anyway?
    Reply
  • p1esk - Wednesday, July 22, 2015 - link

    Sure, iWatch is the best smart watch out there. I'm saying that the best smart watch we have today is a mediocre gadget. I went to Apple store, and I played with it, and I'm not impressed with what it can do for me.
    No one disputes the fact that Apple is good at building and selling good products. What I'm questioning is their blue sky research ambitions.
    Reply

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