Apple announces Q4 2018 revenue of $62.9b, 46.89m iPhones sold

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Apple today announced financial results for its fiscal 2018 fourth quarter ended September 29, 2018. The Company posted quarterly revenue of $62.9 billion, an increase of 20 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.91, up 41 percent. International sales accounted for 61 percent of the quarter’s revenue.

Services revenue reached an all-time high of $10 billion. Excluding a one-time favorable adjustment of $640 million recognized in the fourth quarter of fiscal 2017, Services revenue grew from $7.9 billion in the fourth quarter of fiscal 2017 to $10 billion in the fourth quarter of fiscal 2018, an increase of 27 percent.

“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,” said Tim Cook, Apple’s CEO.

Revenue from Apple’s wearables devices (Apple Watch, AirPods, and Beats products), skyrocketed in Q4, rising 50% year over year. Strong performance from wearables helped Apple’s Other Products segment’s revenue rise 31% year over year to $4.2 billion.

“Over the past two months, we’ve delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac as well as our four operating systems, and we enter the holiday season with our strongest lineup of products and services ever.”

Apple shipped 46.9 million iPhones during the September quarter, up slightly year-on-year from the same period in 2017, when it shipped 46.7 million iPhones. Revenue from iPhones of $37.2 billion is up year-on-year from $28.8 billion.

The average selling price (ASP) of the iPhone is $793, up from the $617.99 ASP from one year ago. This continues a pattern seen in earlier quarters, with the main ASP driver being the premium pricing of the iPhone X, iPhone XS, and iPhone XS Max. Sequentially, iPhone ASPs are up substantially from the $724 figure recorded in quarter three.

“We concluded a record year with our best September quarter ever, growing double digits in every geographic segment. We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac,” said Luca Maestri, Apple’s CFO.

“We generated $19.5 billion in operating cash flow and returned over $23 billion to shareholders in dividends and share repurchases in the September quarter, bringing total capital returned in fiscal 2018 to almost $90 billion.”

Apple to no longer report unit sales

One takeaway from Apple’s earnings call was management’s decision to stop reporting unit sales data for the iPhone, iPad, and Mac beginning with its first quarter of fiscal year 2019.

Some investors may worry that the company’s decision to hide this data from investors reflects a bearish outlook from management on the key metric. But CFO Luca Maestri argued the metric simply isn’t as relevant to the company’s business performance as it was in the past.

As demonstrated by our financial performance in recent years, the number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business. Furthermore a unit of sale is less relevant for us today than it was in the past given the breadth of our portfolio and the wider sales price dispersion within any given product line.

Apple is providing the following guidance for its fiscal 2019 first quarter:

  • revenue between $89 billion and $93 billion
  • gross margin between 38 percent and 38.5 percent
  • operating expenses between $8.7 billion and $8.8 billion
  • other income/(expense) of $300 million
  • tax rate of approximately 16.5 percent before discrete items

Consolidated Financial Statements

Data Summary

Apple’s board of directors has declared a cash dividend of $0.73 per share of the Company’s common stock. The dividend is payable on November 15, 2018 to shareholders of record as of the close of business on November 12, 2018.

Apple will provide live streaming of its Q4 2018 financial results conference call beginning at 2:00 p.m. PDT on November 1, 2018 here. This webcast will also be available for replay for approximately two weeks thereafter.

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