Apple (NASDAQ:AAPL) earned a straight A from investors when it reported better-than-expected fourth-quarter results last week. Accelerating revenue growth and massive guidance highlighted strong performance and big growth potential.
But there was more to the quarter than the key metrics. During Apple's fourth-quarter earnings call, management discussed demand for its just-launched iPhone X, the drivers behind Mac sales, its wearables business, and more. Here's a look at the most insightful takeaways from the earnings call.
1. iPhone X demand is strong
When asked about the specific mix of iPhone orders Apple is receiving by model, Apple CEO Tim Cook wouldn't cave. "[W]e never go through mix," he told the analyst. But Cook did comment on the overall solid demand for Apple's newest iPhone, the iPhone X:
But I would share with you that the iPhone X orders are very strong for both direct customers and for channel partners, which, as you know, are lots of carrier throughout the world. And we couldn't be more excited to get underway.
2. Mac sales are benefiting from these drivers
When measured by revenue, Mac was Apple's third-largest segment in the quarter, behind iPhone and services. Notably, fiscal 2017 proved to be the best year ever for Mac. In addition, Mac sales were up an impressive 25% year over year in Q4.
But what, exactly, were the main drivers behind Apple's impressive growth in Mac sales? Apple CFO Luca Maestri explained:
This performance was fueled primarily by great demand for MacBook Pro ... We had outstanding results all around the world with each of our geographic segments, growing Mac revenue by 20% or more. We are also very happy with the success of Mac in the education market, where customer purchases grew double digits year-over-year.
3. Apple Watch sales are soaring
Apple doesn't break out Apple Watch sales in its operating data. Instead, it lumps them in with the company's other products revenue, which was up 36% year over year -- making other products Apple's fastest-growing segment. Based on the segment's rapid growth, investors would assume Apple Watch is doing well.
Fortunately, however, investors don't have to play a guessing game. During Apple's earnings call, Cook said Apple Watch sales have been rising sharply:
With unit growth of over 50% for the third consecutive quarter, it continues to be the best selling and most loved smartwatch in the world. We began shipping Apple Watch Series 3 just 6 weeks ago and customers love the new freedom of cellular.
Cook was pleased with the Watch's success enough to conclude that adding cellular connectivity with the Apple Watch 3 Series has been a "game changer."
4. Wearables may be Apple's next fast-growing product segment
If Apple does eventually begin breaking out Apple Watch sales into a more specific product segment, it will likely call it wearables. And Apple will likely opt to include sales of AirPods, and any other future wearable technology it sells, alongside Apple Watch. After all, Cook is already providing data on wearables as a category -- and the segment is looking good:
The combination of music streaming on Apple Watch and AirPods is truly a magical experience for people on-the-go. We're thrilled with the momentum of these products. In fact, our entire wearables business was up 75% year-over-year in the fourth quarter and in fiscal 2017, already generated the annual revenue of a Fortune 400 company.
Apple's earnings call provided further support for a bullish investment thesis for the tech giant. With strong demand for its latest iPhone, healthy Mac sales, and promising growth in newer product segments, there's plenty of reasons for Apple's growth to remain strong in the years ahead.