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Apple Earnings: iPhone X Helps Drive Record Results

By Daniel Sparks - Feb 1, 2018 at 8:17PM

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Double-digit iPhone revenue growth drove first-quarter revenue above management's guidance.

Remember just over a year ago, when Apple (AAPL -1.92%) was struggling to grow its top and bottom line? Those days are long gone.

Apple just posted record quarterly revenue and earnings per share for its important fiscal first quarter, which takes place during the holidays. The record results were driven primarily by a double-digit percentage increase in iPhone revenue.

Apple's new iPhone X, in particular, was a key driver for the quarter. "iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November," said Apple CEO Tim Cook in a press release about the quarter.

But strength in Apple's iPad, services, and other products segments helped, too.

Apple customers holding new iPhone X devices on launch day

Apple customers holding new iPhone X devices on launch day. Image source: Apple.

Apple earnings: The raw numbers

Metric

Q1 2018

Q1 2017

Change

Revenue

$88.3 billion

$78.4 billion

13%

EPS

$3.89

$3.36

16%

Gross profit margin

38.4%

38.5%

(10 basis points)

Data source: Apple's first-quarter consolidated financial statements. Table by author.

Extending the company's return to growth since the first quarter of fiscal 2017, Apple's first-quarter revenue for fiscal 2018 was $88.3 billion, up 13% year over year. The growth rate notably marked an acceleration in revenue growth compared to Apple's 12% year-over-year revenue growth in Q4.

Earnings per share for the quarter also increased nicely, climbing 16% year over year. However, this earnings-per-share growth was below Apple's 24% year-over-year growth in the metric during Q4.

Apple's first-quarter gross profit margin was 38.4% -- about even with its gross profit margin of 38.5% in the year-ago quarter.

Going into its first quarter, Apple had guided for revenue of $84 billion to $87 billion. In addition, management expected gross profit margin of 38% to 38.5%. Apple's revenue easily came in above its guidance range, and its gross profit margin was at the high end of management's expectations.

Segment results

Product Segment

Q1 2018 Revenue

Q1 2017 Revenue

Change

iPhone

$61.6 billion

$54.4 billion

13%

iPad

$5.9 billion

$5.5 billion

6%

Mac

$6.9 billion

$7.2 billion

(5%)

Services

$8.5 billion

$7.2 billion

18%

Other products

$5.5 billion

$4.0 billion

36%

Data source: Apple's first-quarter operating data. Table by author.

Apple's $61.6 billion in first-quarter iPhone revenue increased a whopping $7.2 billion year over year, representing a 13% rise. Investors can thank Apple's higher average selling price for this sharp jump in iPhone revenue, since iPhone unit sales actually declined on a year-over-year basis.

Other fast-growing segments during the quarter were services and other products. Revenue in these segments climbed 18% and 36%, respectively.

iPad revenue was up 6% year over year, and Mac revenue was down 5% year over year.

Looking ahead

Looking beyond its first-quarter results, Apple forecast double-digit revenue growth in its second quarter.

Apple CEO Tim Cook shakes hands with fans at an Apple store the day of the iPhone 8 launch

Apple CEO Tim Cook. Image source: Apple.

Specifically, management said it expected second-quarter revenue between $60 billion and $62 billion. Based on the midpoint of this guidance range, this represents 15% year-over-year growth. Second-quarter revenue at this level would mark yet another quarter of accelerating growth if it's achieved. 

Apple said it expected its second-quarter gross profit margin to be between 38% and 38.5%. This compares to a gross profit margin of 38.9% in the company's second quarter of fiscal 2017. 

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