Another quarter, another discussion about whether Apple (NASDAQ:AAPL) is losing its luster. It doesn't seem to matter how many record-breaking quarters the iPhone maker strings together; the talk on Wall Street always seems to return to the inevitable talk of "peak iPhone." The financial press has been ripe with stories of disappointing sales of the iPhone X, pending production cuts, and slowing growth.
That didn't stop Apple from putting together a quarter that shattered records in a variety of metrics.
Like a broken record
For the just-completed fiscal first quarter, which ended Dec. 30, Apple reported all-time record sales of $88.3 billion, up 13% year over year -- even though the quarter had 13 weeks, compared with the 14 weeks in the same quarter last year. Revenue exceeded the high end of Apple's forecast of $87 billion, while also topping consensus estimates of $87.28 billion. That resulted in record earnings per diluted share of $3.89, up 16% over the prior-year quarter, beating analysts' expectations for $3.86 per share.
Apple pointed out that it achieved not only record revenue, but also record operating income, net income, and earnings per share.
Apple sold 77.3 million iPhones during the quarter, declining by 1% year over year, and missing analysts' expectations for 80 million. Even though fewer were sold, those that did sell sported a heftier price tag. The average selling price for the devices soared, reaching $796, up more than $100 from the prior-year quarter, and beating consensus estimates of $737 per device.
CEO Tim Cook said the iPhone X was the best-selling iPhone model in every week since its release. Apple also reported that its installed base of devices reached 1.3 billion in January, increasing 30% from the 1 billion it achieved just two years ago.
It's not just about iPhones
Apple's other products, which include Apple Watch, Apple TV, AirPods, iPod Touch, Beats products, and the HomePod, were the unsung heroes of the quarter, with sales of $5.49 billion, growing 36% year over year and exceeding $5 billion for the first time. The Apple Watch achieved its best quarter ever, with 50% growth in revenue and units sold for the fourth consecutive quarter. Revenue from wearables, which combines the Apple Watch, Beats, and AirPods, was up nearly 70% year over year.
Apple's services segment continued its impressive growth, increasing 18% year over year to $8.47 billion. Last year, Apple announced a goal of doubling its services revenue to $50 billion by 2020. The biggest contributor is the App Store, along with Apple Music, and the iCloud. The total number of paid subscriptions across Apple's services topped 240 million, up 58% year over year, and increasing 30 million in the past 90 days alone -- the largest quarterly growth in its history. Apple said the App Store, Apple Music, iCloud, and Apple Pay each had their best quarters ever.
Revenue from other Apple products contributed to the quarter as well. Sales of Mac computers generated revenue of $5.1 billion, a 5% decrease, but grew by 2% when accounting for the missing week. Revenue from iPad sales reached $5.86 billion, up 6% year over year, but the missing week would have seen sales increase by 8%. iPad revenue was also boosted by an average selling price that grew 5% over the prior year.
What the future holds
For the current quarter, Apple is forecasting sales in a range of $60 billion to $62 billion, lower than analysts' consensus estimates of $65.4 billion.
While the expected "super cycle" isn't materializing, Apple is succeeding in coaxing more revenue from its customers by selling them additional products, such as the Apple Watch or AirPods, or getting them to sign up for monthly subscriptions to Apple Music, or using services such as Apple Pay.
Considering what this quarter looked like, Apple is doing just fine.
Danny Vena owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.