Driven by strong growth in iPhone revenue during the holidays, Apple (AAPL +1.26%) posted another record first quarter. iPhone revenue climbed 13% year over year to $61.6 billion, helping total revenue rise 13% to $88.3 billion. An 18% and 36% year-over-year boost to services and other products, respectively, also helped. With this strong momentum, management provided a similarly optimistic outlook for its second fiscal quarter of 2018, guiding for revenue to rise about 15% year over year.
The quarter was undoubtedly solid, putting the spotlight on the company's ongoing ability to grow both revenue and profits. But there were some beneath-the-surface metrics Apple shared that have received less attention from the media. In its first-quarter earnings call, Apple shared important insights about wearables sales, paid subscriptions, and its installed base of active devices.
Image source: Apple.
70% growth in wearables revenue
Anyone looking for unit sales or even total revenue for Apple Watch or AirPods in the company's segment operating data isn't going to find it. Apple lumps sales from the two fast-growing product categories into its "other products" segment, which also includes sales from Beats products, iPod touch, and Apple-branded and third-party accessories.
Fortunately, however, Apple does provide some useful context on these product categories during its earnings calls.
In its first-quarter earnings call, Apple not only noted that it was the company's "best quarter ever" for Apple Watch, but it said when combining revenue from Beats products, AirPods, and Apple Watch, total wearables revenue was up 70% year over year during the quarter. "In fact, wearables were the second-largest contributors to revenue growth after iPhone, which is impressive for a business that started only three years ago," noted Apple CFO Luca Maestri.
Apple also noted that Apple Watch revenue and units sold during the quarter were up more than 50% year over year, with "strong double-digit growth in every geographic segment."
More than 240 million paid subscriptions
Paid subscriptions continued to be a key driver in Apple's fast-growing services segment. Paid subscriptions in the quarter reached 240 million, up 58% year over year. Notably, Apple added 30 million paid subscriptions in the last 90 days, representing Apple's most robust quarterly growth ever for the metric.
1.3 billion active devices
Apple's installed base of active devices climbed to a record 1.3 billion in January -- the month after its fiscal first quarter of 2018 ended. This figure is up 30% in just two years, Apple noted.
iPhone X, Apple Watch, and AirPods charging wirelessly. Image source: Apple.
"It speaks to the strength and reliability of our products and our ecosystem as well as the loyalty, satisfaction, and engagement of our customers," said Apple CEO Tim Cook. "It's also fueling tremendous growth in our services business, which I'll talk about a little later in the call."
Growth in Apple's paid subscriptions and its active installed base is fueling impressive growth in its services segment. While services revenue was up 18% year over year during the quarter, this comparison included an extra week in the year-ago quarter. Making for a more accurate year-over-year comparison, average revenue per week for services during Q1 was up 27% year over year -- an acceleration from the 24% growth rate the segment saw in its fourth quarter.
The iPhone's importance to Apple's business easily trumps these metrics. But all three of these takeaways from Apple's earnings call provide useful insights into catalysts that could help revenue growth for years to come.
