After three quarters in a row of double-digit revenue growth and a 30% year-over-year increase in earnings per share in Apple's (AAPL -0.81%) most recent quarter, the bar was set high going into the company's third-quarter fiscal 2018 earnings release. But Apple still managed to deliver some impressive numbers, including another quarter of accelerating revenue growth and a 40% increase in earnings per share.
Here's a look at the top- and bottom-line results, as well as other key takeaways from the quarter, including accelerated year-over-year growth rates in iPhone revenue, big numbers from services and other products, and more.
Image source: Apple.
Apple third-quarter earnings: The raw numbers
|
Metric |
Q3 2018 |
Q3 2017 |
Change |
|---|---|---|---|
|
Revenue |
$53.3 billion |
$45.4 billion |
17% |
|
Earnings per share |
$2.34 |
$1.67 |
40% |
|
Gross profit margin |
38.3% |
38.5% |
N/A |
Data source: Apple's fiscal 2018 third-quarter consolidated financial statements.
Apple's third-quarter revenue was $53.3 billion, up 17% year over year and at the high end of management's guidance range for third-quarter revenue of between $51.5 billion and $53.5 billion. Net income increased 32% year over year, but EPS saw outsize growth of 40%, thanks to Apple's aggressive share-repurchase program.
Speaking of Apple's share repurchases, management said it bought back $20 billion worth of its own shares, bringing Apple's total repurchases in the last two quarters alone to a stunning $43.5 billion.
Segment results
|
Product segment |
Q3 2018 Revenue |
Q3 2017 Revenue |
Change |
|---|---|---|---|
|
iPhone |
$29.9 billion |
$24.8 billion |
20% |
|
iPad |
$4.7 billion |
$5.0 billion |
(5%) |
|
Mac |
$5.3 billion |
$5.6 billion |
(5%) |
|
Services |
$9.5 billion |
$7.3 billion |
31% |
|
Other Products |
$3.7 billion |
$2.7 billion |
37% |
Data source: Apple's fiscal 2018 third-quarter segment data summary.
Apple's iPhone segment continued to benefit from a successful iPhone 8- and iPhone X-fueled product cycle, with iPhone revenue surging 20% year over year, up from 14% growth in Q2. A higher average selling price for Apple's iPhones was the primary driver for this higher segment revenue, as iPhone unit sales only increased 1% year over year during the quarter.
Apple's services and other products revenue sustained their impressive momentum. Apple's second largest segment, services, saw revenue rise 31% year over year to $9.5 billion, while other products revenue soared 37% to $3.7 billion.
Data source: Apple's fiscal 2018 third-quarter segment data summary. Chart by author.
Two segments, however, saw revenue decline on a year-over-year basis. iPad and Mac both saw revenue decline 5% year over year.
Apple notably saw strong growth in each of its major geographic segments, with the lowest year-over-year growth rate coming in at 7% for Japan and the fastest growth at 20% in the Americas.
Overall, the record third quarter was driven primarily by "strong sales of iPhone, Services, and Wearables," said Apple CEO Tim Cook about the quarter in the company's third-quarter earnings press release.
Looking ahead
Management is clearly optimistic about its fiscal fourth quarter -- a quarter that typically benefits from a few weeks of sales of new iPhones after they're launched in the fall. Management guided for fiscal fourth-quarter revenue between $60 billion and $62 billion, up from revenue of $52.6 billion in the fourth quarter of fiscal 2017. The midpoint of this guidance range represents 16% year-over-year revenue growth.
Looking ahead, Cook said Apple is "very excited about the products and services in our pipeline."
