After a massive $23.5 billion in share repurchases last quarter, Apple (NASDAQ:AAPL) followed up with an additional $20 billion in stock buybacks in the fiscal third quarter. We're talking about $43.5 billion in repurchases over the course of six months, which is more than the market value of most companies in the S&P 500. And there's plenty more where that came from.

Here's everything investors need to know about Apple's earnings release last night.

Chart showing share repurchases over time

Data source: Apple. Chart by author. Calendar quarters shown. ASR = accelerated share repurchase programs.

iPhone X still in the driver's seat

Total revenue jumped 17% to $53.3 billion, and net income rose 32% to $11.5 billion. Apple's aggressive repurchase activity is highly accretive to earnings per share, which increased 40% to $2.34 as the company continued to retire shares at a rapid pace. Gross margin was flat sequentially at 38.3%, with cost improvements and foreign exchange benefits offsetting the seasonal loss of leverage.

iPhone X front and back view

Image source: Apple.

iPhone X continues to be one of Apple's most potent growth drivers -- more specifically, iPhone X's price tag, which starts at $999. iPhone units increased a mere 0.7% to 41.3 million units, but iPhone revenue jumped 20% thanks to average selling prices (ASPs) soaring to $724. iPhone ASPs spiked in the fourth quarter with the iPhone X launch, and have remain elevated ever since.

Chart showing iPhone ASPs

Data source: SEC filings. Chart by author. Calendar quarters shown.

Put another way, growth in the iPhone business represented a full 64% of all growth in the quarter.

Services revenue hits a new record

CEO Tim Cook reiterated that Apple remains on schedule to hit its target of doubling services revenue by 2020, relative to fiscal 2016 levels. Services revenue grew 31% to a record $9.5 billion. However, that total includes a one-time benefit of $236 million from various lawsuits.

The company had a rather litigious quarter, winning $539 million from Samsung in the yearslong patent infringement case that continues to be prolonged through numerous appeals, while losing $503 million to VirnetX in a separate yearslong patent infringement case related to iMessage. Apple lost a smaller $25 million case related to its Beats subsidiary as well. It's unclear what other lawsuits are being included in that aggregated figure.

Apple Music revenue grew over 50% year over year, Cook said on the conference call, while other cloud services also saw revenue grow at comparable rates. Apple Pay adoption continues to rise, and Apple now has 300 million paid subscriptions across all of its platforms. Apple has consistently added roughly 30 million paid subscriptions per quarter for the last three quarters.

On a trailing-12-month (TTM) basis, services is now a $35.7 billion business, well on its way to hit $50 billion by 2020.

Wearables hits a new milestone

While Apple still prefers to describe its wearables business in vague terms, saying revenue was up 60% and accelerating, Cook did say that wearables revenue has now exceeded $10 billion in TTM revenue. Last quarter's ambiguous description was that wearables was now a Fortune 300 company, meaning it had reached $9.3 billion in TTM sales, so Apple was already on the cusp of hitting $10 billion.

Apple Watch enjoyed record performance for the June quarter, growing by a mid-40s percentage.

The first rule of Apple's video-streaming service: You don't talk about Apple's video-streaming service

Much digital ink has been spilled regarding Apple's continued push into original video content, and it's abundantly clear by now that Apple is indeed building a video-streaming service. The Mac maker is simply spending too much money buying up all sorts of content across various genres to not be doing so, and it can't economically justify bundling all of that content into Apple Music, as was the original strategy.

In case there was any lingering doubt, last night's conference call provided the clearest signs yet that Apple is putting together such a service. In response to an analyst question regarding original content, Cook discussed cord-cutting at length (emphasis added):

As you know, we hired two highly respected television executives last year and they have been here now for several months and have been working on a project that we're not really ready to share all the details of it yet, but I couldn't be more excited about what's going on there and we've got great talent in the area that we've sourced from different places and feel really good about what we will eventually offer.

In terms of the sort of the key catalysts and the changes, the cord-cutting in our view is only going to accelerate and probably accelerate at a much faster rate than is widely thought. We're seeing the things that we have on the periphery of this like Apple TV, units and revenue grew by very strong double digits, very, very strong double digits in Q3.

Cook also noted that within those 300 million paid subscriptions, Apple can observe a noticeable increase in third-party video subscriptions, suggesting that it wants in on the action. Apple isn't ready to talk about its video-streaming service, but that day is rapidly approaching.

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