Apple (AAPL 1.27%) has a high bar to live up to this week. The company reports financial results for its fourth quarter of fiscal 2018 on Thursday, following seven consecutive quarters of accelerating year-over-year revenue growth rates. Adding even more pressure, Apple guided for strong double-digit revenue growth in Q4.
Of course, there's good reason to expect solid results from the tech giant. Not only has iPhone revenue been growing nicely, but Apple has been seeing high growth rates from its services and "other products" segments. The strong momentum at its back has indeed raised expectations, helping propel the tech giant's stock more than 30% higher over the last 12 months.
Going into Apple's fourth-quarter results this week, here's an overview of some of the key areas to watch.
Image source: Apple.
Revenue and earnings per share
Combining Apple's strong 17% year-over-year increase in revenue growth in Q3 and management's guidance for 14% to 18% revenue growth in Q4, investors should expect more strong revenue growth in that period. Lately, Apple's quarterly revenue has trended toward the high end of management's revenue guidance, so investors should look for about 16% or greater revenue growth.
With the iPhone accounting for approximately 56% of Apple's revenue, total revenue will be largely driven by the company's smartphone sales. To achieve 16% revenue growth, iPhone revenue will likely need to rise at a similarly strong rate or better.
Apple's earnings per share have seen outsize growth recently thanks to the company's aggressive share repurchase program. This trend should persist in Q4. Look for earnings per share to come in around $2.70 to $2.80, representing 30% to 35% year-over-year growth.
Services
Now Apple's second-largest business segment, services have become integral to the tech giant's growth story. Including revenue from the App Store, iTunes, and AppleCare, Apple's services business has been growing exceptionally fast. Services revenue soared 31% year over year in Apple's third quarter.
With Apple's App Store (one of the segment's biggest contributors) firing on all cylinders, there's no reason to expect this catalyst to slow down. Investors should look for more year-over-year growth around 30% in Q4.
Other products
Another key segment worth calling out is Apple's "other products" business. Sure, it's Apple's smallest segment, accounting for about 7% of revenue, but it's also the tech giant's fastest-growing segment. Sales of Apple Watch and AirPods, in particular, are driving sharp growth in the segment.
"Our third highlight of the quarter is the outstanding results in wearables," Apple CEO Tim Cook said in the company's third-quarter earnings call, "which comprises Apple Watch, AirPods, and Beats, and was up over 60% year over year with growth accelerating from the March quarter."
Look for year-over-year revenue growth from the segment in line with the 37% growth other products saw in Q3.
Revenue guidance
Finally, investors will want to tune into Apple's revenue guidance for its fiscal first quarter of 2019. Benefitting from the holiday season and Apple's annual iPhone refresh, this quarter is seasonally Apple's biggest. Given the strength of Apple's fiscal first quarter of 2018, investors should expect guidance for more double-digit revenue growth. In addition, investors should look for more year-over-year growth, albeit at a decelerated rate of around 5%. This would translate to guidance for first-quarter revenue of about $92.5 billion.
Apple reports its fourth-quarter financial results after market close on Thursday, Nov. 1.
