On Monday, Apple (NASDAQ:AAPL) reported strong March quarter results, with $58.01 billion in revenue and EPS of $2.33. This blew past analyst expectations of $56.03 billion and $2.16, respectively. As compared to last year, the company grew revenue and EPS 27% and 40%.
On a product basis, the best performer was the iPhone. Most notably, Apple sold 40% more units over last year's total. But investors also benefited from an average-selling-price increase of nearly 11% -- $659 versus $596 -- as customers enthusiastically snapped up the larger, more-expensive iterations of Apple's signature product.
And while the iPhone's performance best sums up Apple's quarter on a product basis, when it comes to geography one market was responsible for Apple's amazing quarter: Greater China. For a visual representation of China's contribution to total revenue and year-over-year growth, see the chart below:
Apple's second-largest market
For Apple, this marks a changing of the guard of sorts concerning geographical market share. After coming close in Apple's first fiscal quarter and last fiscal year's second quarter, China finally toppled Europe as Apple's second-largest region last quarter by contributing $16.8 billion to Apple's top line, while Europe contributed $12.2 billion. (The Americas region still has a comfortable lead, though, with quarterly revenue of $21.3 billion.)
As shown above, Apple's top line in China grew 71% year over year last quarter. Meanwhile, sales in Europe only grew 12% during that period -- less than half of Apple's overall growth rate.
As a matter of fact, on a regional basis, China is the key growth story for Apple. Outside of the small catch-all Asia-Pacific region, which includes all Asian countries excluding Greater China and Japan, China was the only segment that increased more than Apple's overall growth rate. On a raw-number basis, China was responsible for 57% of Apple's total revenue growth during this timeframe, showing the growing importance of the Middle Kingdom to Apple investors.
Strong product performance in China
Even better for investors, it appears the growth in China is rather widespread, with CEO Tim Cook noting that Mac unit sales were up 31% there even as global Mac unit growth was only 10%. Cook also noted the App Store grew 100% in China year over year. Perhaps the most surprising revelation was the fact that Apple sold more iPhones in China than in the United States last quarter as Apple benefited from the Chinese New Year gift season.
Apple appears to be doubling down in China by expanding its retail footprint. Cook further noted the company plans to have 40 stores there by the middle of next year compared to the 21 it currently has. In addition, the company is improving its online reach in China by expanding its two-day online shipping from 319 cities to 365 by the end of the current quarter. And let's not forget the iPhone -- the company achieved 70% iPhone growth in China.
Over the last two quarters Apple has produced 70%-plus revenue growth from China, and it appears the company thinks the strong growth will only continue. During Apple's earnings call, Cook said: "I've never seen as many people coming into the middle class as there are in China. And that's where the bulk of our sales are going. And so we're really proud of the results there and continue to invest in the country."