Apple Announces Q4 FY 2018 Earnings: Revenue Up, Sales Not
by Brett Howse on November 1, 2018 9:00 PM EST- Posted in
- Smartphones
- Apple
- Financial Results
This afternoon Apple announced their earnings for the fourth quarter of their 2018 fiscal year, and in what can only be described as a very Apple-esque quarter, revenue was up 20% year-over-year to $62.9 billion. Gross margin came in at 38.2%, up 0.3% from a year ago. Operating income was up 22.9% to $16.1 billion, and partially due to the new tax cuts, net income was up 31.8% to $14.1 billion. Earnings per share were up 40.6% to $2.91.
| Apple Q4 2018 Financial Results (GAAP) | |||||
| Q4'2018 | Q3'2018 | Q4'2017 | |||
| Revenue (in Billions USD) | $62.900 | $53.265 | $52.579 | ||
| Gross Margin (in Billions USD) | $24.084 | $20.421 | $19.931 | ||
| Operating Income (in Billions USD) | $16.118 | $12.612 | $13.917 | ||
| Net Income (in Billions USD) | $14.125 | $11.519 | $10.714 | ||
| Margins | 38.5% | 38.3% | 37.9% | ||
| Earnings per Share (in USD) | $2.91 | $2.34 | $2.07 | ||
As usual, iPhone leads the way at Apple, but as has become the norm the Q4 results will only have a glimpse at the new launch sales, since this quarter ended on September 29. iPhone revenue was up a staggering 29% year-over-year to $46.9 billion, but overall unit sales were up only 0.4% from Q4 2017, with 46.9 million devices sold this quarter. But with iPhone pricing moving in an upward trajectory, Apple now has an amazing $793.04 average selling price on iPhone.
The other half of iPhone is Apple’s services, which are up 17% year-over-year to just under $10 billion for the quarter. Services include digital content, Apple Pay, and of course iTunes sales.
We just saw a Mac event this week, showing off the new MacBook Air and Mac Mini, but with this quarter ending in September we won’t be able to see that impact Mac sales until Q1 2019. For this quarter, Mac sales fell 2% to 5.3 million units, with revenue up 3% reflecting the higher price of the new models.
iPad sales also fell. Apple sold 9.7 million iPads this quarter, which was down 6% from last year. Revenue fell even further though, coming in at $4.1 billion for the quarter, which is a 15% drop from Q4 2017. Apple’s price-reduced iPad has likely eaten into sales of the more profitable Pro models, but like the Mac updates, the latest iPad Pros were just announced and won’t be reflected in this quarter’s earnings.
| Apple Q4 2018 Device Sales (thousands) | |||||
| Q4'2018 | Q3'2018 | Q4'2017 | Seq Change | Year/Year Change | |
| iPhone | 46,889 | 41,300 | 46,677 | +14% | +0.4% |
| iPad | 9,699 | 11,553 | 10,326 | -16% | -6% |
| Mac | 5,299 | 3,720 | 5,386 | +42% | -2% |
Finally, Apple’s “Other” category, which has become their catch-all, had $4.2 billion in revenue, which was up 31% from a year ago. Other now includes HomePod, in addition to Apple TV, Apple Watch, Beats, and accessories.
Apple is expecting revenues for Q1 2019 to be between $89 and $93 billion, with margins between 38% and 38.5%.
Moving forward, Apple has also decided to stop reporting unit sales. This is unfortunate, because Apple has been more open on their earnings than several of their competitors, even though they’ve never broken-down sales per-model in a category. There’s likely a good reason for this of course. With device sales declining, they will be taking heat, despite the company continuing to increase revenue.
Source: Apple Investor Relations
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Peskarik - Friday, November 2, 2018 - link
But you should sober up before you write thingsFunBunny2 - Friday, November 2, 2018 - link
"But unless you tech freak like myself and most people are you don't need the highest tech - you don't need expensive discrete GPU or machine with more than 2 cores. "well, in the early days of PCs, the saying went, "here are the three main apps for a PC; word processing, spreadsheets, and word processing".
today, that list looks like; email, Facebook, email. you can get away with one of those 20 year machines for that.
the only hope for the industry is that games become the main app for 99.44% of users. not very likely.
Icehawk - Sunday, November 4, 2018 - link
Eh, you really want to be post C2D but beyond that, yeah not a lot of difference in day-to-day feel. A SSD is really the only mahor performance increase, the delta between a 2nd gen i7 and a 7th is laughable.StormyParis - Friday, November 2, 2018 - link
The good news is that you only have to pay those prices if you want the Apple brand. I just checked, a $150 Xiaomi Redmi Note 5 sits squarely between the iPhones 6 and 6S in terms of performance, has a better camera, is cute and reliable... overall, delightful.Apple and Samsung and flagships in general have been getting crazy about prices. It doesn't mean we have to follow them, especially since the low and midrane have gone from bad to usable to OK to good to, now, delightful.
Phones are handbags now. The price you pay for one doesn't have much to do with the use you get of it - exceptions apply of course.
johnnycanadian - Friday, November 2, 2018 - link
Way ahead of you. However the Pixel 3 XL 128 with the extended warranty is around $1450 CDN all in. No thanks. Might I recommend seeking out an Essential PH-1? It's an 835, not the latest and greatest but pretty good. It has a decent camera, the 360 camera attachment is surprisingly good and I picked mine up on Amazon for $250 USD (128GB). No such deals on Amazon any longer but there's a litany of them on eBay for the equivalent. Superb phone, fast OS updates and no awful skinning. It ain't perfect but I've yet to see a better phone at twice the price, and it works perfectly on Rogers up here.If you can get past supporting Andy Rubin, given the accusations made against him, it's a worthwhile purchase.
Partners in Grime - Saturday, November 3, 2018 - link
Recently bought a Space Grey iPhone XS Max 512GB with folio case and AppleCare+. With tax it came to $2,718.24 Canadian. So, I was a bit shocked that Apple's ASP wasn't higher. :Dname99 - Friday, November 2, 2018 - link
“I think the problem is...”Perhaps you might explain WHAT the problem is before giving us your diagnosis, hmm.
Producing tons of money - check.
Producing best of breed hardware - check.
Producing more innovation than the rest of the industry - check.
I agree that Apple is not doing well in the all-important “do internet know-it-all’s love us” category, but you can’t have everything...
mode_13h - Friday, November 2, 2018 - link
The growth in ASP is not sustainable. The plateau in volume will bite them as the economy cools and even the most die-hard iPhone users start to question the extent of their allegiance to The Fruit.Frenetic Pony - Friday, November 2, 2018 - link
Hell no, I want a straight laptop replacement. I'm done with MS, they'll never upgrade the Surface Pro in any meaningful way. If the new Ipad Pro had a touchpad so I could see what I'm doing I'd have ordered it already.BurntMyBacon - Friday, November 2, 2018 - link
Define meaningful. The upgrade to 4C/8T processors in the same power envelope seems pretty meaningful to me. The improvement in battery life is also appreciated. They've also improved the pen with tilt support if that is important to you.It seems to me that the the Surface Pros are doing a fine job for many business use cases and I know more that a few people that are quite satisfied using the Surface Pro as their personal machine. The mantra "If it ain't broke, don't fix it." comes to mind so it would be helpful if you described how it is broke for your use case. That said, it may be that the changes that are meaningful to you aren't in Microsoft's vision for the Surface Pro. The straight laptop replacement use case may be better served by the Surface Book (assuming you are looking for a 2-in-1). It is rare that I find someone who thinks an iPad of any type is better for the traditional laptop usage model, so you use case and feature needs interest me. It's possible that some of my clients may have similar enough needs to make this a worthwhile discussion as many of them like Apple product, but can't justify them for their use case.