This afternoon, Apple announced their earnings for the third quarter of their 2017 fiscal year. Revenue grew 7% year-over-year to $45.408 billion USD for the three months ending July 1, 2017, with a gross margin of 38.5%. Operating income was $10.77 billion for the quarter, up 6.6% from a year ago. Net income was $11.31 billion, up 11.8% as well. This resulted in earnings per share of $1.67, up from $1.42 a year ago.

Apple Q3 2017 Financial Results (GAAP)
  Q3'2017 Q2'2017 Q3'2016
Revenue (in Billions USD) $45.408 $52.896 $42.358
Gross Margin (in Billions USD) $17.488 $20.591 $16.106
Operating Income (in Billions USD) $10.768 $14.097 $10.105
Net Income (in Billions USD) $8.717 $11.029 $7.796
Margins 38.5% 38.9% 38.0%
Earnings per Share (in USD) $1.67 $2.10 $1.42

Apple has been the iPhone company for pretty much a decade now, and at time, Apple has been somewhat dependant on the iPhone for most of its earnings. That’s the case again this quarter, but Apple as a company is much more diversified now than even a year or two ago when iPhone revenues could account for over 70% of their earnings. This quarter, iPhone brought in $24.85 billion in revenue, which works out to 54.7% of Apple’s revenue. iPhone revenue was up 3% year-over-year, with unit sales of 41.026 million phones, up 2% from a year ago.

Services has quickly jumped from being an afterthought at the company, to now being their number two source of revenue, surpassing both the Mac and the iPad. Services revenue jumped 22%, to $7.27 billion. The iPhone ecosystem is a strong draw for many Apple customers, clearly.

Mac sales were only up 1% year-over-year, which is a bit surprising since they hadn’t yet launched their new laptops a year ago, but revenue was up 7% to $5.59 billion, so revenue-per-device is up nicely. Apple sold 4.29 million Macs in the last three months.

iPad has been the one sore spot for Apple for several years now, with slowing sales, but earlier this year, Apple announced a new, lower cost, entry level iPad. This strategy has paid off, at least for the interim, with iPad sales up 15% in terms of units sold. Apple sold 11.42 million iPads last quarter, compared to just 9.95 million a year ago. Revenue was only up 1% though, thanks to the lower cost of these entry level devices.

Apple Q3 2017 Device Sales (thousands)
  Q3'2017 Q2'2017 Q3'2016 Seq Change Year/Year Change
iPhone 41,026 50,763 40,399 -19% +2%
iPad 11.424 8,922 9,950 +28% +15%
Mac 4,292 4,199 4,252 +2% +1%

Other Products, which includes Beats, Apple TV, Apple Watch, and accessories, also had a very strong quarter, with revenue up 23% year-over-year to $2.73 billion. Apple doesn’t break down individual sales inside of Other Products though, but Apple did say Apple Watch sales were up 50% in the quarter. Up from what, we’re not sure, but obviously a big jump regardless.

For the fourth quarter of fiscal year 2017, Apple is expecting revenue between $49 and $52 billion, with a gross margin between 37.5 and 38 percent.

Source: Apple Investor Relations

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  • Ratman6161 - Wednesday, August 2, 2017 - link

    I agree that there is no one size fits all. One issue is that Apple essentially does not make low end/entry level devices and if you want mid-range, the offering is really just last years flagship. They don't really build anything that is intended from the start to be mid range. On the Android side, you can get anything from bottom of the barrel crap to top of the line with a flagship Android device often costing just as much as an iPhone.
    But I do see a lot of people picking up something from the low end of the Android spectrum and then deciding that Android sucks because its not as good as an iPhone. They haven't really done an apples to apples comparison :).
    I also personally know many iPhone users who talk about how it "just works" and how Android sucks when in fact, they have never owned or even tried any smart phone that isn't an iPhone. They really have no basis for comparison.
    So yes, as always, get the best tool for the job...which will not be the same for everyone. Its just that too many make decisions based on marketing.
  • BurntMyBacon - Friday, August 4, 2017 - link

    My sister's are nice counterexamples to the whole "It just works" mantra that Apple has going. They won't move to another phone because they've never tried a non-apple smartphone and they have purchased apps for iOS. So they just blindly purchase the next Apple phone hoping that all their woes will finally be solved, convincing themselves that that is the case for the first few months, and lamenting the rest of time until their contract is up so they can do it all over again. While I have seen a number of other's that don't see the kind of issues that my sisters do, I can say the same for Android and even Windows Phone as well. It is this "try the same thing again and again and expect a different result" mentality that I rarely see outside a rather passionate subset of the Apple user base (though I'm sure they exist in every fandom).

    To be fair, Apple devices are (with a few exceptions) well made products that prove to be a best fit for a number of use cases. There are a number of issues that keep me firmly out of the Apple ecosystem, but performance/build quality isn't one of them. Also, it is sometimes easier for people to just go with what the store rep or a friend or acquaintance tells them and save themselves the time and effort of researching things themself (this applies to both iOS and Android). Once they are started in an ecosystem (whether well researched or based on recommendation), the natural tendency is to stick with what is familiar unless things get uncomfortable enough to prompt reconsideration. After all, they've already committed significant time learning the device and possibly resources adding on functionality (apps) that they desire.

    On a different note: why should I care what device someone I don't even know is using? It doesn't effect my ability to do what I need to do with my device. Beyond family members and some friends that are (unfortunately) constantly asking me to fix problems with their device, I have no need to interact with a device that I don't care for. My only real concern is for competition to keep prices from getting any more unreasonable that they already are. Android as a platform is in fine shape, so much so that losing a few points of market share would probably be in consumer's best interest. Within the Android ecosystem, Samsung's recent missteps have allowed other vendors to gain a little ground and even things out a bit. Apple is, unfortunately, losing ground in sales statistics, but seems to be in decent shape according to active usage statistics. Still, the 12% sales figure is a little shallow for the only other major player in the market and doesn't bode particularly well for competition. It would be nice to have a third major platform player, but seeing as Microsoft doesn't seem interested and everyone else is less than a tenth of a percent market share, I'm not holding out hope.

    Still, it would be good for the market if the rumored Surface Phone makes an appearance and manages to garners Microsoft a small, but sustainable market share. Another manufacturer coming out of nowhere to grab significant market share seems even less likely. Samsung could ditch android and create a third platform from their market share, but it seems unlikely that they could hold onto that market share without android.
  • LMTLion - Wednesday, August 2, 2017 - link

    I don't buy into fanboy mentality and just use what works best for me. I use iPhone for the smartphone for security purposes for what I use my phone and the fact that iOS is highly stable, consistent, and fluid (stuttering on android phones used to drive me insane!). I use android for my tablets as andoid just gives a better tablet environment (customization, widgets) compared to the big iphone feel of iOS. And finally I use windows 10 for the laptop and desktop (great OS, love it.). I wish one of the platforms worked for me across the entire spectrum of devices but I don't know if that day will ever come.
  • Manch - Wednesday, August 2, 2017 - link

    iPhones are not secure. Stable, yes, secure? noooo. I too wished for the one OS to rule them all. MS gave up on mobile and never bothered to push it even though they spent a $H!T ton of money to take apart Nokia. Last good phone from them was the 1020. Mine bricked testing W10 mobile beta. Got a 950XL as a replacement. Fragile POS cracked bc it flexed so much removing the battery cover. Always unstable. When it worked it was brilliant. The 1020 and previous were damn near impossible to break. Loved those phones. If MS comes out with a Surface phone.....NOPE!!! I'll stick to Android. I wont buy into their mobile anymore. Tablets, Laptops, DT? Yes. No more MS mobile anything.
  • osxandwindows - Wednesday, August 2, 2017 - link

    The most secure, as compared to android, yes.
  • trparky - Wednesday, August 2, 2017 - link

    I use an iPhone mainly because I like how I get guaranteed software updates regardless of what carrier I have or where in the world I am. I get iOS updates the same day that everyone across the world gets it. It's the same way that my Windows machine gets updates, guaranteed software updates. Apple and Microsoft can do it just fine yet Android and their circus of OEM partners can't.
  • BurntMyBacon - Friday, August 4, 2017 - link

    The windows machines you mention have a circus of OEM partners as well. Yet that never stopped them from being able to keep their desktop, laptop, tablet, etc. devices updated. The issues for android stem from carrier intervention. Google et al. should never have given carriers boot and OS level access. Carrier code should have been restricted to user space. Then security updates wouldn't require carrier code reintegration and sign-off. Taking it one step further, if Google didn't allow vendors that same access and they had to make their modifications work in user space, then they could provide updates the similar to how Apple and Microsoft do. Of course, they would then need to take on the burden of qualifying their updates against a plethora of different hardware that they currently do not do. It is currently the vendor's responsibility to qualify their hardware.
  • tipoo - Wednesday, August 2, 2017 - link

    Technically there are more reported iOS vulnerabilities. The problem with Android is almost no one is running the latest build.
  • logamaniac - Wednesday, August 2, 2017 - link

    Got to love a random image file that doesn't differentiate any version of the operating system its referencing.

    Must be legit.
  • Ro_Ja - Wednesday, August 2, 2017 - link

    What he said about the latest build is true though. The update of Android is in the hands of the manufacturer which cripples the updates of the entry level and sometimes mid range phones, the problem is some phones still use SoCs that was released way back 2014-2015.

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