iPhone X factor fuels Apple earnings surge - Mobile World Live

iPhone X factor fuels Apple earnings surge

01 AUG 2018

Apple dished on the impacts of the US trade battle with China and plans to give its Apple Pay platform another boost, as it posted fiscal Q3 earnings featuring the strongest revenue growth rate in 11 quarters.

Total revenue of $53.3 billion was up 17 per cent year-on-year from $45.4 billion, which CEO Tim Cook said in an earnings call made it the vendor’s strongest fiscal Q3 (the three months to end-June) on record. Net income totalled $11.5 billion, up from $8.7 billion in the comparable 2017 quarter.

Apple’s iPhone continued to be a top earner, as revenue grew 20 per cent to $29.9 billion despite relatively flat unit shipments of 41.3 million. Cook noted iPhone X was once again the most popular model, helping drive ASPs up nearly 20 per cent year-on-year to $724.

Revenue from iPad and Mac each fell 5 per cent to $4.7 billion and $5.3 billion respectively. However, the vendor’s Other Products business, which includes Apple Watch, HomePod, AirPods and Apple TV, generated a 37 per cent increase in revenue to $3.7 billion. Over the last four quarters, Cook said wearables revenue totalled more than $10 billion.

Apple’s Services business also posted strong gains, with revenue growing 31 per cent to $9.5 billion.

The segment, which includes Apple Pay, is poised to grow even further: Cook announced plans to rollout support for the mobile payments platform at CVS pharmacies and 7-Eleven convenience stores across the US in the second half of the year. He added Apple Pay will also be expanding into Germany in late 2018.

Apple Pay is already live in 24 markets and includes more than 49,000 bank partners. In fiscal Q3, Cook said Apple Pay transactions tripled year-on-year to more than 1 billion, surpassing both the number of transactions handled by payments app Square and mobile transactions conducted via PayPal.

Tariffs
Cook said Apple’s products, including the iPhone, have not yet been impacted by escalating tariffs in a trade battle between the US and China. However, he noted the company is evaluating whether it will be affected by $200 billion in additional tariffs proposed by the US and plans to share its views with the President’s administration once a conclusion has been drawn.

Generally speaking, Cook said Apple believes tariffs “show up as a tax on the consumer, wind up resulting in lower economic growth and sometimes can bring about significant risk of unintended consequences.”

Despite the tension between the US and China, Cook said the company remains optimistic the countries can sort out their differences.

“There’s an inescapable mutuality between the US and China that sort of serves as a magnet to bring both countries together. Each country can only prosper if the other does…We are hoping that calm heads prevail.”

Content ambitions
The CEO also teased the launch of a new video-related product, acknowledging two television executives the company hired in 2017 are hard at work on an unspecified project.

Cook declined to discuss the details of the effort, but said it stems from Apple’s view that the cord cutting shift from cable TV to OTT video is going to accelerate in the coming years. He added Apple TV is gaining steam and noted growth of some third-party video apps in its App Store is approaching “100 per cent year-over-year”.

“All the forcing functions here from the outside all point to dramatic changes speeding up in the content industry. So we’re really happy to be working on something but just not ready to talk about it in-depth today.”

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Diana Goovaerts

Diana joins Mobile World Live as its new US Editor, reporting on infrastructure and spectrum rollouts, regulatory issues, and other carrier news from the US market. Diana comes to GSMA from her former role as Editor of Wireless Week and...

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