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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  • Speedfriend - Friday, November 2, 2018 - link

    I go to a lot of investor conference and there are now more Surface Pros than any other laptop and also than iPad Pro. Still see a lot of normal iPad and iPad minis
  • Icehawk - Sunday, November 4, 2018 - link

    The Surface is terrible, we have had at least 4 different models at work and they are universally loathed by both IT and the end users.

    Love my iPad but considering it’s useage (reading, watching videos, and light gaming) I don’t need a new one for a few generations I’ve owned a 1, 3, and a Pro. Definitely a different use case and market vs Surface/laptops.

    No subsidized phone means I am keeping my iPhones longer too, no more yearly upgrade - but I never really needed that anyway.
  • Yojimbo - Friday, November 2, 2018 - link

    Gross Margin should be a percentage. Your "Margins" field should be labeled "Gross Margin". What you have under "Gross Margin" is presumably revenue minus cost of goods, which would give gross margin if you divided the difference by revenue (although when I do the arithmetic I get 38.3% not 38.5%).
  • Ryan Smith - Friday, November 2, 2018 - link

    It's actually quite literally on Apple's consolidated statements as "Gross Margin"
  • Sahrin - Friday, November 2, 2018 - link

    Apple's smartphone business is a puss filled bag ready to burst.

    If Satya doesn't have a skunkworks Surface Phone project ready to release by christmas 2019, he should be fired. Android is in chaos, and Apple can't figure out what to do with their market leadership. Time for Windows.
  • AdditionalPylons - Friday, November 2, 2018 - link

    While I would be welcoming MS' potential return to the smartphone business, I think Apple could kill that competition again by simply releasing new lower cost phones a few months later. An updated equivalent of iPhone SE would be fantastic!
    Very many people are too invested in the Apple iOS/iCloud/iMessage/Facetime ecosystem to find migrating to other platforms worth the trouble. I realise that part of the reason for high prices of 2018 iPhones are the across-the-board integration of FaceID and high-end CPUs, but I still feel they are greedily testing the borders in terms of pricing.
    I've been an Apple user since 1994 and still think macOS and iOS are the best operating systems, but Apple's pricing (and lack of hardware upgradability on the computer side) has made me move more and more to Windows. For phone I seriously considered Android but realised the severity of Android fragmentation and limitations in Camera API preventing apps to use secondary cameras (in addition to Google's data harvesting).
    I ended up buying a used iPhone 6S on the cheap to replace my 5 year old iPhone 5S.
  • star-affinity - Tuesday, November 6, 2018 - link

    I agree with you pretty well. The Mac Pro (Mid 2010) I have is still a great computer for my needs, and very up-gradable (I have SSDs, a GTX 1070 graphics card, 32 GB RAM and a USB-C PCI-E card). I hope the coming new Mac Pro that's supposed to be ”modular” will have similar abilities.
  • TEAMSWITCHER - Friday, November 2, 2018 - link

    You put your faith in a company that has failed at EVERYTHING they ever tried to do in mobile... The phrase "glutton for punishment" best describes you.
  • Peskarik - Friday, November 2, 2018 - link

    These days for many humanoids their phones have replaced their lives. They slip, shit, stuff their faces with some crap "food" and the rest of the time "live" in their mobile phones. Look anywhere, as soon as people stop - they pull out their mobile phones and stick their faces in them like zombies. Recent story is a good example: chinese woman went on holidays and spent 5 days just eating, sleeping and the rest of the time holding her phone, till she got inflammation in her hand and could not bend her fingers anymore.
    Phone is life now for many, therefore it is imperative to get a good life, an expensive life, 1700 bucks is therefore acceptable, 2000 would also be acceptable and humanoids would still queue for days in front of Apple shops to get the next installment of life.
  • FunBunny2 - Friday, November 2, 2018 - link

    "These days for many humanoids their phones have replaced their lives. They slip, shit, stuff their faces with some crap "food" and the rest of the time "live" in their mobile phones. "

    researchers, they of the Fake News, have been concerned about the bad effect of distracting technology, i.e. substituting playing with pixels rather than thinking about the problem to be solved, since the first GUI-ified PC decades ago. at some point, 99.44% of humans will be brainless meat bags, eager to follow whatever dictator is best able to manipulate the vegetation between their ears.

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