Enlarge / Apple CEO Tim Cook dinner.
Right now, Apple reported its Q3 2019 earnings to traders. Total income is up 1% over the identical quarter final yr, reaching $53.eight billion. Apple CEO Tim Cook dinner framed the report back to traders as “a blowout quarter” for wearables, citing robust demand for the Apple Watch and AirPods in addition to progress in companies as counterbalances to a slight dip in iPhone gross sales.
iPhone income declined year-over-year (YOY) from $26.5 billion to $26 billion, and iPhones now make up lower than half of Apple’s income. Cook dinner tried to easy over reactions to the drop, saying, “Whereas that is down 12% from final yr’s June quarter, it’s a important enchancment to the 17% year-over-year decline in Q2.” That previous-quarter decline sparked a plethora of sizzling takes from press and traders surmising the demise of Apple, even supposing the iPhone enterprise alone would nonetheless be a Fortune 50 firm by itself, even accounting for the decline.
Web gross sales for the iPad have been simply over $5 billion, and the Mac noticed $5.82 billion on robust gross sales of the lately revised MacBook Air and MacBook Professional. Wearables reached $5.52 billion, whereas companies hit $11.45 billion. Providers grew 13% YOY, remaining Apple’s largest optimistic enterprise story for one more quarter. Apple claimed 420 million paid subscribers throughout its varied companies, indicated that companies grew in all of the areas the corporate tracks, and reiterated that it’s on monitor to hit its aim to double companies income by 2020.
Whereas Apple Music and iCloud weren’t mentioned at size throughout the name with traders, Apple executives boasted of a 50% enhance in month-to-month customers of the Apple TV app YOY. Additionally they confirmed that Apple Pay now completes simply shy of 1 billion transactions per 30 days—twice as many as a yr in the past. In August, the corporate will introduce the Apple Card, which is more likely to increase Apple Pay utilization much more.
Apple roughly advised to traders that this was a robust quarter as a result of the numbers undermine pundits’ claims that Apple won’t be able to make up for slowing iPhone gross sales with wearables and companies. The issue, although, is that the medium-term well being of the wearables and companies companies is tied to the success of the iPhone.
To undercut that argument, Cook dinner mentioned the lively set up base for Apple gadgets is increased than it has ever been this quarter. When requested how the corporate explains that amidst slowing gross sales of the flagship product, Cook dinner alluded each to buyer loyalty (that’s, comparatively few customers switching to competing platforms) and customers within the aftermarket—shoppers who purchased iPhones second-hand from somebody aside from Apple. Cook dinner mentioned the corporate seeks to encourage the aftermarket, as a result of it helps Apple carry its companies to clients it may not attain with its dear first-run merchandise.
Apple inventory was up four% in after-hours buying and selling following the decision. Whereas this quarter noticed a continuation of the narrative from the prior quarter—iPhone dips versus companies and wearables progress—count on way more attention-grabbing information subsequent quarter. It is going to be the primary to incorporate income from the brand new iPhone fashions set to be unveiled later this yr, in addition to the launch of two new companies: Apple TV+ and Apple Arcade.
