Apple Reports Q3 Earnings of $45.4 Billion, Record-Smashing Services Growth

Apple Reports Q3 Earnings of $45.4 Billion, Record-Smashing Services Growth
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Apple on Tuesday announced its financial results for the fiscal third-quarter of 2017, which concluded on July 1. Notably, the company exceeded Wall Street’s expectations by posting earnings of $45.4 billion, largely driven by strong iPhone, iPad, and Mac sales — 61% of which were international — as well as record-smashing performance in its Services business.

Overall revenue is up $3 billion in comparison to the $42.4 billion revenue generated during the same quarter one year ago.

“With revenue up 7 percent year-over-year, we’re happy to report our third consecutive quarter of accelerating growth and an all-time quarterly record for Services revenue,” said Tim Cook, Apple’s Chief Executive Officer, who added that “We hosted an incredibly successful Worldwide Developers Conference in June, and we’re very excited about the advances in iOS, macOS, watchOS and tvOS coming this fall.”

Apple Q3 Highlights

  • Apple reported selling 41 million iPhones, about 200,000 more than Wall Street expected, and about 600,000 more than the 40.4 million iPhones sold during the same quarter last year.
  • iPad sales were also the company’s strongest in the last 4 years, reaching 11.4 million units and largely driven by the three new iPads launched earlier this year, including two new iPad Pro models at the beginning of June.
  • In comparison to the same quarter last year, iPad sales were up by 1.4 million units, and were up even more substantially compared to the 8.9 million iPads sold during the quarter ending March 31, 2017.
  • Bolstered by the launch of new iMac, MacBook, and MacBook Pro models at its Worldwide Developers Conference in early June, Apple’s 4.3 million Mac sales were also up (though not substantially) in comparison to the 4.2 million Macs sold during the same quarter last year.

“We reported unit and revenue growth in all our product categories in the June quarter, driving 17 percent growth in earnings per share,” said Luca Maestri, Apple’s Chief Financial Officer, who added that “We also returned $11.7 billion to investors during the quarter, bringing cumulative capital returns under our program to almost $223 billion.”

Apple’s Growing Services Business

Apple’s Services business, meanwhile, which includes entities like iTunes, iCloud, Apple Music, AppleCare, the App Stores, and Apple Pay, has officially become more valuable than Facebook — with a market cap, in itself, that’s equivalent to a Fortune 100 company. In the fiscal third-quarter, Apple reported $7.27 billion in Services revenue, which is not only up from the record-breaking $7.04 billion generated during the quarter ending March 31, but substantially so from the $5.98 billion generated during the same quarter last year.

Apple’s earnings are sure to excite investors on Wall Street whose estimates were a bit more conservative, but it’s almost universally believed that Cupertino’s best quarter is yet to come. The company is providing guidance for the fiscal fourth-quarter of 2017 to the tune of revenue between $49 and $52 billion, which would be driven largely by the trifecta of new iPhone models expected to launch this September.

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