Despite rampant reports that the iPhone X was not selling as well as Apple had hoped, the firm delivered another blockbuster quarter.
“We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, services and wearables,” Apple CEO Tim Cook said in a prepared statement. “Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20 percent growth in Greater China and Japan.”
Every sentence in that quote is aimed at Apple’s naysayers, which have spent the past few weeks raising questions about the success of the iPhone X, Apple’s viability in China, and whether the firm has finally peaked.
We’ll get to that in a moment. For now, here are the numbers.
Apple earned net income of $13.8 billion on revenues of $61.1 billion; that latter figure is up 16 percent year-over-year.
Apple sold 52.2 million iPhones in the quarter ending March 31, a 3 percent jump over the 50.8 million sold in the same quarter a year ago. Sales of iPads were up 2 percent, to 9.1 million units. Sales of Macs were down 3 percent, to 4.1 million units. And Apple’s services business surged 31 percent to $9.2 billion.
That Apple sold many millions of iPhones is not surprising, and the firm consistently beats earnings estimates. But what we’re looking for in these results is some indication that iPhone sales are sagging. And, in particular, whether the iPhone X is a flop … within context.
Heading into this week, several of Apple’s component suppliers—Corning, Samsung, SK Hynix, Taiwan Semiconductor Manufacturing, and Teradyne—all hinted that Apple had cut back on orders, in particular for the expensive iPhone X. This is important because Apple now derives over 62 percent of its income from the iPhone. And if you factor in iPhone-related services, the figure jumps to over 75 percent. Apple is, in many ways, the iPhone company.
The relative lack of success of the iPhone X has triggered angst in Wall Street. Worse, it’s impacted Apple’s stock price and market capitalization. Once cruising toward a $1 trillion market cap, Apple’s stock has tumbled 15 percent so far this year because of the iPhone X. And some now believe that another company, perhaps Amazon or even Alphabet/Google, will reach a $1 trillion market cap first.
But these results speak for themselves. As they always do.