Notes of interest from Apple's Q3 2018 conference call

Posted:
in AAPL Investors edited July 2018
Apple set a new high for the June quarter on the back of a premium-priced iPhone lineup anchored by iPhone X, as well as continued growth in the services segment. Following the publication of its third fiscal quarter 2018 results, the company provided additional detail on the record-setting performance in an earnings conference call.

Tim Cook and Luca Maestri


The numbers: Apple's revenue for the third quarter of the fiscal year 2018 hit $53.3 billion, with it and the earnings-per-share of $2.34 growing year-on-year, bolstered by iPhone sales of 41.3 million units.

Participating in Thursday's call were Apple Chief Executive Tim Cook and Chief Financial Officer Luca Maestri.

Highlights

  • Paid subscriptions have exceeded 300 million, a 60 percent growth in the last year alone.

  • Number of apps offering subs growing, almost 30K in app store today.

  • $100 billion paid to developers from App Store since opening.

  • AppleCare highest growth rate in 18 quarters.

  • All time highs for monthly active users & FaceTime calls in Messages, with growth accelerating.

  • 100 billion Siri requests this fiscal year.

  • Number of articles read on Apple News doubled year-over-year.

  • One billion Apple Pay transactions in fiscal year, triple year-over year.

  • Apple Pay coming to CVS.

  • Past quarter, more total transactions than Square, more mobile transactions than Paypal.

  • Over 200 million users involved in beta testing macOS Mojave, iOS 12, tvOS 12, and watchOS 5.

  • CEO Tim Cook reinforces that iOS and MacOS are different, but reminds that some frameworks have been migrated to the Mac.

  • Charter offering AppleTV 4K as set top box for customers before the end of the year.

  • This fall, iTunes will be the largest repository of Dolby Atmos movies anywhere.

  • More than 5000 schools and colleges have adopted Everyone Can Code programs.

  • More than 300 schools are adopting Everyone Can Create in the fall.

  • "Limitless" ARKit apps coming, Apple working with enterprise to "change how things get done" with AR.

  • Apple grew in each of its 15 major markets, with revenue up by more than 20 percent year over year in the US alone.

  • iPhone channel inventory reduced by 3.5 million, company on lower end of targeted 5 weeks to 7 weeks of inventory.

  • AirPods sold as fast as Apple could make them.

  • 60 percent of quarterly Mac sales from new users.

  • Low compare year-over-year because of fourth quarter MacBook Pro release, as opposed to third in 2017.

  • More than half of iPad sales in the quarter were sold to new users.

  • iPad customer satisfaction of 94 percent, 75 percent of businesses planning to buy tablets will buy iPads.

  • Majority of SalesForce's 35,000 employees on Mac.

  • $6 billion in debt retired, net cash $129.1 billion dollars corrected with outstanding debt.

  • $20 billion in AAPL purchased on the market and retired, 112.8 million shares repurchased.

  • Some new services coming to Apple in the future, says Tim Cook. No elaboration.

  • DRAM prices improving, Apple may see positive financial effects in the next quarter

  • iPhone X, iPhone 8, iPhone 8 Plus still "growing very nicely" according to Cook.

  • Cook regarding iPhone X: "Customers want innovate products, and we already knew that."

  • iPhone SE had a difficult compare to the year-ago-quarter.

  • Apple picked up global marketshare worldwide in smartphone, and tablet markets.

  • Fourth quarter of double-digit in mainland China, across iPhone, iPad, Services, Other categories.

  • Cook: "Tariffs show up as an additional tax on the consumer."

  • Cook: Tariffs are not the approach to dealing with trade imbalances on the national level.

  • None of Apple's products are directly affected by the first three tariffs, fourth tariff out for public comment and is being evaluated by Apple.

  • Apple will share its thoughts on the matter with the White House before the comment period ends.

  • Apple not attempting to measure global economic changes and effect on the company.

  • Cook: "I can't predict the future, but I am optimistic that the countries will get through this. We are hoping that calm heads prevail."

  • Cook: "Cord-cutting is only going to accelerate, and will accelerate at a rate that is greater than widely thought."

  • Cable cutting "periphery" grew by "very strong" double digits.

  • 100 percent year-over-year growth in video streaming subscriptions through apps.

  • 50 million Apple Music listeners across paid subscriptions and free trials.

  • Cook on streaming music: "Extraordinary opportunity in that business to grow the market well"

  • Revenues on Apple Music grew over 50 percent over the quarter

  • Cook: "The smartphone market is very healthy. I think it is the best business in the world to be in."

  • Some replacement cycles are lengthening, major catalyst of the change the extinction of iPhone subsidies from carriers.

  • Active install base of the iPhone grew double digits since the year-ago quarter.

  • Apple has never done an analysis on who is getting a battery replacement, versus who is buying a new iPhone.

  • Cook: "Treat the users and customers well, and you have a great business over time."
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Comments

  • Reply 1 of 22
    LukeCageLukeCage Posts: 162member
    $1 Billion in Apple Pay transactions and over 200 million users involved in Beta testing are the most surprising stats for me. 
    claire1
  • Reply 2 of 22
    avon b7avon b7 Posts: 4,193member
    60% of Mac sales to new users. This is the second time in recent memory this has happened. The last one was an Xmas quarter I believe.

    I find that somewhat intriguing.
    racerhomie3claire1chasm
  • Reply 3 of 22
    entropysentropys Posts: 1,850member
    avon b7 said:
    60% of Mac sales to new users. This is the second time in recent memory this has happened. The last one was an Xmas quarter I believe.

    I find that somewhat intriguing.
    Must be some corporate buyers.  At least I hope so, it would be quite detrimental to long term Mac sales if private purchasers discover their brand new machine isn’t really.

    i would hope the bulk of the Mac range is updated this quarter with decent specs, functionality and flexibility. That will fix the Mac sales slump pretty quick.
    watto_cobra
  • Reply 4 of 22
    Mike WuertheleMike Wuerthele Posts: 4,872administrator
    entropys said:
    avon b7 said:
    60% of Mac sales to new users. This is the second time in recent memory this has happened. The last one was an Xmas quarter I believe.

    I find that somewhat intriguing.
    Must be some corporate buyers.  At least I hope so, it would be quite detrimental to long term Mac sales if private purchasers discover their brand new machine isn’t really.

    i would hope the bulk of the Mac range is updated this quarter with decent specs, functionality and flexibility. That will fix the Mac sales slump pretty quick.
    Like we keep saying, the vast majority of private purchasers don't care that the new machine doesn't have the latest Intel silicon. 
    cornchipracerhomie3bshankxamaxStrangeDaysJWSCwatto_cobraclaire1chasm
  • Reply 5 of 22
    alandailalandail Posts: 690member
    LukeCage said:
    $1 Billion in Apple Pay transactions and over 200 million users involved in Beta testing are the most surprising stats for me. 

    That's not $1 billion, that's 1 billion transactions.
    watto_cobra
  • Reply 6 of 22
    FolioFolio Posts: 634member
    Mindblowing, some of the stats from AI piece above:

    • All time highs for monthly active users & FaceTime calls in Messages, with growth accelerating.

    • 100 billion Siri requests this fiscal year.

    • Number of articles read on Apple News doubled year-over-year.

    • One billion Apple Pay transactions in fiscal year, triple year-over year.

    • Apple Pay coming to CVS.

    • Past quarter, more total transactions than Square, more mobile transactions than Paypal.
    watto_cobrachasm
  • Reply 7 of 22
    entropys said:
    avon b7 said:
    60% of Mac sales to new users. This is the second time in recent memory this has happened. The last one was an Xmas quarter I believe.

    I find that somewhat intriguing.
    Must be some corporate buyers.  At least I hope so, it would be quite detrimental to long term Mac sales if private purchasers discover their brand new machine isn’t really.

    i would hope the bulk of the Mac range is updated this quarter with decent specs, functionality and flexibility. That will fix the Mac sales slump pretty quick.
    Yes. I work for a company with 150,000 employees, and we just began offering Macs to employees this past year.
    watto_cobraclaire1chasm
  • Reply 8 of 22
    linkmanlinkman Posts: 928member
    AppleInsider said:
    • This fall, iTunes will be the largest repository of Dolby Atmos movies anywhere.
    And very few devices will support it. Hopefully Apple TV has the update by that time as previously announced.
  • Reply 9 of 22
    alandailalandail Posts: 690member
    linkman said:
    AppleInsider said:
    • This fall, iTunes will be the largest repository of Dolby Atmos movies anywhere.
    And very few devices will support it. Hopefully Apple TV has the update by that time as previously announced.
    The Apple TV update is what they are talking about.
    watto_cobraclaire1
  • Reply 10 of 22
    Mac sales are up.  This is great.  But think what they could be if Apple actually updated the Mac Mini and Mac Pro!  Come on Mr. Cook!
    watto_cobra
  • Reply 11 of 22
    LukeCageLukeCage Posts: 162member
    alandail said:
    LukeCage said:
    $1 Billion in Apple Pay transactions and over 200 million users involved in Beta testing are the most surprising stats for me. 

    That's not $1 billion, that's 1 billion transactions.
    Oh I see, thanks that a lot different 
    watto_cobra
  • Reply 12 of 22
    brucemcbrucemc Posts: 1,540member
    entropys said:
    avon b7 said:
    60% of Mac sales to new users. This is the second time in recent memory this has happened. The last one was an Xmas quarter I believe.

    I find that somewhat intriguing.
    Must be some corporate buyers.  At least I hope so, it would be quite detrimental to long term Mac sales if private purchasers discover their brand new machine isn’t really.

    i would hope the bulk of the Mac range is updated this quarter with decent specs, functionality and flexibility. That will fix the Mac sales slump pretty quick.
    The vast majority buy new computers when they need them. I and my family are solidly in the Apple ecosystem, but I just upgraded my 2011 MBP for a 2017 13” MBP (refurb) which I use for work.  The family iMac is from 2009 and will get upgraded this year after 9 years.  I purchase Apple products due to usefulness, quality, and support.  Apple gets ever more of my spend every year due to better services and new products (Apple Watch, AirPods, Apple Music, etc). But I don’t buy every version. 

    I think Apple has this business figured out...
    badmonkStrangeDaysJWSCwatto_cobra
  • Reply 13 of 22
    entropysentropys Posts: 1,850member
    Well sure Bruce. If you have to buy now you buy what is available.
    The point is the sales Apple isn’t currently making. What could sales have been with current spec iMacs, MBAs, Mac Pros Mac minis etc? Heck even iPads! They would be a lot of people that have not made a purchase because they are out of date.
    release new models and sales wil be a lot more than they are at present.
    watto_cobra
  • Reply 14 of 22
    welshdogwelshdog Posts: 1,694member
    entropys said:
    Well sure Bruce. If you have to buy now you buy what is available.
    The point is the sales Apple isn’t currently making. What could sales have been with current spec iMacs, MBAs, Mac Pros Mac minis etc? Heck even iPads! They would be a lot of people that have not made a purchase because they are out of date.
    release new models and sales wil be a lot more than they are at present.
    What he is saying is that there would not be a big bump in sales if the various Macs had the latest everything inside. People don't care about or even understand what clock speed is, or RAM or pretty much anything on a motherboard. Just does not matter. What would increase Mac sales is aggressive marketing which Apple just does not do - and which is also very expensive which Apple does not like.
    xamaxbadmonkStrangeDaysJWSCwatto_cobra
  • Reply 15 of 22
    kudukudu Posts: 34member
    • Cook: "Treat the users and customers well, and you have a great business over time."
    Ain’t that the truth
    watto_cobra
  • Reply 16 of 22
    flydogflydog Posts: 340member
    Folio said:
    Mindblowing, some of the stats from AI piece above:


    • 100 billion Siri requests this fiscal year.

    Yes, but 80 billion were the same request made 10 times until Siri got it right. 
    avon b7
  • Reply 17 of 22
    ElCapitanElCapitan Posts: 266member
    I am sure Mac sales will recover if they only make them even thinner.
    xamax
  • Reply 18 of 22
    mdriftmeyermdriftmeyer Posts: 7,300member
    Raise the dividend to at least $1 per share. It's long overdue.
  • Reply 19 of 22
    SpamSandwichSpamSandwich Posts: 31,395member
    ElCapitan said:
    I am sure Mac sales will recover if they only make them even thinner.
    "Introducing our thinnest MacBook Pro ever... it's made of graphene and it's only 2 atoms thin!"
  • Reply 20 of 22
    welshdog said:
    entropys said:
    Well sure Bruce. If you have to buy now you buy what is available.
    The point is the sales Apple isn’t currently making. What could sales have been with current spec iMacs, MBAs, Mac Pros Mac minis etc? Heck even iPads! They would be a lot of people that have not made a purchase because they are out of date.
    release new models and sales wil be a lot more than they are at present.
    What he is saying is that there would not be a big bump in sales if the various Macs had the latest everything inside. People don't care about or even understand what clock speed is, or RAM or pretty much anything on a motherboard. Just does not matter. What would increase Mac sales is aggressive marketing which Apple just does not do - and which is also very expensive which Apple does not like.
    Even people like myself who do know what those things are can have other spending priorities. One thing I love about Macs is their longevity, I still run my business on a fully maxed 2012 Pro, upgrade would be nice but not essential. Macs are the best VALUE on the market imo, people complaining they’re over priced and under speced just don’t get what Apple are doing.
    watto_cobra
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