Examining Apple's record-breaking 2018 fourth quarter earnings results by the numbers
The quarter that saw the introduction of the iPhone XS and iPhone XS Max is the last of Apple's fiscal year. At a time when the average selling price has become more important to analysts than ever for Apple's main revenue generator, it is worth looking at several years of previous data to see how the latest one stacks up.
Apple's quarterly revenue and net profit
For the fourth quarter, Apple earned a total of $62.9 billion in revenue, which is over $10 billion more from the same period last year. This is above Apple's forecast for the period, which had a top end figure of $62 billion.
It is also worth noting that this quarter breaks a pattern from the previous five years, where the fourth quarter results are roughly comparable or below the second quarter's figures.
iPhone units and revenue
As to be expected, the iPhone makes the lion's share of revenue for the company, bringing in $37.2 billion compared to $28.8 billion from last year. The rise in revenue isn't accounted for by unit sales, as Apple sold 46.9 million iPhones in the period, barely higher than Q4 2017's 46.7 million.
iPhone's average selling price
What can account for it is the average selling price (ASP), which this year was reported at $793, beating last year's figure of $617.99. This is explained by the continued sales of the high-priced iPhone X during the period, followed by the iPhone XS and the more expensive iPhone XS in the last few weeks of the quarter.
With sales growth relatively flat, this has led to analysts suggesting Apple will be relying on higher ASP levels in its products in the future, rather than purely increasing sales.
iPad units and revenue
On the iPad side, there's little to be happy about. Sales are down compared to last year, and seemingly has the appearance of levelling off. It remains to be seen if the all-new iPad Pro will make a dent in the next quarter's finances, and if Apple will bring any of the new features like Face ID down to the iPad.
iPad's average selling price
For ASP, the iPad Pro is likely Apple's biggest chance of increasing the figure dramatically. Of course, this does need to be match by sales for it to be of real value to the company.
Mac units and revenue
The Mac has improved its revenue from $7.2 billion last year to $7.4 billion this year. At the same time, sales of 5.3 million units is slightly down from 5.4 million. Again, the improvement is down to ASP.
Mac average selling price
While this quarter the ASP is down from earlier this year, it is still quite a high Mac ASP overall when compared to earlier years. This quarter also saw the introduction of new MacBook Pro models, complete with new processors and better GPUs, which likely helped this figure.
As a side point, it is worth noting that Apple has decided to change how it issues figures relating to iPhone, iPad, and Mac sales from the next quarter onwards, changes that will make it hard to determine the ASP of each segment. Aside from working from analyst estimations and supply chain or retail reports, it remains to be seen how accurate future ASP figures from experts will end up.
So, unless Apple specifically distributes this number, the ASP graph above is likely the last one.
Revenue earned by Apple's Services arm
Services continues to be a trusty workhorse for revenue and growth, with the arm contributing $10 billion in revenue, $1.5 billion up from last year. During the period, Apple tripled its Apple Pay transaction volumes year-over-year, with Apple Music and the App Store also achieving quarterly records.
The ongoing year-on-year growth of Apple's Services arm
Yet again, Services manages double-digit growth, this time 17.4-percent year-on-year, and this is the 14th quarter in a row where the growth has been in double figures. Given the increased reliance for online services, and the rising usage of mobile payments, it's probably going to be growing like this for quite a while longer.
Operating segment revenue for different regions
This last graph shows the vast bulk of Apple's revenue stems from the Americas, followed by Europe then Greater China. It is also worth noting that the combined revenue of the Japan and Rest of Asia Pacific operating segments is $8.6 billion, less than the company's Services arm's revenue.
Apple's quarterly revenue and net profit
For the fourth quarter, Apple earned a total of $62.9 billion in revenue, which is over $10 billion more from the same period last year. This is above Apple's forecast for the period, which had a top end figure of $62 billion.
It is also worth noting that this quarter breaks a pattern from the previous five years, where the fourth quarter results are roughly comparable or below the second quarter's figures.
iPhone units and revenue
As to be expected, the iPhone makes the lion's share of revenue for the company, bringing in $37.2 billion compared to $28.8 billion from last year. The rise in revenue isn't accounted for by unit sales, as Apple sold 46.9 million iPhones in the period, barely higher than Q4 2017's 46.7 million.
iPhone's average selling price
What can account for it is the average selling price (ASP), which this year was reported at $793, beating last year's figure of $617.99. This is explained by the continued sales of the high-priced iPhone X during the period, followed by the iPhone XS and the more expensive iPhone XS in the last few weeks of the quarter.
With sales growth relatively flat, this has led to analysts suggesting Apple will be relying on higher ASP levels in its products in the future, rather than purely increasing sales.
iPad units and revenue
On the iPad side, there's little to be happy about. Sales are down compared to last year, and seemingly has the appearance of levelling off. It remains to be seen if the all-new iPad Pro will make a dent in the next quarter's finances, and if Apple will bring any of the new features like Face ID down to the iPad.
iPad's average selling price
For ASP, the iPad Pro is likely Apple's biggest chance of increasing the figure dramatically. Of course, this does need to be match by sales for it to be of real value to the company.
Mac units and revenue
The Mac has improved its revenue from $7.2 billion last year to $7.4 billion this year. At the same time, sales of 5.3 million units is slightly down from 5.4 million. Again, the improvement is down to ASP.
Mac average selling price
While this quarter the ASP is down from earlier this year, it is still quite a high Mac ASP overall when compared to earlier years. This quarter also saw the introduction of new MacBook Pro models, complete with new processors and better GPUs, which likely helped this figure.
As a side point, it is worth noting that Apple has decided to change how it issues figures relating to iPhone, iPad, and Mac sales from the next quarter onwards, changes that will make it hard to determine the ASP of each segment. Aside from working from analyst estimations and supply chain or retail reports, it remains to be seen how accurate future ASP figures from experts will end up.
So, unless Apple specifically distributes this number, the ASP graph above is likely the last one.
Revenue earned by Apple's Services arm
Services continues to be a trusty workhorse for revenue and growth, with the arm contributing $10 billion in revenue, $1.5 billion up from last year. During the period, Apple tripled its Apple Pay transaction volumes year-over-year, with Apple Music and the App Store also achieving quarterly records.
The ongoing year-on-year growth of Apple's Services arm
Yet again, Services manages double-digit growth, this time 17.4-percent year-on-year, and this is the 14th quarter in a row where the growth has been in double figures. Given the increased reliance for online services, and the rising usage of mobile payments, it's probably going to be growing like this for quite a while longer.
Operating segment revenue for different regions
This last graph shows the vast bulk of Apple's revenue stems from the Americas, followed by Europe then Greater China. It is also worth noting that the combined revenue of the Japan and Rest of Asia Pacific operating segments is $8.6 billion, less than the company's Services arm's revenue.
Comments
(From one of my posts on ped30.com)
Okay, some numbers to play with this weekend:
• Apple appears to have bought back about 81 M shares last quarter. I’m assuming a flat 4.8 B shares outstanding.
• Net income was $14.125 B for the quarter, and $59.531 B for the fiscal year.
• EPS thus equals (59.531/4.8=) $12.40/share.
• At the present price of $205.65, that’s a “real” (backwards looking) P/E of (205.65/12.40=) 16.6.
I don’t think we need any clearer indication of how utterly stupid this selloff of AAPL is, but I couldn’t be more delighted, because Apple is in the market, buying back 20% of the stock that’s up for sale each and every day at fire sale prices, and consequently handing Wall Street it’s head on a platter.
What utter and complete vindication for Apple’s long term business plan.
Sinking Apple’s valuation is like throwing Br’er Rabbit into the briar patch. Good luck with that.
Their services and entertainment offerings are really going to move the needle soon.
You should post more often, by the way.
I would love nothing more than for Mr. Cook to back up the truck and buy $30+ billion of stock this quarter. If not now, when?
Goinf forward, Appleflix, Apple’s services and the watch etc must drive growth.
Can they?
Wall Street likes a profitable well run company but loves only exponential growth.
Can a giant keep growing?
I think yes but I understand why these kinds of question continually get asked.
That isn’t to say that Apple’s potential for good growth is over, or even it’s potential for surprising growth. Lest we forget, Apple is one of the premier, if not the premier, computer companies in the world. And the potential for growth for computers remains enormous.
Meanwhile, on the smartphone front, Apple is now entering the endgame towards which it has been working for the last decade. And the endgame isn’t nearly as much about smartphone sales growth as it is about growing the installed base. All this time, Apple has been building an installed base much larger than it’s so-called market share. And every indication is that it’s still growing at a double-digit pace, unlike the installed base of it’s competition, which is shrinking.
There are very good reasons for fhis, and top notch Apple analysts like Horace Deidu have spoken clearly about those reasons. Suffice it to say that Steve Jobs was a huge believer in W. Edwards Deming, and inculcated his profound theories deep into Apple’s culture.
The bottom line is that Apple remains a long term play of immense potential, even though it is, as you say, a giant among companies. Just like in the present political arena, however, fake news abounds. But lies can’t mask reality forever. Eventually, truth will out.
The thing that stood out to me is that cash on hand only decreased by $6B. That tells me that it will be 5-6 years of buybacks at this level before cash neutral is reached. In that time another 1.5-2 B shares could be taken off the table. Maybe closer to 1 B if the share price really takes off.
Imagine where that puts us in 10-15 years?