Examining Apple's record-breaking 2018 fourth quarter earnings results by the numbers

Posted:
in AAPL Investors
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
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
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
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
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
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
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's average selling price
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
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
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
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

  • Reply 1 of 18

    (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.

    chasmretrogustobaconstangMuntzradarthekatbadmonkMacProRonnnieOjony0lolliver
  • Reply 2 of 18
    say what you want, stock prices will go down until a new event is scheduled, I guess March 2019
  • Reply 3 of 18
    sacto joe said:

    (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.

    Yeah, for a long-term shareholder, it’s kind of a win-win situation—no problem if the share price drops for no good reason, because we’re essentially buyers through the buyback program, and low prices enable Apple to buy back more shares for the same money. Now is a critical time, because they will be buying back shares at an accelerated rate until they get to a “cash-neutral” position. 
    sacto joebadmonk
  • Reply 4 of 18
    sacto joe said:

    (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.

    Yeah, for a long-term shareholder, it’s kind of a win-win situation—no problem if the share price drops for no good reason, because we’re essentially buyers through the buyback program, and low prices enable Apple to buy back more shares for the same money. Now is a critical time, because they will be buying back shares at an accelerated rate until they get to a “cash-neutral” position. 
    Someone, somewhere is manipulating the stocks and making a killing out of it....
  • Reply 5 of 18
    sacto joe said:

    (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.

    Yeah, for a long-term shareholder, it’s kind of a win-win situation—no problem if the share price drops for no good reason, because we’re essentially buyers through the buyback program, and low prices enable Apple to buy back more shares for the same money. Now is a critical time, because they will be buying back shares at an accelerated rate until they get to a “cash-neutral” position. 
    Exactly. Apple is approaching 30% of it’s shares bought back since 2013. If you’d bought and held since then, if you’d owned 1% of Apple (don’t I wish!), at a 30% reduction in stock “float”, you’d own (1/70=) 1.43% of Apple today.

    Sinking Apple’s valuation is like throwing Br’er Rabbit into the briar patch. Good luck with that.
    retrogustobaconstang
  • Reply 6 of 18
    elfig2012 said:
    say what you want, stock prices will go down until a new event is scheduled, I guess March 2019
    You seem pretty sure of that. What’s your basis? Or did you just pull it out of your glass?
    baconstangMuntz
  • Reply 7 of 18
    chasmchasm Posts: 997member
    elfig2012 said:
    say what you want, stock prices will go down until a new event is scheduled, I guess March 2019
    Maybe. But I predict Apple will beat its own guidance for fiscal Q1 just as it did this quarter, so I think the stock will rise overall, just slower than it should -- maybe a nice bump after the Q1 earnings call. I suspect the Apple Watch is going to be a very hot xmas present this year, more so than previously.
    badmonkMacPro
  • Reply 8 of 18
    Profit taking. No big deal. I am quite happy to see it in this neighborhood for a few weeks. Fundamentally the company is in great shape and managing growth in absolute terms while reducing share count. 

    Their services and entertainment offerings are really going to move the needle soon. 
    MacPro
  • Reply 9 of 18

    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.
    Interestingly the majority of Apple’s revenue (56.3%) comes from outside the Americas, though the Americas is the largest contributor to revenue on a per-region basis at 43.7% overall, which is obviously what you’re referring to. 
    edited November 2
  • Reply 10 of 18
    thrangthrang Posts: 745member
    elfig2012 said:
    say what you want, stock prices will go down until a new event is scheduled, I guess March 2019
    I say wrong...there!
    PickUrPoisonJFC_PAradarthekatRonnnieO
  • Reply 11 of 18
    Rayz2016Rayz2016 Posts: 4,468member
    sacto joe said:

    (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.

    So if anyone is wondering why Apple does very little to dispel rumours of collapsing iPhone sales and discourage supply line tea-leaf reading, here’s why. The announcement that they will no longer include unit sales in their financials will lead to further price drops, another massive buyback, and an eventual win (or at least, that’s the plan) for the long-termers. 

    You should post more often, by the way.  
    radarthekatbadmonkanantksundaram
  • Reply 12 of 18
    sacto joe said:

    (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.

    Assuming EPS grows 25% in FY19, the forward PE is 12.5.   Backing out net cash, the forward multiple falls to about 11.0

    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?  


  • Reply 13 of 18
    512ke512ke Posts: 776member
    Devil’s advocate. We are at peak iPhone sales and peak iPhone price. The #1 selling product for Apple can’t grow revenue much more.  

    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. 
    larrya
  • Reply 14 of 18
    512ke said:
    Devil’s advocate. We are at peak iPhone sales and peak iPhone price. The #1 selling product for Apple can’t grow revenue much more.  

    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. 
    We’ve reached peak smartphone, but probably not peak iPhone, although the explosive growth is past. And yes, short term traders are still interested in the quick buck, which they can find if they bet on the right rabbit.

    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.
    edited November 3 RonnnieOStrangeDays
  • Reply 15 of 18
    LatkoLatko Posts: 155member
    I welcome the end of the post-PC era, with iPad sales shrinking
    edited November 3
  • Reply 16 of 18
    sacto joe said:
    We’ve reached peak smartphone..
    Not even close. For instance, India has a billion mobile phones, but only 350M are 'smart'phones.
  • Reply 17 of 18
    sacto joe said:

    (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.

    I've got it at a little less than 4.75B outstanding.  Nasdaq had 4.83 before the latest report.

    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?  :smiley: 
  • Reply 18 of 18
    Latko said:
    I welcome the end of the post-PC era, with iPad sales shrinking
    That doesn’t make sense. post-PC just means “after the PC”. New mobile form factors came after the desktop PC form factor. You can’t undo this or go back in time. post-PC does not mean “replace the PC” or “end the PC”. They will continue to exist just as cars and trucks (and trains) continue to exist.
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