Apple increased its revenue as well as its fourth-quarter guidance.
Apple’s shares rose more than 4% after releasing a better-than-expected earnings report. The company’s revenue increased after being down for the last two quarters and the company reported earnings of $2.18 per share.
Here is a breakdown of the earnings report:
- Earnings: $2.18 per share versus $2.10 expected
- Revenue: $$53.8 billion versus $53.39 billion expected
During the fourth quarter, Apple expects to bring in between $61 billion and $64 billion, which is also higher than expected.
A breakdown of Apple’s earnings report
This was good news for Apple investors, who have become recently bearish about the company in recent months. The company has been plagued by trade war concerns and declining iPhone sales so this positive report comes as a welcome relief.
Here is an overview of what went well for Apple during the third quarter, as well as a few things the company still needs to work on.
Revenue is up 1% from a year earlier
Apple CEO Tim Cook said the company hit “record revenue” for quarter three. The company’s revenue is up 1% from a year earlier. And the company also beat expectations in China, which has been a bit of a sore subject for the company recently.
The company saw its sales in China drop by 4% during the previous quarter. During the third quarter, the company returned to profit in China. And according to Cook, the customer hasn’t seen evidence of any Chinese backlash against the company.
iPhone sales are still down
During the previous quarter, iPhone sales reached $25.99 billion which didn’t quite meet investor expectations of $26.31 billion. This means the iPhone accounted for 48% of the company’s revenue. That’s the first time the iPhone has been less than 50% of the company’s revenue since 2012.
Strong growth in wearables and services
Fortunately for Apple, the company’s other product categories continue to increase. This includes Macs, iPads, wearables, and services. In particular, the company’s growth in wearables and services was particularly impressive.
Wearables include things like the Apple Watch, AirPods, and headphones. Sales in this category were up 48%.
Apple services include things like the App Store, cloud subscription, and Apple Music. Revenue in this category is up 13%, which is still slightly below investor expectations. But this is still solid growth and it shows that Apple’s revenue isn’t entirely dependent on the iPhone.
All in all, this was a good earnings report for Apple and showed that the company is making strong progress across the board. And the positive guidance heading into the fourth quarter likely gave investors more confidence that there are more positive results to come.