Despite the widely held belief that Apple is losing ground to Google and has been short of big ideas since the passing of Steve Jobs, there was no evidence of that in the company’s record Q3 financial results this week.
The company reported a 17 percent year-on-year increase in quarterly revenues to $53.3 billion, beating consensus estimates, with profits jumping 32 percent to $11.5 billion. This made it the most successful third quarter in the company’s history and the fourth consecutive quarter of double-digit growth.
Apple’s guidance for Q4 is also ahead of analysts’ forecasts, with forecast revenues of $60-62 billion.
Connected economy headlines
The results featured a number of highlights for the IoT and connected device economy.
Apple’s wearables business, which includes the Apple Watch and wireless AirPod headphones, saw 60 percent year-on-year revenue growth, bringing total sales over the last four quarters to more than $10 billion for the fledgling business.
“Apple Watch delivered record June quarter performance with growth in the mid 40 percent range,” said Cook.
Apple Watch continues to be the best selling smartwatch by a wide margin and Cook said that the device will become “an even stronger companion for fitness, communication, and quick access to information”.
New features including new workouts, activity sharing competitions, auto workout detection, advanced running features, a walkie-talkie function, podcasts, and third-party apps on the Siri watch face.
Siri requests from all devices have exceeded 100 billion so far this fiscal year, added Cook.
App Store: the news at 10
The company passed another significant milestone this month: the tenth birthday of the App Store, an anniversary marked by another Q3 revenue record.
“The App Store has exceeded our wildest expectations, igniting a cultural and economic phenomenon that has changed how people work, learn, and play,” said Cook.
“Customers around the world are visiting the App Store more often and downloading more apps than ever before. And based on third-party research estimates, the App Store generated nearly twice the revenue of Google Play so far in 2018.”
Apple: The world’s mobile bank?
However, the hidden success story in Apple’s latest results may surprise some analysts: the rise of Apple Pay in the connected economy. Cook said that over one billion transactions passed through the payment platform in Q3, a 300 percent year-on-year increase, with growth accelerating from the previous quarter.
“To put that tremendous growth into perspective, this past quarter we completed more total transactions than great companies like Square and more mobile transactions than PayPal,” he said.
“Apple Pay is now live in 24 markets worldwide with over 4,900 bank partners, and we look forward to adding Germany later this year.
In short, Apple is now one of the world’s biggest and most important mobile payment platforms.
“We’re excited to share that in the US, eBay is beginning to enable its sellers to accept Apple Pay, and CVS Pharmacy and 7-Eleven will roll out Apple Pay acceptance in locations nationwide this fall,” continued Cook.
Connected transport is another important area of growth for the platform, he said: “Apple Pay can be used with iPhone and Apple Watch to quickly and conveniently ride public transit in 12 metropolitan areas.
“Apple Pay Cash, our peer-to-peer payment service, is already serving millions of customers across the US, less than eight months following its launch,” he added.
Cook took time out in the earnings call to comment on the current trade war between the US and China. Read his comments in our separate report:
Internet of Business says
Apple is far from old news, it seems. According to CFO Luca Maestri, Apple grew in each of its top 15 markets, with strong performance in the US, Hong Kong, Russia, Mexico, the Middle East, and Africa, where revenue was up by more than 20 percent in each territory.
Gross margin was 38.3 percent, flat sequentially, as cost improvements and foreign exchange offset the seasonal loss of leverage.
During the quarter, the company sold 41.3 million iPhones, with double-digit unit growth in several markets including the US, Canada, Germany, Switzerland, Mexico, Hong Kong, Russia, the Middle East, and Africa.
And while iOS’ market share may be falling against Android, Apple’s iPad now holds 60 percent of the US tablet market in the June quarter, up from 51 percent in the same quarter last year.
Not bad for the world’s biggest walled garden.