Apple Inc. reported its second-quarter results for 2018 on Tuesday, and contrary to analyst expectations that the company’s newest, and most expensive, flagship device didn’t live up to the hype, the numbers indicate otherwise.
The Cupertino, Calif.-based tech giant reported quarterly revenue of $61.1 billion (all figures USD), a year-over-year increase of 16 per cent, and while as usual Apple did not divide its iPhone unit sales into models, the company sold approximately 52.2 million iPhones during the quarter – a three per cent increase over the same period last year – with CEO Tim Cook calling the iPhone X its most popular model.
“Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter,” Cook told investors during a May 1 earnings call. “Since we split the line with the launch of iPhone 6 and 6 Plus in 2014, this is the first cycle in which the top of the line iPhone model has also been the most popular.”
It also was a record quarter for the company’s services division, which posted revenue of more than $9 billion for the first time.
“We had all-time record revenue from the App Store, from Apple Music, from iCloud, from Apple Pay and more, all of which are a powerful illustration of the importance of our huge active installed base of devices and the loyalty and engagement of our customers,” Cook said. “Across all our services, paid subscriptions surpassed 270 million, up over 100 million from a year ago and up $30 million in the last 90 days alone, contributing to the overall increase in services revenue.”
Apple’s wearables business also grew, by nearly 50 per cent over the same period last year, he said.
The company also doubled the number of users and saw triple the transactions on its Apple Pay mobile payments service, Cook said, though no specific numbers were given. The CEO attributed much of the growth to widespread adoption of Apple Pay in Japan, and transit initiatives launched in the Chinese cities of Beijing and Shanghai.
Such rosy numbers were far from expected, especially from the iPhone X, with Bloomberg reporting two days before the company reported its quarterly results that Cook was expected to address the fact that the iPhone X did not live up to the hype, and offer a plan to fix it.
The predictions were driven by suppliers reporting weak demand for high-end handsets, and falling Chinese demand for iPhones in favour of local suppliers.
In fact, it’s worth noting that international sales accounted for 65 per cent of Apple’s revenue during the quarter.
It’s unlikely that Cook would have admitted to any weakness during Apple’s earnings call anyway, though he might have avoided mentioning its sales had the device been considered a failure: Of the Homepod, widely considered a flop, Cook only said the device “is a breakthrough speaker that delivers amazing sound, and we believe it will change the way people listen to music at home.”
Our thanks to investment research platform Seeking Alpha for the transcriptions from Apple’s May 1 Q2 earnings call.