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Apple crushes estimates in its fiscal third quarter, reporting a boost in services revenue

Last updated: 10:05 01 Aug 2018 EDT, First published: 16:42 31 Jul 2018 EDT

iPhone X on a table
iPhone sales growth slowed to 41.3 million units, below analyst estimates of 41.8 million

Apple Inc (NASDAQ:AAPL) shares rose in early New York trade on Wednesday after the tech giant saw its fiscal third-quarter earnings - released after-hours on Tuesday - surpass analyst estimates on several fronts, including earnings, revenue, average selling price and services revenue.

After just over half-an-hour of trading Apple shares were 4.2% higher at US$198.25.

The tech giant reported earnings of US$2.34 per share on revenue of US$53.3bn compared with US$1.67 EPS on revenue of US$45.4bn in the previous year’s third quarter.

The California-based company beat Wall Street estimates of US$2.18 EPS on revenue of $52.34bn.

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth. Our Q3 results were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline,” said CEO Tim Cook in a press release.

Shares of the tech giant jumped more than 2.5% to US$195.40 in after-hours trading on Tuesday.

iPhone sales

iPhone sales came in at 41.3 million, slightly below analyst expectations of 41.79 million. The average selling price came in at US$724, well above analyst estimates of US$693.

Though iPhone sales are always a key metric, Apple’s growing “other devices” unit is worth a second look.

READ: Apple’s MacBook Pro gets a makeover, including new Intel chips

While iPhones and Mac computers have been spared from the US tariffs on Chinese goods, Apple’s accessories aren’t exempt. This segment includes its Apple Watch, Airpods and HomePod speaker.

As iPhone sales growth slows down, a price hike on its other products could hurt its profit margin.

Three new iPhones are expected to launch in September, though all the details have not yet been revealed.

READ: Apple Watch, FitBit could feel the heat of President Trump’s China tariffs

Investors are looking to the company’s September outlook to get a sense of exactly when the new phones will be available. A higher outlook for this period may signal to investors that new phones will be released during that time.

The company is expecting revenue between US$60bn to US$62bn, beating analyst expectations of US$59.5bn.

Services revenue

Another element worth noting is Apple’s fast-growing services segment, including Apple Music, Apple Care, iCloud and the App Store.

The services revenue jumped 31% to US$9.55, above analyst estimates of US$9.2bn.

Apple’s board of directors has declared a cash dividend of US$0.73 per share of its common stock. The dividend is payable on August 16, 2018, to shareholders of record as of the close of business on August 13, 2018.

 -- Adds current share price --

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