Apple bounced back after two down quarters…
After two back-to-back down quarters, Apple managed to beat expectations with its Q3 earnings report.
The tech giant’s stock rose by more than 4% in after-hours trading after yesterday’s announcement after market close.
However, since Apple recently invested more than $17 billion in share buybacks, this news may not be enough to help the company reclaim its $1 trillion valuation. Apple is expected to release an updated report with the SEC today to reflect its new, lower share count.
Still, the results of Apple’s Q3 earnings are a positive surprise for many analysts. Thanks to the success of Wearables, Apple Services, and strong performance from other products, Apple was able to increase its revenue and beat expectations for sales and earnings.
Digging Deeper
Expectations for Apple’s third fiscal quarter were low, but the tech company’s strong earnings report suggests that demand for its products is stabilizing as we head toward the end of the year.
Here are the key details from Apple’s Q3 earnings report:
- $53.8 billion in revenue
- $2.18 earnings per share (EPS)
- $25.99 billion in iPhone revenue
- $11.46 billion in Services revenue
In a press release, Apple CEO Tim Cook said, “This was our biggest June quarter ever — driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac and significant improvement in iPhone trends.”
CFO Luca Maestri also revealed yesterday that Apple “returned over $21 billion to shareholders during the quarter, including $17 billion through open market repurchases of almost 88 million Apple shares, and $3.6 billion in dividends and equivalents.”
Apple’s board of directors has also declared a 77-cent per share cash dividend, which is payable on August 15, 2019, to shareholders of record as of the close of business on August 12, 2019.
Future Outlook
In the wake of two down quarters, Apple may finally be turning things around. However, due to the iPhone’s decreased performance, the company’s future may depend on its other offerings.
The iPhone accounted for just over 48% of the company’s revenue this quarter — marking the first time since 2012 that the flagship product hasn’t contributed to at least 50% of Apple’s sales.
Instead, the company’s bolstered Q3 performance is largely due to the success of the Mac and Wearables, including the Apple Watch, Beats headphones, and AirPods. Services, such as subscription and App Store fees, have also given the company a significant boost in revenue.
Still, while these products and services are continuing to grow, Apple relies largely on the success of the iPhone. The company announced earlier this year that there were 900 million iPhones currently in use. Though, Apple has yet to release an updated figure.
To accompany the Q3 earnings report, Apple announced optimistic projections for its fourth fiscal quarter, including:
- Revenue between $61 billion and $64 billion
- Gross margin between 37.5 percent and 38.5 percent
- Operating expenses between $8.7 billion and $8.8 billion
- Other income/(expense) of $200 million
- Tax rate of approximately 16.5 percent
Apple hopes that the improved success of its other offerings will continue to drive revenue and sales growth in the coming months.
