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Breaking Down Apple's (AAPL) Q4 iPhone Sales, Services Growth & More

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Apple (AAPL - Free Report) saw its shares sink after-hours following the release of its fiscal Q4 financial results, despite posting both a top and bottom-line beat. So, let’s dive into more of Apple’s report details, including iPhone sales and services revenues, to see what’s going on.

Q4 Overview

Apple’s total quarterly revenues jumped 20% to reach $62.9 billion, which came in well above our Zacks Consensus Estimate that called for $61.49 billion. The iPhone powerhouse also continued to shine at the bottom end of the income statement. Apple posted adjusted quarterly earnings of $2.91 per share. This marked a 41% surge from the year-ago period and topped our $2.79 per share estimate.

Apple posted impressive growth despite the fact that its newest product lineup barely impacted the quarter that ended on September 29. “We concluded a record year with our best September quarter ever, growing double digits in every geographic segment. We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac,” Apple CFO Luca Maestri said in a company statement.

With that said, investors have become so accustomed to outstanding reports from Apple that they now focus on individual business units. Therefore, it is essential to break down more of the specifics.

 

 

iPhone

Apple’s total iPhone unit sales climbed from 46.677 million to 46.889 million. This marked nearly flat growth and fell short of our NFM estimate that projected 46.954 million. Investors should be used to slowing iPhone unit sales by now, but it is still a bit hard to swallow. Last quarter, iPhone unit sales rose marginally from 41.026 million to 41.300 million.

Luckily, higher prices continue to drive overall iPhone revenues. The firm’s iPhone revenues surged 29% from $28.846 billion in the fourth quarter of 2017 to $37.185 billion, which blew past our $35.651 billion estimate. Apple’s smartphone revenues jumped just 20% to reach $29.906 billion last quarter.

Plus, CEO Tim Cook and Apple knew it would get harder and harder to sell more iPhones so they raised prices and expanded into new growth areas.

Services

Front and center of this expansion has been Apple’s services business, which includes Apple Pay, AppleCare, Apple Music, and more. Fourth quarter services revenues jumped 17% from $8.501 billion to reach $9.981 billion. This marked a significant slowdown from Q3’s 31% growth and 34% expansion in the year-ago quarter. Plus, our NFM estimates called for Apple’s services revenues to jump 24% to $10.546 billion.

Apple’s services business aims to take on (SPOT - Free Report) , Square (SQ - Free Report) , PayPal (PYPL - Free Report) and many others. And services have helped drive Apple stock’s post-earnings momentum in the recent past. But its Q4 performance will likely left many investors wondering what went wrong.

Other Products

Luckily, Apple’s less-talked-about “Other Products” unit jumped 31% from $3.231 billion in the year-ago quarter to hit $4.234 billion. This division, which features AirPods, Apple TV, Apple Watch, Beats products, and HomePod, saw its quarterly revenues soar 37% in Q3.

Bottom Line

Clearly, Apple’s non-iPhone businesses did not blow away investors. But the strength of iPhone revenues due to higher prices helped lift Apple’s overall revenues. The next big frontier will come down the road when Apple launches its streaming TV service to take on Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , Hulu, and Disney (DIS - Free Report) .

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