Apple just announced its earnings for the third quarter of 2017, reporting profits of $8.72 billion on revenues of $45.4 billion. The company sold 41 million iPhones, 11.4 million iPads, and 4.29 million Macs.
Now that the numbers are out there in the public, Apple is set to hold its quarterly earnings call, which will kick-off at 2PM PT/5PM ET and we’ll have live coverage right here…
Ecobee HomeKit Thermostat
For all of the numbers and data from Apple’s Q3 2017 earnings release, head to our full coverage here. Tim Cook was optimistic as always in the press release, but we should get a bit more color during the call itself:
“With revenue up 7 percent year-over-year, we’re happy to report our third consecutive quarter of accelerating growth and an all-time quarterly record for Services revenue,” said Tim Cook, Apple’s CEO. “We hosted an incredibly successful Worldwide Developers Conference in June, and we’re very excited about the advances in iOS, macOS, watchOS and tvOS coming this fall.”
As usual, we’ll have live coverage of Apple’s earnings call in this post. The call will begin at 2PM PT/5PM ET, with Tim Cook will likely speaking first, followed by CFO Luca Maestri. A question and answer session will round out the call.
- Recapping earlier numbers, “proud to announce very strong results”
- Unit and revenue growth in all product categories
- “Biggest and best WWDC ever”
- iPhone 7 and 7 Plus up strong year over year
- 1.2 billion iPhones sold over last 10 years
- Services up 22 percent year-over-year
- Size of a Fortune 100 company
- iPad sales up 15 percent, growing across all geographic segments
- Highest global marketshare in four years
- Half of iPads sold were to first time buyers
- Especially strong in U.S. education market, up 32 percent year over year
- Coding is an “essential skill that all students should learn”
- 1.2 million students using iPad + Swift Playground
- 1,000 K12 schools plan to use Apple’s “Everyone can code” this fall
- Mac hit new June quarter unit sales records in mainland China and Japan
- Driven by iMac and MacBook Pro
- “Off to great start for back to school
- Apple Watch sales up 50 percent YOY, #1 selling smartwatch by “very large margin”
- AirPods: 98 percent customer satisfaction
- “We’ve increased production capacity and are working to get them to customers as quickly as we can”
- “Very exciting fall ahead with iOS 11, High Sierra, and watchOS 4.”
- “It’s clear that ARKit has captured the imagination of developer community. We believe AR has broad applicability across education, gaming, and more. iOS will become the world’s biggest augmented reality platform as soon as iOS 11 hits.”
- “Might even have some others to show you later this year,” teasing new products later this year…
- More numbers recap…
- Asia, Latin America, and Middle East saw iPhone unit growth by 25 percent
- $606 iPhone ASP thanks to strong demand for iPhone 7 Plus
- Partially offset by negative foreign exchange and reduction of channel inventory
- iPhone customer satisfaction “very strong” with 95 percent rating for iPhone 7, 99 percent for iPhone 7 Plus
- Purchase intention for iPhone was nearly 3x “rate of closest competitors”
- App Store “preferred destination for customer purchases” with nearly 2x revenue of Google Play
- Number of pay subscriptions (Apple Music & iCloud) reached 185 million, up 20 million in last 90 days
- 3 out of 4 Apple Pay transactions happen outside U.S.
- Mac customer satisfaction at 95 percent
- “Great lineup of Macs for our customers heading into the busy back to school season”
- iPad double digit growth in U.S., Japan, Germany, and Greater China
- 95 to 99 percent customer sat, purchase intention over 70 percent
- WalMart to deploy over 19,000 iPads for training across the United States
- Very strong quarter for retail
- “Today at Apple” initiative hosted 87,000 sessions during quarter
- AAPL now has $261.5 billion in cash
- There is an unprecedented number of products that launch in the back half of this year. Any commentary on how that could impact revenue or cost?
- Tim says AAPL has assumed some transitional cost in its guidance, “we’re looking forward to the product rollout”
- Talk about China?
- Tim: “Very encouraged by results this quarter. We improved as we thought we would, from the previous quarters. If you look underneath the numbers, Mainland China was flat year-over-year. In constant currency terms, we were up 3 percent. We’re very encouraged by that. iPad grew dramatically more than market. iPhone was flat year on year, similar as the market was.”
- “The fact that a lot of people use WeChat makes the switching opportunity even greater. Looking forward to working with [Tencent] even more to build mutually beneficial products.”
- Upgrades for this fiscal are the highest that we’ve seen and we feel good about that. however, if you look at it from an upgrade rate point of view, the rate is similar to what we saw with the previous iPhones, except for iPhone 6 which had an abnormally high upgrade rate.
- Tim: “Amount of rumors and volume of them that there is some pause in current numbers. While that affects us in the short term, it probably bodes well later on.”
- On Apple’s big beautiful plants promised by Trump?
- “Let me jut take this question from a ‘what are we doing to increase jobs’ standpoint, which I believe is where it’s rooted. We’ve created 2 million jobs in the U.S. We do view that we have a responsibility to increase economic activity in the United States, including creating jobs, because Apple could only have been created here. “
- Three main categories of job creation:
- App development (75 percent of 2 million are app developers)
- Purchased $50 billion from U.S. based suppliers, “so we’ve asked ourselves how to increase this”
- On working with Chinese government:
- On VPN issue: Tim says, “The central government in China, back in 2015, started tightening the regulations on VPN apps. Essentially, as a requirement for someone to operate a VPN, they must have a license from the government there. Earlier this year, they began a new effort tot enforce this policy. We were required by government to remove some apps that don’t meet that requirement. There are still hundreds of VPN apps on the App Store.”
- “We believe in working with governments even when we disagree. Innovation requires freedom to collaborate and communicate, and I know that is a major focus [in China]. Some folks have tried to link it to the U.S. situation last year and they’re very different. In the U.S. case, the law in the U.S. supported us. It was very clear. In China, the law is very clear there. We have to abide by it.”
- Apple’s approach to content and Apple TV?
- Tim: “We have done some original content. It’s focused on Apple Music currently. We have some more that’s launching in a week that will be made available on Apple Music. the objective of this is two-fold. One is for our own learning given that we’re new in the video creation space. Two is to give the Apple Music subscribers some exclusive content.”
- “Still an area of great interest.”
- Autonomous systems?
- Tim: “We are very focused on autonomous systems. We do have a large project going and are making a big investment in this. Autonomy is the mother of all AI projects.”
- “Autonomous systems can be used in a variety of ways and a vehicle is only one. But I don’t want to go any further on that.”
- “I think ARKit is big and profound. This is one of the huge things we are going to look back on and marvel at the start of. There’s lots of enterprise excitement as well.”
- Why is this year’s iPhone release bigger than most?
- Tim: “We have no comment on anything that’s not announced.”