This afternoon Apple announced their earnings for the fourth quarter of their 2018 fiscal year, and in what can only be described as a very Apple-esque quarter, revenue was up 20% year-over-year to $62.9 billion. Gross margin came in at 38.2%, up 0.3% from a year ago. Operating income was up 22.9% to $16.1 billion, and partially due to the new tax cuts, net income was up 31.8% to $14.1 billion. Earnings per share were up 40.6% to $2.91.

Apple Q4 2018 Financial Results (GAAP)
  Q4'2018 Q3'2018 Q4'2017
Revenue (in Billions USD) $62.900 $53.265 $52.579
Gross Margin (in Billions USD) $24.084 $20.421 $19.931
Operating Income (in Billions USD) $16.118 $12.612 $13.917
Net Income (in Billions USD) $14.125 $11.519 $10.714
Margins 38.5% 38.3% 37.9%
Earnings per Share (in USD) $2.91 $2.34 $2.07

As usual, iPhone leads the way at Apple, but as has become the norm the Q4 results will only have a glimpse at the new launch sales, since this quarter ended on September 29. iPhone revenue was up a staggering 29% year-over-year to $46.9 billion, but overall unit sales were up only 0.4% from Q4 2017, with 46.9 million devices sold this quarter. But with iPhone pricing moving in an upward trajectory, Apple now has an amazing $793.04 average selling price on iPhone.

The other half of iPhone is Apple’s services, which are up 17% year-over-year to just under $10 billion for the quarter. Services include digital content, Apple Pay, and of course iTunes sales.

We just saw a Mac event this week, showing off the new MacBook Air and Mac Mini, but with this quarter ending in September we won’t be able to see that impact Mac sales until Q1 2019. For this quarter, Mac sales fell 2% to 5.3 million units, with revenue up 3% reflecting the higher price of the new models.

iPad sales also fell. Apple sold 9.7 million iPads this quarter, which was down 6% from last year. Revenue fell even further though, coming in at $4.1 billion for the quarter, which is a 15% drop from Q4 2017. Apple’s price-reduced iPad has likely eaten into sales of the more profitable Pro models, but like the Mac updates, the latest iPad Pros were just announced and won’t be reflected in this quarter’s earnings.

Apple Q4 2018 Device Sales (thousands)
  Q4'2018 Q3'2018 Q4'2017 Seq Change Year/Year Change
iPhone 46,889 41,300 46,677 +14% +0.4%
iPad 9,699 11,553 10,326 -16% -6%
Mac 5,299 3,720 5,386 +42% -2%

Finally, Apple’s “Other” category, which has become their catch-all, had $4.2 billion in revenue, which was up 31% from a year ago. Other now includes HomePod, in addition to Apple TV, Apple Watch, Beats, and accessories.

Apple is expecting revenues for Q1 2019 to be between $89 and $93 billion, with margins between 38% and 38.5%.

Moving forward, Apple has also decided to stop reporting unit sales. This is unfortunate, because Apple has been more open on their earnings than several of their competitors, even though they’ve never broken-down sales per-model in a category. There’s likely a good reason for this of course. With device sales declining, they will be taking heat, despite the company continuing to increase revenue.

Source: Apple Investor Relations

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  • nicolaim - Thursday, November 1, 2018 - link

    This seems like an error: "Earnings per share were up 40.6% to $2.91."
  • Brett Howse - Thursday, November 1, 2018 - link

    Nope not an error.
  • johnnycanadian - Sunday, November 4, 2018 - link

    Year over year: $2.91 (Q4, 2018) / $2.07 (Q4, 2017), so 40.6%.
  • HStewart - Thursday, November 1, 2018 - link

    I think the problem is Apple does not listen to customers - look at those iPad numbers - people don't want iPad to be desktop replacement - a lot want a new iPad Mini.

    Apple lost me in both the phone and tablet - I use Galaxy Note 8 and Galaxy Tab S3. My last MacBook was 2010 MacBook Air. Apple refused to go touch in Mac line. Sorry Apple you lost me as a customer.
  • ZipSpeed - Thursday, November 1, 2018 - link

    It's ridiculous how much the prices have increased these last 3 years. Here in Canada, the new MBA starts at $1500. iPhone Xs Max 64GB starts at $1519. Personally, 64GB is on the smaller side, so to get the 256GB, I have to fork over $1729. When it's time to upgrade my iPhone 7 Plus, I'm going to have a serious look at that current year's Google Pixel XL.
  • HStewart - Thursday, November 1, 2018 - link

    But people complain about prices of computers now a days and I remember about 20 years ago I purchase Dell Inspiron 7000 with had 300Mhz Pentium II mobile processor with 15 in screen and huge.

    But phones are crazy and out of this world pricing, but most including myself - just ignore the based price but phone companies hide the price in phone plans and want you upgrade and just repeat paying for rest of your life.

    But for computers if you don't want an Apple, you can better price unless you desired top of line. This is why they want higher and higher performing graphics card and more cores. Gaming machines are the worst - because next year new GPU's and CPU and repeat again just like phones.

    But unless you tech freak like myself and most people are you don't need the highest tech - you don't need expensive discrete GPU or machine with more than 2 cores. I am as quilty as gamers with desktop - which I been doing for 30 years. I am typing this on a new Dell XPS 15 2in1 with 4k screen on laptop - but that is not good enough I have it connected to LG 34U88 Ultrawide.
  • HStewart - Thursday, November 1, 2018 - link

    I forgot to list of that price of Dell Inspiron from 20 years ago - it was $3500 and my Supermicro Xeon was whopping $7000. Difference between now and then is something called 0%
  • logamaniac - Friday, November 2, 2018 - link

    show me your receipt from that dell transaction.

    also in 1998 the iMac was released for 1299
  • Speedfriend - Friday, November 2, 2018 - link

    Before getting snotty with someone, maybe do some research. I paid over $4000 for a IBM Thinkpad back in 1998.
  • FreckledTrout - Saturday, November 3, 2018 - link

    I bought a pretty low end Acer Aspire back in 1994 for $2800. Ended up upgrading it to have a super fast 56K modem.

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