Everything you need to know about Apple earnings for Q3 2015

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Good news for Apple investors today.
Record sales for Q3 2015.
Photo: Ken Teegarden/FlickrCC

We didn’t get Apple Watch numbers, but Tim Cook and Luca Maestri delivered plenty of good news about Apple’s current financials and future prospects during Tuesday’s earnings call. Amid all the canned statements and bewildering biz speak, they dropped some tantalizing tidbits.

Cook and Maestri teased us with plenty of bullishness — and a little debunking — about impressive Apple Watch sales and consumer responses to the new device. And that’s just the tip of the iceberg: Apple hit record numbers again this quarter, with massive sales of both iPhone 6 and Macs across the globe.

Here are the highlights from today’s third-quarter 2015 Apple earnings call.

The iPhone continues to shine

iPhone continues to rock across the globe.
iPhone continues to rock across the globe.
Photo: Rob LeFebvre/Cult of Mac

iPhone revenues are up 59 percent year over year, says Cook, which is a June quarter record. The customer-satisfaction indexes Apple looks at show iPhone is the highest-rated of any smartphone brand, with the highest switcher rate (from Android) they’ve ever measured: 86% of those interested in a new smartphone plan to purchase an iPhone.

Mac makes waves as PCs sink

In an industry that IDC says is contracting by 12 percent, the Mac is beating the trend with a 9 percent growth rate year over year. Cook and Apple CFO Luca Maestri both reminded investors that the new MacBook is still facing huge demand: Apple continues to catch up with the strong interest in the svelte laptop. There’s been a 33 percent increase in market share for Macs over last year’s third quarter.

Apple Watch is doing awesome

Apple needs no shelter, thank you.
Apple needs no shelter, thank you.
Photo: Jim Merithew/Cult of Mac

Despite an unwillingness to give competitors any advantage by releasing specific Apple Watch numbers, Tim Cook gave some indicators that the wearable is doing amazingly well, including the fact that Apple Watch sold far better than the original iPhone or iPad did initially.

The Other Products category, which is where Apple Watch numbers get lumped in, is deceiving, says Cook. Sales of products in that category that are not Apple Watch are actually shrinking, so any math whiz that simply subtracts last quarter’s numbers from this quarter’s isn’t getting an accurate take on Apple Watch sales. Take that, naysayers.

And that Slice data positing that Apple Watch sales dropped 90 percent after launch week last April? Cook laid those concerns to rest, saying “our June [Apple Watch] sales were higher than April or May.” (Maestri also said Apple Watch sales topped internal expectations.)

Cook made the point that launching the Apple Watch wasn’t solely for sales alone. Sure, they’re glad it’s selling, but they’ve positioned a new product category based on a constrained initial supply in less-than-optimum sales environments (online versus in-store). Cook is so attached to his Apple Watch, he never goes anywhere with out it.

“I feel fantastic about what the team has done and delivered,” he said, and watchOS 2 — which will bring native apps and other goodies to Apple Watch this fall — will only make the device better.

Services are massive

Apple brought in $5 billion in services revenue this quarter, with record App Store growth of 24 percent, the best seen in any quarter since it launched. App Store revenues doubled in the past quarter.

China is huge

Tim Cook said China was Apple’s next big market, as the developing nation continues to become Apple-centric. The iPhone is selling amazingly well — to the tune of 87 percent growth in greater China — and the Chinese App Store showed a staggering 112 percent increase in sales, with 250,000 apps available.

Maestri chimed in on China, saying revenue from the large country doubled to $13 billion from $18 billion in sales. That’s a lot of cash right there.

Apple remains a force

Apple had a great Worldwide Developers Conference, where it was able to announce big operating system initiatives and get betas into the hands of developers everywhere. With such massive revenue coming from various App Stores across the globe, it makes sense for Apple to connect with and nurture its third-party app developers.

Apple News rated a special mention today, with Cook saying Cupertino had signed 25 percent of the major publishing concerns for the upcoming news app. More than 75 news outlets are signed on to feed the Apple News app with fresh daily content.

“We believe it will be the best news reading experience on any mobile device,” Cook said.

Apple Music is doing very well, too, with “millions and millions of customers” taking advantage of the three-month trial period to check out the service, which includes one-of-a-kind worldwide radio station Beats 1. More than 15,000 artists are using Connect to get in touch with fans.

Big growth for Apple Pay

Apple Pay on Apple Watch.
Apple Pay on Apple Watch.
Photo: Rob LeFebvre/Cult of Mac

Apple recently launched Apple Pay in the U.K., with more than 25 million locations in the country and most of the major banks and credit/debit card providers represented. Heck, you can even ride the Underground with Apple Pay.

In the U.S., Apple Pay continues to expand, with a new Square reader coming this fall to bring Apple Pay support to local businesses. Apple Pay is seeing 80,000 new additions per day, and American Express Corporate is adding its cards to Apple’s retail processing system. Cook hopes to see more than 1.5 million total U.S. locations by the end of the year.

iPad sales are down but Cook still ‘bullish’

Apple sold about 3 million fewer iPads last quarter than in the equivalent time frame in 2014 (10.9 million units this year versus 13.3 million last year). But Cook reminded investors to remain calm. iPads are still used by a staggering number of people; the iPad is not going anywhere.

Customers love them, and new features coming in iOS 9, including Split View multitasking and new QuickType text-input systems, will help sell plenty more of the ubiquitous tablet computing devices.

Additional reporting by Lewis Wallace.

  • Gregg_Thurman

    Keying on TC’s statement that Apple Watch exceeded iPad launch quarter sell through I calculated (guesstimated?) that Apple Watch units sold were about 2.600 Million. This is entirely in line with my oft arged belief that Apple Watch sales estimates should compare to iPad launch quarter, and that any quantity above 2.900 Million would be an unqualified success.

    WS’s estimates were baseless and hopefully optimistic, especially the venerated Ming Chi Kuo, who has had some success in the past, but given far to much credit for his lucky guesses.

    • Richard Liu

      The overall smart watch market in 2014 is 1.2B USD / 6.8M units, contributed by 89 companies from 18 countries. Samsung took the largest market share with 300M USD / 1.2M units from 3 different models. Even with the “disappointing” 2.6M estimation, Apple Watch is already doubled Samsung’s 2014 yearly sales in 9 weeks.

      • ITprogrammer

        Apples to oranges. Apple dedicated HUGE advertising/promotional dollars to the Apple Watch. Meanwhile, Samsung did pretty much no advertising for their smart watch, and neither did LG, Motorola etc. Everyone knows that the Apple Watch exists while virtually no one but tech fans knows about the Samsung or other watches. You guys can spin it all you want, but for all the money that Apple put into promoting the Apple Watch, to only sell 2.5 million of them so far is underwhelming. As a matter of fact, when you consider the advertising costs, I wonder exactly how much profit Apple has even made on the devices.

      • Richard Liu

        Well Samsung did make quite a few CMs since 2013. Unfortunately, all of them are pure horrible, even worse than that awful Downey-Jr.-misspelling-HTC CM.
        Part of you claim is true: Apple did make some extraordinary effort in promotion that no other company had ever thought before: they sell the smart watch as luxury.

  • Carlardavis

    Taste The -in-f-m–a– – < w­­­w­­­w.­­­­N­e­t­C­a­s­h­­­9­­.­­­C­­­o­­­m

  • ITprogrammer

    “iPhone revenues are up 59 percent year over year, says Cook, which is a June quarter record.”

    Problem 1: Apple did not sell as many iPhones as hoped/projected.

    Problem 2: despite their propaganda to the contrary, the iPhone 6 did not overtake Android’s market share lead in most developed markets, nor did it slow Android’s growth in developing countries.

    Huawei’s major sales and profit increase – overtaking Apple and Xiaomi in Chinese smartphone sales if their figures are to be believed – is huge, since everyone knows that:

    A) Google is going to brand the next Huawei flagship as a Nexus in order to give Huawei access to carriers and distributors in America and other developed markets

    B) Huawei is going to open up their app store at minimum – and possibly other Chinese app stores also – to Google apps with Google branding.

    People are used to Apple making big profits. They have ever since introducing the iPod. What they were hoping to see was evidence of a game-changer: of Apple doing to Google and Android what they did to Microsoft and Intel. There is no evidence of that happening, and as a matter of fact except for average (but not terrible) sales for the Samsung Galaxy S6, there is ample evidence that it isn’t.

    • Richard Liu

      我猜你八成是華為員工。既然你能翻牆出來看世界,就不要繼續沉浸在強國光環裡了。中國是很大,不過還不足以撼動那些第一世界自我感覺良好的優越地位;那些老外看中國品牌是用什麼眼光,我想我不用提醒你。華為最好先統一管好自己產品線的設計風格,搞清楚自己想要表現出來的亮點到底是什麼,不然不管你在內地銷售蟬聯多少季第一,拿到國際市場一樣不能和 Samsung、LG 這些一線大廠比。Nexus 這頂桂冠從以前到現在對公司都只有扣分從來沒有加分,台灣的某手機品牌大廠一樣也是拿過 Nexus,看看現在變成什麼樣?他們就是沒搞清楚公司品牌發展方向才會搞成這樣。華為今年的榮耀 7 已經有一點這種徵兆了。Engadget 正體中文版的榮耀 7 評論,你們最好花點時間去看看。