Apple’s Q3 earnings beat expectations thanks to booming App Store

Apple’s Q3 earnings beat expectations thanks to booming App Store

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Tim Cook answered some tough questions during his interview.
Apple's earnings aren't as bad as expected.
Photo: CBS

Apple today revealed its results for the third fiscal quarter of 2016, and they make for surprisingly pleasant reading for investors. The company reported revenue of $42.2 billion and quarterly net income of $7.8 billion after App Store sales hit an all-time record.

“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” said Apple CEO Tim Cook.

“We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”

Apple’s services business grew a whopping 19 percent year-over-year and App Store revenue was the highest it has ever been since it opened its doors in 2008. The company is attributing that to its ever-growing install base for iOS.

During Q3, Apple returned over $13 billion to investors through share repurchases and dividends, and has now completed almost $177 billion of its $250 billion capital return program, according to CFO Luca Masestri.

Here’s what Apple is forecasting for Q4 2016:

  • revenue between $45.5 billion and $47.5 billion
  • gross margin between 37.5 percent and 38 percent
  • operating expenses between $6.05 billion and $6.15 billion
  • other income/(expense) of $350 million
  • tax rate of 25.5 percent

Apple will tell us more about Q3 2016 during its earnings call today, which kicks off at 2 p.m. PDT. You can listen in live on its website.