iPhone X sales did not come in as strong last holiday season as investors hoped. Apple just posted its Q1 2018 earnings, and iPhone sales declined compared to the same quarter a year ago. Everyone on Wall Street seemed to expect an increase.
Still, there’s a silver lining: Despite the weaker iPhone sales, Apple made a record-setting $88.3 billion in revenue during the quarter. CEO Tim Cook says the iPhone X defied the company’s expectations, leading to Apple’s best quarter in history.
“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup,” said Cook in a statement. “iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November.”
My estimate for Apple’s quarterly revenues was $88.299b. The results were $88.3b.
— Horace Dediu (@asymco) February 1, 2018
Total iPhone sales slid to 77.3 million, down 1 percent compared to the same quarter last year. Wall Street was hoping for 80 million iPhones sold, based on the SuperCycle Theory. iPad sales rose 6 percent to 13.1 million, while Mac sales dropped slightly to 5.1 million units sold.
Wall Street might be disappointed that Apple didn’t sell more iPhones than ever during Q1, but raising the price on the iPhone X helped Apple bring in more revenue than ever. Shifting to a higher-priced iPhone allowed Apple to still bring in a ton of money, even if sales are a bit stagnant.
Apple CFO Luca Maestri noted that the company achieved an all-time high profitability for the quarter, with earnings per share up 16 percent. $14.5 billion was returned to investors during the quarter too.
Cook also expressed excitement about Apple’s install base, which hit a new high.
“We’ve also achieved a significant milestone with our active installed base of devices reaching 1.3 billion in January,” said Cook. “That’s an increase of 30 percent in just two years, which is a testament to the popularity of our products and the loyalty and satisfaction of our customers.”
Apple is providing the following guidance for its fiscal 2018 second quarter:
- Revenue between $60 billion and $62 billion
- Gross margin between 38 percent and 38.5 percent
- Operating expenses between $7.6 billion and $7.7 billion
- Other income/(expense) of $300 million
- Tax rate of approximately 15 percent