The biggest takeaways from Apple’s dominant Q3 earnings results


Apple is made of money.
Apple is made of money.
Photo illustration: Ste Smith/Cult of Mac

Apple beat Wall Street’s expectations today with its Q3 2018 earnings report. Even though iPhone sales were barely up 1% the company still posted better-than-expected revenues as sales of Apple Watch, services and AirPods picked up the slack leading to Apple’s best Q3 results ever.

Prices of Apple shares skyrocketed closer to the illustrious $204 mark that will make the iPhone-maker the first ever trillion dollar company once the results posted and Tim Cook seemed extremely confident and relaxed on his call with investors this afternoon. While the rest of tech stocks are starting to sink, Apple is as steady ever.

Are you tired of Apple winning yet?

Tim Cook money bag
Tim Cook makes this look too easy.
Illustration: Cult of Mac

We haven’t seen any surprises from Apple during an earnings call in years. That’s exactly the way Tim Cook wants it. Analysts were expecting Apple to hit the low or middle of its guidance for the quarter, but Apple actually hit the high-end.

iPhone sales were up slightly year-over-year. Revenue was up big time. The ASP (average selling price) was also up big time. Even Apple’s EPS (earnings per share) was higher than some of the biggest Apple believers expected. Everything was ho-hum in Cupertino as the rest of the tech industry is struggling to post growing numbers.

iPhone X is still dominant

The iPhone X is still on the top of sale charts.
Photo: Apple

When the iPhone X launched last year it was panned as too expensive by far too many critics. It turns out that selling a ridiculously-expensive iPhone was actually ridiculously brilliant. As Android copycats try to mimic the iPhone X’s design, competitors like Samsung are in a slump.

iPhone revenue was up 20% YOY. The install base was driven by switchers, first time iPhone buyers and loyal iPhone owners. And the iPhone X was the most popular iPhone in the quarter.

Mac sales are down

2018 MacBook Pro
The 2018 MacBook Pros didn’t launch soon enough.
Photo: Apple

Apple didn’t talk much about the Mac during its earnings call and investors didn’t seem to care much as long as the profits are flowing. Even though the Mac install base had double-digit year-over-year growth sales were down.

CFO Luca Maestri blamed the sluggish results on the launch of the new MacBook Pro Last year Apple launched new MacBooks and iPads at WWDC 2017 which is part of Q3. This year the launch didn’t happen until Q4. A lot of potential MacBook purchasers waited for the new units instead of going for the old versions and that hurt Apple’s bottom line just a little bit.

Wearables are up big-time

apple watch
A big Apple Watch update is on the horizon.

Apple Watch Series 4 is set to launch later this fall but that hasn’t stopped people from scooping up the current version in droves. Wearable sales are up 60% year-over-year.

Tim Cook noted on today’s earnings call that Apple Watch can also be a catalyst for iPhone sales, instead of the other way around. AirPods and Beats are also selling well. Combined with Apple Watch they’ve generated more than $10 billion in revenue in just the last year. AirPods remind Tim Cook of the early days of iPod and how iconic those white wires were when the first started catching on.

Tim’s not scared of the US vs China trade war

Donald Trump speaks to supporters at an immigration policy speech at the Phoenix Convention Center in Arizona.
Apple hasn’t been hit by Trump’s trade war…yet
Photo: Gage Skidmore/Flickr CC

Investors have been leery that Trump’s trade war with China could hit the iPhone and raise prices. Tim Cook doesn’t seem too worried that it will be a catastrophe and reckons that “cooler heads” will prevail.

As far as the tariffs that have been imposed (the steel and aluminum tariffs and two others that total $50 billion of goods), none of Apple’s products are directly affected. There is a fourth tariff that is out for public comment. Apple is evaluating it and will share its views on it before the comment period is over.

“There’s an inescapable mutuality that serves to bring the US and China together,” Cook told investors on today’s call. Both countries need each other in order for the world to do well.

There’s a big iPhone launch on the horizon

iphone x
The iPhone X Plus will launch this fall.
Photo: Ste Smith/Cult of Mac

Guidance for Q4 2018 was posted between $60 billion and $62 billion. That would be a pretty big jump from the $52.6 billion Apple made in the same quarter last year, suggesting that a big iPhone launch is set for September. Last year, Apple launched the iPhone 8 and iPhone 8 Plus during Q4 but the heavily anticipated iPhone X didn’t come out until Q1 2018. With three new iPhones slated for launch in the fall, 2018 could finally be the iPhone upgrade super-cycle investors have been waiting for.

Apple’s TV streaming service is about to go BIG

Apple TV
Apple is working on a ton of original TV shows.
Photo: Apple

We’ve known all year that Apple is making a planning a huge attack on TV streaming services. Today, Tim Cook gave his biggest indication yet that something major is on the horizon.

Cook finally comment on Apple’s TV deal with Oprah, saying he “couldn’t be happier” that she’s on board. He also stated that the cord-cutting revolution is about to take off far faster than people originally thought.

Everything points to “dramatic changes speeding up in the content industry,” Tim told investors. “We’re really happy to be working on something. We’re just not ready to talk about it in-depth today.”


Daily round-ups or a weekly refresher, straight from Cult of Mac to your inbox.

  • The Weekender

    The week's best Apple news, reviews and how-tos from Cult of Mac, every Saturday morning. Our readers say: "Thank you guys for always posting cool stuff" -- Vaughn Nevins. "Very informative" -- Kenly Xavier.