Apple's Services Revenue Up 17% Year-Over-Year in 4Q 2018, Hits All Time High of $10B

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Apple's services category, which includes iTunes, the App Store, the Mac App Store, Apple Music, iCloud, Apple Pay, and AppleCare, continues to be an increasingly important revenue driver for Apple, and services growth is once again at an all time high.

During the fourth fiscal quarter of 2018, Apple's services segment brought in $10 billion in revenue, up 17 percent from the $8.5 billion services earned in the fourth quarter of 2017.


According to Apple CEO Tim Cook, services growth was actually at 27 percent if a one-time favorable adjustment from the year-ago quarter is excluded.

Several services categories, including the App Store, AppleCare, Apple Pay, and Apple Music hit all-time revenue records. 330 million Apple customers subscribe to Apple services, a number that has increased 50 percent compared to a year ago.

Cook highlighted Apple Pay's success during the quarter. Apple Pay transaction volume tripled year-over-year, with Apple Pay generating significantly more transactions than PayPal mobile and growing 4x faster.

With the rollout of Apple Pay at Costco locations in the United States, 71 out of 100 major retailers support Apple Pay, and 60 percent of all U.S. retail locations support the Apple Pay service.

Apple has said that it is aiming to reach $14 billion in services revenue per quarter by 2020, a goal the company is well on its way to achieving.

Earlier this year, Morgan Stanley analyst Katy Huberty predicted that over the course of the next five years, services revenue growth will contribute more than 50 percent of Apple's total revenue growth.

Apple is working on bolstering its services category in the future, breaking into the television industry. Apple has more than a dozen original television shows in the works right now, which it is rumored to be planning to distribute via television streaming service set to debut sometime during the first half of 2019.

Tag: earnings

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Apple Reports 4Q 2018 Results: $14.1B Profit on $62.9B Revenue, 46.9M iPhones

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Apple today announced financial results for the third calendar quarter and fourth fiscal quarter of 2018.

For the quarter, Apple posted revenue of $62.9 billion and net quarterly profit of $14.1 billion, or $2.91 per diluted share, compared to revenue of $52.6 billion and net quarterly profit of $10.7 billion, or $2.07 per diluted share, in the year-ago quarter. Revenue, profit, and EPS were all-time records for the September quarter.

Gross margin for the quarter was 38.3 percent, compared to 37.9 percent in the year-ago quarter, with international sales accounting for 61 percent of revenue. Apple also declared an upcoming dividend payment of $0.73 per share, payable November 15 to shareholders of record as of November 12.


For the quarter, Apple sold 46.9 million iPhones, up slightly from 46.7 million in the year-ago quarter. iPad sales fell to 9.7 million from 10.3 million in the fourth quarter of 2017, while Mac sales dipped to 5.3 million from 5.4 million.

For the full fiscal year, Apple generated $265.6 billion in sales with $59.5 billion in net income, up from $229.2 billion in sales and $48.4 billion in net income for fiscal 2017. Both figures are also all-time company records, exceeding standards of $233.7 billion in sales and $53.4 billion in net income set in fiscal 2015.

“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,” said Tim Cook, Apple’s CEO. “Over the past two months, we’ve delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac as well as our four operating systems, and we enter the holiday season with our strongest lineup of products and services ever.”

Apple's guidance for the first quarter of fiscal 2019 includes expected revenue of $89-93 billion and gross margin between 38 and 38.5 percent.


Apple will provide live streaming of its fiscal Q4 2018 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Conference call starts at 2:00 PM Pacific - No need to refresh

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Atlas Chromebook to get a battery boost with Intel Integrated Sensor Hub co-processor

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Apple Expected to Report Its Best Fourth Quarter Ever Today Following iPhone XS and iPhone XS Max Launch

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Apple is set to report its earnings results for the fourth quarter of its 2018 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began July 1, 2018 and ran through September 29, 2018, according to Apple's fiscal year accounting calendar.

Apple provided the following guidance for the quarter back on July 31:

• revenue of $60 billion to $62 billion
  
• gross margin between 38 and 38.5 percent
  
• op. ex. of $7.95 billion to $8.05 billion
  
• other income/expense of $300 million
  
• tax rate of approximately 15 percent before discrete items

Apple's guidance suggests it will report its best fourth quarter results ever, by revenue, comfortably topping its 2017 record of $52.6 billion:

• 2014: $42.1 billion
  
• 2015: $51.5 billion
  
• 2016: $46.9 billion
  
• 2017: $52.6 billion
  
• 2018: $60+ billion

Wall Street analysts forecast that Apple will report $61.5 billion revenue, above the midpoint of its guidance, and earnings per share of $2.78, according to 32 estimates averaged by Yahoo Finance.

Key Takeaways and What to Look For

• iPhone unit sales of around 47.5 million, according to a FactSet estimate. Apple began accepting iPhone XS and iPhone XS Max pre-orders September 14, just over two weeks before Apple's fourth quarter ended. Apple sold 46.7 million iPhones in the year-ago quarter.
  
• Apple doesn't break out iPhone sales on a model-by-model basis, but the iPhone's average selling price should reveal whether customers are leaning towards higher-priced iPhones such as the iPhone XS Max. iPhone ASP was $617.99 in the year-ago quarter.
  
• Mac unit sales should be boosted by 2018 MacBook Pro models, released on July 12, nearly two weeks into the quarter. Apple sold 3.72 million Macs last quarter, its fewest in any single quarter since the third quarter of 2010, due to seasonality and a largely outdated lineup. Mac sales totaled 5.39 million in the year-ago quarter.
  
• Apple's guidance for its first quarter of fiscal 2019, which began September 30 and encompasses the launch of the iPhone XR and the new iPad Pro, MacBook Air, and Mac mini models. Analysts expect record revenue of $92.9 billion, based on 31 estimates averaged by Yahoo Finance.
  
• Continued growth of Apple's Services category, including the App Store, Apple Music, iCloud, iTunes, Apple Pay, and AppleCare. Last quarter, Apple's services brought in a record $9.5 billion revenue. Apple said it is still on target to double its fiscal 2016 services revenue by fiscal 2020.
  
• Continued growth of Apple's Other Products category, including the Apple Watch, Apple TV, HomePod, AirPods, Beats, iPod touch, and accessories, as Apple diversifies revenue beyond the iPhone.
  
  

Apple's CEO Tim Cook and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will loosely transcribe the one-hour call as it occurs live.

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Apple Adding iPhone 5 and Additional Macs to Pilot Program Allowing Repairs of Select 'Vintage' Products

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Normally, an Apple product becomes vintage once five years have passed since it was last manufactured, meaning that Apple Stores and Apple Authorized Service Providers (AASPs) will no longer repair or service the product.


In late January, however, Apple launched a pilot program that permits Apple Stores and AASPs to continue servicing select vintage products, subject to parts availability. The program started in the United States and Turkey with the Mid 2011 iMac and expanded worldwide with the 2012 MacBook Air in August.

Now, Apple is further expanding the program to include the iPhone 5, which became vintage on Wednesday. In an internal document, Apple says Apple Stores and AASPs worldwide are authorized to continue servicing the CDMA variant of the device through October 31, 2020, and the GSM variant through December 30, 2020.

Apple's internal document, obtained by MacRumors from multiple sources, also outlines other soon-to-be vintage iPhones and Macs that will also be added to the pilot program at various dates throughout the remainder of this year:

Effective November 30, 2018:

• iPhone 4S
  
• MacBook Pro (15-inch, Mid 2012)

Effective December 30, 2018:

• MacBook Pro (13-inch, Retina, Late 2012)
  
• MacBook Pro (13-inch, Retina, Early 2013)
  
• MacBook Pro (15-inch, Retina, Mid 2012)
  
• MacBook Pro (15-inch, Retina, Early 2013)
  
• Mac Pro (Mid 2012)

If parts are unavailable for a specific repair for these vintage products, Apple Stores and AASPs are instructed to decline service. This is a pilot program to begin with, so it is subject to change or end at any time.


The exact reason for the pilot program is unclear, beyond Apple apparently having a surplus of service parts for these specific vintage products. Apple's internal document states that inventory of service parts will not be replenished, so repairs under the pilot program are certainly not guaranteed.

Tags: vintage and obsolete, AASP

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Apple Seeds First Beta of tvOS 12.1.1 to Public Beta Testers

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Apple today seeded the first beta of an upcoming tvOS 12.1.1 update to its public beta testing group, one day after releasing the beta for developers and two days after releasing the tvOS 12.1 update.

The tvOS 12.1.1 public beta can be obtained by going to the Settings app on the Apple TV and navigating to the Software Updates section under "System." "Get Public Beta Updates" will need to be toggled on, and once it is, the Apple TV will download the beta software.


What's new in tvOS 12.1.1 is a mystery because Apple does not provide detailed release information for tvOS updates. The new software most likely focuses on bugs that were not able to be addressed in the tvOS 12.1 update.

Nothing new was discovered in the tvOS 12.1.1 beta provided to developers, which is not a surprise as Apple's tvOS updates have historically been minor in scale.

Related Roundups: Apple TV, tvOS 12

Buyer's Guide: Apple TV (Caution)

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Apple Seeds First Beta of iOS 12.1.1 to Public Beta Testers With FaceTime Improvements

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Apple today seeded the first beta of an upcoming iOS 12.1.1 update to its public beta testing group, one day after seeding the same beta to developers and two days after the release of the iOS 12.1 update.

Beta testers who have signed up for Apple's beta testing program will receive the iOS 12.1.1 beta update over-the-air after installing the proper certificate on an iOS device.


Those who want to join the beta testing program can sign up on Apple's beta testing website, which gives users access to iOS, macOS, and tvOS betas.

The iOS 12.1.1 update introduces some significant improvements to the FaceTime interface, and it re-adds the feature that's designed to let you take a Live Photo while on a FaceTime call.

In iOS 12.1.1, FaceTime features a reworked bottom bar that includes quick access buttons for muting a call and flipping the camera. Sliding up on the bottom bar brings up additional options with conversation participants.

Previously, FaceTime users were required to tap on three dots to access a secondary menu with these features.

The update also includes a new option in the Apple News app that lets you hide the side bar if desired.

Related Roundup: iOS 12

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