A strong performance for Apple in what has traditionally been termed as its weakest quarter has seen revenue from its iPhone arm up 20% compared to last year.
The electronics giant also managed to beat earnings estimates across the board, with strong showings all around.
Posting results of $53.3bn in total revenue across the quarter, Apple managed to go above analyst expectations by a billion dollars as well as achieve growth of $17bn compared to forecasts of $15bn.
The company’s performance against expected earnings per share also boasted good results, with $2.34 beating the estimated $2.16.
Most of the positive returns news is due to Apple’s success in a change of strategy for its iPhone sales. Turning around a slowdown in sales has been harder to achieve, so Apple brought out higher specification models with higher retail prices, and this appears to have done the trick.
With the iPhone X retailing at $1,000 and the iPhone 8 and iPhone 8 Plus retailing at $700 and $800 respectively, the higher margins have clearly paid off for Apple CEO Tim Cook and his team.
A key marker for success with sales of the iPhone was the average selling price of all models together, which came in at $724 and beat estimates of $693 by a comfortable distance.
Analyst Tom Forte of DA Davidson said that the “strength in the high-end luxury end of the market” paid dividends for Apple, allowing it to “generate free cash flow and buy back a lot of stock”. This gives Apple much greater scope for liquidity, strategic flexibility and the ability to reinvest and influence returns in the future. Forte said that he believes both trends are set to carry on.
Cook attributed the company’s positive results in Q3 to “strong sales of iPhone, Services and Wearables” while expressing his excitement for the future products that Apple is already working on. He believes that these products can continue to take the company to new heights.
Services, which includes iTunes, iCloud and the App Store, rose by a particularly impressive 31% to take in total earnings of $9.5bn for the business.
The only downside in Apple’s Q3 performance came from poor sales of its Mac series and iPads, which both saw 5% drops to a respective $5.3bn and $4.7bn.
Apple’s stock should now see a boost from having spent more than $20bn in stock buybacks over the period. This should allow the company to reduce its huge cash balance reserves somewhat, which will then allow its earnings per share figure to rise. Apple is known for its canny financial structures, and its shares should continue to increase off the back of the positive news.
In the first few hours after the revelation that Apple beat its earnings estimates, its shares were up 3.6%. This has taken the company to an all-time best of $197.20 a share.