Apple enjoys its fourth straight quarter of revenue growth in Q2 2018

Apple posted its financial results for the second quarter of 2018 (or the third quarter of its fiscal 2018) today. The company took in $53.3 billion in revenue, up 17% year-on-year, and made $12.6 billion in operating income, also up about 17% year-on-year. Net income was $11.5 billion, up 32.1% year-on-year, and gross margin was 38.3%, down about 0.2 percentage points.

iPhone shipments totaled 41.3 million, or an increase of 1% on the year. Despite the more-or-less unchanged unit shipments, Apple's handsets brought in $29.9 billion in revenue, or an impressive 20% increase from a year ago. The fact that Cupertino is making more revenue off the same number of units shipped suggests the ultra-high-end iPhone X is still selling well.

Apple moved 11.5 million iPads last quarter, up 1% on the year. The company's family of slates brought in $4.7 billion in revenue, down 5% on the year, suggesting the latest entry-level iPad's $329 starting price might be eating into the iPad's overall slice of the revenue pie a bit.

The company shipped 3.7 million Macs last quarter, down 13% on the year. That bite out of the proverbial apple was stilll good for $5.3 billion in revenue, down 5% on the year. Apple just released new MacBook Pros with a shot of Coffee Lake inside, and after some early teething pains, reviewers seem largely satisfied with the performance of those new machines. Next quarter might prove better for the Mac as a result.

The Other Products division, home to the Apple Watch, AirPods, and the HomePod, took in $3.7 billion in revenue, up a whopping 37% year-on-year. Finally, Apple's Services revenue of $9.5 billion was good for a 31% increase year-on-year.

For the third quarter of 2018 (its fiscal fourth quarter), Apple expects revenue between $60 billion and $62 billion and gross margins between 38% and 38.5%. That revenue figure would represent year-on-year growth of about 14%–18%.

Comments closed
    • derFunkenstein
    • 1 year ago

    Fourth consecutive revenue growth was Q2 2018. That means Q2 2017 was a down quarter. Based on that assumption, maybe these growth percentages aren’t quite a big deal, since they’re all based on that down year-ago quarter.

    I can’t find TR’s post on the year ago quarter. The “Q2 2017” post uses Apple’s fiscal Q2, so it’s the first calendar quarter, which was also apparently not that great. [url<]https://techreport.com/news/31837/services-are-apple-bright-spot-in-a-mostly-flat-fiscal-q2[/url<]

    • tipoo
    • 1 year ago

    They have a potential supercycle coming too with the iPhone 9 supposedly with the X’s display ratio but the 8’s price. And then the iMac refresh with ProMotion (I’m assuming, some “high performance display technology” was mentioned), Mac Mini refresh at last, the 13″ Budget Macbook…

    I think they could hit the big 1T next quarter.

      • DancinJack
      • 1 year ago

      They also just released the new MBPs. I don’t think they will have huge sales from them, but it’ll be more than Q2.

      • oldog
      • 1 year ago

      I’m not so sure about “supercycles” any more. I just borked my iPhone 7 in a swimming pool in Portofino (don’t ask).

      The genius in Century City gave me a new one for $100 on Apple Care. I can’t imagine I need an “upgraded” one.

        • tipoo
        • 1 year ago

        There’s a “do I need anything better?” demographic and a “must buy shiney new thing” demographic, both have always existed and both will always continue to. Even if the total percent of install base users that upgrade decreases, cycles much larger than others around them will still happen around interesting times (“regular” pricing for the X reduced bezel display being the big one I see).

      • tipoo
      • 1 year ago

      Heh, next quarter ended up being next day.

    • trackerben
    • 1 year ago

    Their ‘Other Products’ division alone would make it into the Fortune 1000.

    • End User
    • 1 year ago

    Mac sales really dropped. I’m curious to see if the just released MacBook Pros improve things next quarter.

    Apple finally released a macOS Mojave update that included the performance fix for the 2018 MBPs. The Cinebench R15 multi core score for my i7-8559U equipped 13″ jumped from 606 to 714 – not bad.

      • sweatshopking
      • 1 year ago

      People want new shiny things. Wife’s class of medical students is pretty evenly split between surfaces and Mb pros. This is quite change from previous programs she was in. Idk if it is consistent across other programs, but I found it quite surprising.

        • DancinJack
        • 1 year ago

        It doesn’t hurt WIndows machines have been exponentionally better than they used to be the last five years or so. Also, Apple may as well have done nothing to the MBP line for the past three years. Would have had the same sales imo.

        Q3 should be better for them.

          • tipoo
          • 1 year ago

          It’s the lowest selling quarter since 2010, so the slightly late spec bump doesn’t explain all of it. We’ll see next quarter, but ever since after the slight redesign uptick from pent up demand, it’s been pretty lukewarm feelings to this current incarnation of MBPs.

          Though I think the Macbook Budget being rumored could set off a supercycle too.

      • Krogoth
      • 1 year ago

      Macs have been playing second fiddle to i-Gadgets since late 2000s. Outside of the hardcore macolyte crowd and some professional graphical studios. Nobody is getting Macs for their PC needs.

        • End User
        • 1 year ago

        I’m not getting a PC for my toaster needs.

          • sweatshopking
          • 1 year ago

          No, you just get a copy cat iPad pro for that.

            • End User
            • 1 year ago

            If you had no soul.

        • blastdoor
        • 1 year ago

        [quote<]Macs have been playing second fiddle to i-Gadgets since late 2000s.[/quote<] Basically true. [quote<] Outside of the hardcore macolyte crowd and some professional graphical studios. Nobody is getting Macs for their PC needs.[/quote<] Although Apple seems to agree with you, I don't think that's really true (or at least, it's not necessarily true). For example, [url<]https://www.extremetech.com/computing/238002-ibm-claims-moving-to-mac-drastically-reduced-support-calls-operating-costs[/url<] Whether Apple realizes it or not, the Mac is probably the single stickiest (and therefore most valuable) product in their ecosystem. Their goal should be to try and convert new iPhone/iPad users to the Mac as quickly as possible. But unfortunately Apple is dropping the ball with the Mac and missing opportunities because of it.

    • tipoo
    • 1 year ago

    The new Macbooks are faster and the butterfly keyboard may be wearing a condom now, but it still feels like the market is in an extended inhale waiting for something else, after lukewarm feelings to this design generation overall. Maybe this 13″ budget macbook kicks things off more, like the iPad Budget did, in the meantime between a true generational redesign for the Pros.

    • Ushio01
    • 1 year ago

    So what happened to Mac sales? you have to go back to Apple’s 3rd quarter 2010 for shipments to be lower.

      • blastdoor
      • 1 year ago

      No product updates

        • deruberhanyok
        • 1 year ago

        Yep, that’d be my guess too.

        Macbook Air not updated since 2015.

        Mac Mini not updated since 2014.

        Mac Pro not updated since 2013.

        retina Macbook Pros basically the same since 2012, unless you count the touch bar, until the new ones just launched with Coffee Lake ( but those came in after the end of the quarter).

        retina Macbook has gotten consistent yearly updates, but that makes its last refresh over a year ago now.

        iMac updated last year, but just as a refresh from the 2015 model.

        Only new Mac product recently is the iMac Pro which starts at $5,000 so it’s not going to be a high volume product.

        Basically: there’s no compelling reason to upgrade if you have a recent model, and the bar to entry is pretty high on stuff that’s been updated recently.

      • Krogoth
      • 1 year ago

      They became irrelevant after Apple seized the lion’s share of the eGadget market. The truth is that Apple never got big from its Mac and regular PC line-up even back during its halcyon days of late 1980s into early 1990s. Apple always lost out to the other PC OEMs and almost became bankrupt in its darkest days.

      eGadget craze is what made Apple into the mighty juggernaut that it is today. They seize that market at the right time and had managed to outpace its competition for a solid decade and is working on a second solid decade.

        • derFunkenstein
        • 1 year ago

        Apple has to keep selling Macs since they’re hardware dongles for iOS development. They’re the fuel that makes the iOS cash cow go ’round.

    • DancinJack
    • 1 year ago

    Apple Watch and Apple Music/Pay/iCloud killin’ it.

    edit: And Pay is gonna keep killin’ it. They’re launching soon at CVS and 7-11. That’s A LOT of stores in a ton of places.

    edit2: btw, Apple really screws people on the default iCloud storage. You get 5GB by default. It’s likely not even enough for most people to back up their phones to the service depending on usage. It’s so stupid. Granted, 50GB is only a dollar a month, but it’s still just stupid. Good business, obviously, though.

      • tipoo
      • 1 year ago

      You can’t even do a full backup of some models on the free iCloud storage, it’s silly. Imo, at least starting with matching the storage tier of the phone you bought would be something, not fantastic but something, so 64GB gets you another 64GB in the cloud as free, etc.

        • Usacomp2k3
        • 1 year ago

        I like that idea.

    • derFunkenstein
    • 1 year ago

    The iPhone X is probably selling well, and it’s probably Apple’s most popular model, but don’t also forget that every new iPhone across the board in 2017 cost more than the one before it. It was only a $50 price hike, but it’s a price hike all the same.

      • rudimentary_lathe
      • 1 year ago

      I plan to rock my iPhone SE for as long as possible. I like the security/support of the iOS ecosystem, but the prices are getting out of control (much like with the MacBook Pro line). Hopefully they keep the SE as a relatively inexpensive entry into the ecosystem.

        • strangerguy
        • 1 year ago

        Apple’s iPhone pricing strategy is to raise ASPs while sacrificing a bit of shipments for more overall profit, but I think 2018 it’s gonna be the year the straw breaks that camel’s back.

          • blastdoor
          • 1 year ago

          It’s a bit more nuanced than that. They are increasing the ASPs, but they are also increasing the variance of the selling price by keeping older phones around at discounted prices. Those lower-prices phones allow them to attract/retain people into the ecosystem, which then helps with service revenue.

          I’m not sure what you mean by “break the camel’s back,” but I’ll guess that in 2018 units will be stable to slightly higher and the same will be true of ASPs.

        • derFunkenstein
        • 1 year ago

        The SE seems really popular. It’s the model (or, at least, the 4″ form factor) I see the most when I’m out and about, even if it’s mostly in the hands of middle school and high school kids.

          • rudimentary_lathe
          • 1 year ago

          I like it because it has the same power as the 6 in the smaller form factor. Better pixel density would be nice but it’s not a show-stopper. I’m glued to a laptop for much of the day, so I mostly need my phone for calls and interfacing with my car’s center console display for maps, etc – all things the SE does very well.

    • chuckula
    • 1 year ago

    Interesting how the biggest percentage increases are from the non-phone gadgets and from services too.

      • tay
      • 1 year ago

      AirPods, Apple Music, and Apple Watch. Certainly not the horribly restrictive HomePod.

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