Q1 2018 Financial Results

Apple announced financial results for Q1 2018 (ended 30 Dec 2017) on 1 February 2018, and held a conference call with analysts to discuss the success of specific products and its plans for the future. It was a record-setting quarter, with particularly impressive performance in the iPhone and Other Products categories, although Mac sales and revenue were both down. Here are the headline announcements:

  • Revenue of $88.3bn, up 13 percent on Q1 2017 and an all-time record
  • Quarterly earnings per diluted share of $3.89, up 16 percent, also a record
  • A cash dividend of $0.63 per share of the company's common stock
  • International sales represented 65 percent of revenue

"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 Tim Cook. And CFO Luca Maestri said that "thanks to great operational and business performance, we achieved all-time record profitability during the quarter."

Apple made the following predictions for Q2 2018:

  • Revenue between $60bn and $62bn
  • Gross margin between 38 percent and 38.5 percent
  • Operating expenses between $7.6bn and $7.7bn
  • Other income/expense of $300m
  • Tax rate of approximately 15 percent

Let's look at the separate product categories in a bit more depth.

How many iPhones did Apple sell in Q1 2018?

Apple sold 77 million iPhones this quarter, which is 1 percent down on the 78 million it managed in the same quarter last year. But despite shipments being slightly down, iPhone revenue was actually up, and quite significantly so: $61.6bn, up 13 percent on the $54.4bn it made in Q1 2017.

In other words Apple is making a lot more money from slightly fewer iPhones, and we can put that down to the high unit price and evidently successful launch of the iPhone X.

"iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November," said Cook.

Apple financial results Q1 2018: iPhone X

How many iPads did Apple sell in Q1 2018?

Just over 13 million. That's slightly up (1 percent) on Q1 2017. Revenue was $5.9bn, which is 6 percent up on last year, so the average selling price is up here too.

How many Macs did Apple sell in Q1 2018?

Slightly more than 5 million, for revenue of $6.9bn. Those figures are both 5 percent down on last year.

Apple will hope that the iMac Pro will give its revenues a boost in the next quarter: that product launched just two weeks before the end of Q1.

How many Apple Watches did Apple sell in Q1 2018?

We don't know! Apple still doesn't report Apple Watch sales individually, instead rolling them in with Other Products (which also includes Apple TVs, iPods, peripherals and accessories). That category brought in $5.5bn, which is a stunning 36 percent up on Q1 2017 - it's possible that watch sales are doing well, although we suspect the Apple TV 4K drove a lot of that growth.

Apple financial results Q1 2018: Apple TV

How much money did Apple make from the App Store & iTunes?

The Services category, which includes the App Store as well as items such as Apple Pay and Apple Music, brought in just under $8.5bn this quarter, which is 18 percent up on last year: another strong performance.

How does this compare to Apple's predictions?

It's slightly better than expected. When it announced its fourth-quarter results for 2017, Apple provided the following guidance for its fiscal 2018 first quarter:

  • Revenue between $84 billion and $87 billion
  • Gross margin between 38 percent and 38.5 percent
  • Operating expenses between $7.65 billion and $7.75 billion
  • Other income/(expense) of $600 million
  • Tax rate of 25.5 percent