Apple’s revenue from India doubled year-on-year (YoY) for the quarter ended September 30, 2017 (Q4 2017), Apple CEO Tim Cook said during the company’s earnings call. CFO Luca Maestri added that the company returned to growth in greater China in this quarter, where revenues increased 12% YoY. Besides India, “we grew more than 30% in Mexico, the Middle East, Turkey and Central and Eastern Europe. These results have fueled overall growth of over 20% from emerging markets,” he mentioned.
While answering an analyst question about how Apple can become more successful in India, Cook said that growing in a “market like India is a result of all of those things [manufacturing footprint, partners, more physical stores, lower price points among others] and doing them all well. And so it’s analogous to the many years that we put into China. It’s building stores. It’s building channels. It’s building markets. It’s building the developer ecosystem. It’s having the right product lineup for the market. And I feel like we’re making good progress there and are gaining an understanding of the market, but we still have a long way to go, which I sort of see as an opportunity instead of a problem. And I do feel great about the growth rate.”
“We started manufacturing the iPhone SE there (India) six, nine months ago so. And the majority of the iPhone SEs that we sold in the domestic market last quarter were manufactured there,” added Cook.
Apple sold 46.7 million iPhones during the quarter, up 3% YoY. Sales of iPhones in several emerging markets such as mainland China, India, the Middle East, Central and Eastern Europe, and Mexico increased by double digits, according to Maestri.
“We increased market share for iPhone, Mac and iPad during the quarter. We hit all-time revenue records for Services and for Mac… We’ve had very strong iPad revenue growth. We had double-digit unit growth in iPhone and both the upgraders and Android switchers were both up on a year over year basis during the quarter, and so the results were broad-based… The other thing that’s happened is that the decline that we’ve been experiencing in Hong Kong moderated…,” said Cook.
It’s interesting that Cook mentioned Hong Kong, because according to this Bloomberg report, iPhone Xs are already being bought and sold on the streets of Hong Kong, and it’s just Day 1.
Pricing of iPhones
While answering an analyst question regarding what kind of sales Apple has witnessed for iPhones at the lower-end ($349) versus those at the higher-end (above $1000), Cook said that “in terms of what we saw in Q4… we had good success… through the different iPhones. And we’ve tried hard to have an iPhone that is as affordable as possible for people that really want an iPhone but may have a more limited budget. And we’ve got some iPhones that are really great for that market. And then we’ve got three new iPhones and people will look at these and decide which one they want. And this is the first time we’ve ever been in the position that we’ve had three new iPhones at once like this at the top end of the line.”
Mac & iPad sales
This was the best September quarter for Mac sales ever, with Mac sales generating revenues of $25.8 billion up 25% YoY, primarily “driven by the notebook refreshes we launched in June and a strong back-to-school season,” said Cook. In total, Apple sold 5.4 million Macs in Q4 2017, which was up 10% YoY. “This performance was fueled primarily by great demand for MacBook Pro,” said Maestri. In September, Apple also launched the new version of the Mac OS, High Sierra.
In Q4 2017, Apple sold 10.3 million units of iPad, up 11% YoY, “with strong demand for both iPad and iPad Pro,” said Maestri. Revenue generated by iPad sales was up 14% YoY. In India, iPad unit sales increased 39% YoY for the quarter, while in China the growth was 25% YoY.
For the third consecutive quarter, Apple Watch unit sales grew by over 50% YoY. Note that Apple began shipping its latest Apple Watch Series 3 in October, while Apple Heart Study, a system that will utilize data collected by the Apple Watch “to identify irregular heart rhythms and notify users when unusual patterns are detected,” is expected to be launched soon.
“Earlier this week, we introduced watchOS 4.1, bringing 40 million songs to your wrist through Apple Music,” added Cook.
Note: Units in thousands, Revenue in millions.
On Services segment
Apple posted revenues of $8.5 billion in the services segment for the quarter, which was up 34% YoY. Note that this included a favourable one-time revenue adjustment of $640 million. So, minus this one-time adjustment services revenues increased 24% YoY.
App Store: The company claimed that the revenue generated by the App Store was close to double the revenue generated by Google’s Play Store. “We’re seeing increases in the frequency of customer visits, the amount of time they spend in the store and the number of apps they download,” said Maestri about the App Store.
Apple Music: The number of paid subscribers of Apple Music increase over 75% YoY. “We’re seeing our highest conversion rates from customers trying the service,” said Maestri.
Overall, the number of paid subscriptions across all of Apple’s services offerings stood at 210 million at the end of Q4 2017, which was an “increase of 25 million in the last 90 days.”
Apple Pay: The company expanded Apple Pay to Denmark, Finland, Sweden and the UAE in October. “Over the past year, active users have more than doubled and annual transactions are up 330%. In the U.S., 70% of leading grocery chains are now accepting Apple Pay with the recent launch of Safeway and over 5 million U.S. merchant locations will be Apple Pay enabled by the end of this year,” said Maestri.
Total revenue: $52.6 billion, up 12.22% from $46.8 in Q4 2016.
Net income (profits): $10.7 billion, up 18.86% from $9.01 billion in the same quarter last year.
Operating income: $13.12 billion, up 11.55% from $11.8 billion in Q4 2016.
Operating expenses: $6.8 billion, up 12.54% from $6.05 billion in Q4 2016.