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iPhone revenue continues to fall, but revenues from Watch and services soar

Photo of iPhone 11 Pro camera with Tim Cook in the background
The camera that launches a thousand memes. Source: Apple

While iPhone sales saw a decline of about 9.2% between Q3FY19 and Q3FY18*, Apple’s total revenue saw a 1.8% increase to $64 billion in the same duration. One of the biggest reasons for increase in revenue was growth in sales of wearables, services and iPads, the company’s senior vice president and CFO Luca Maestri said during a call with investors. However, the company’s profit fell from about $14.1 billion in Q3FY18 to $13.7 billion this quarter.

Operational figures

  • Products revenue was $51.5 billion, down 1.5% from Q3FY18, mainly due to decline in iPhone sales.
  • iPhone sales were $33.3 billion, as compared to $36.7 billion in Q3FY18.
    • CEO Tim Cook said, “This 9% decline over last year is a significant improvement over the 15% decline we saw across the first three quarters”.
  • Mac and MacBooks also saw a 4.8% decrease to about $7 billion this quarter.
    • Despite this, Cook said that Apple generated an all-time revenue record for Mac in the US and India.
  • iPad sales grew to $4.7 billion this quarter from $4 billion in Q3FY18.
  • Sales of wearables such as the Apple Watch, Home and accessories, such as the AirPods, grew at about 54.4% YoY to $6.5 billion. Apple earned almost the same revenue from wearables, home and accessories as it did from its computers and laptops.
  • Revenue from services such as Apple Store, Card, iCloud, Apple Pay, etc., grew 18% to $12.5 billion, “up over $1.9 billion year-over-year and almost $1.1 billion sequentially”. Cook said:
    • For Apple Pay, revenue and transactions more than doubled year-over-year with over 3 billion transactions in the September quarter exceeding PayPal’s number of transactions and growing four times as fast.
    • Apple News+ was launched in Australia and the United Kingdom.

“We now have 450 million paid subscriptions across the services on our platform compared to over 330 million just a year ago, and we are well on our way to our goal of surpassing the 500 million mark during 2020.” — Luca Maestri, Apple CFO

Apple’s interest in health services: Apple had announced its Research app during Apple’s keynote event on September 10. The company will continue to build health records connection into the Health app, to “democratise” people’s health data, Cook said. He also said that the company is collaborating with health institutions to reach more participants so as to create new products related to health. Apple’s ECG app is now available in 32 countries, including India.

Apple’s devices will be used for carrying out the US’ census: Cook said that “hundreds of thousands of Apple devices” will be used by the US Census Bureau for the collection and management of census data.

*Apple uses different fiscal terminology from the rest of American industry. An American fiscal year ends in December, but Apple’s ends in September. Thus, Apple’s financials call the quarter ended September 2019 Q4FY19, but we have called it Q3FY19.

Download: Financials

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