"The lesson Apple's management has learned from the iPhoneX, is when you sell a smartphone for more than $1000 you can sell fewer units and still reap the financial benefits", analyst Thomas Forte from DA Davidson & Co told Reuters. Revenue and earnings per share were both up (and over analyst expectations), and stocks have seen a modest bounce as investors jump back on the hype train.
Shares in the Silicon Valley-based technology titan rose 3.96 per cent to US$197.83 in after-hours trade that followed release of the earnings figures, putting its market capitalisation at US$956 billion.
The average selling price of each iPhone was $724, beating expectations of $699, and higher than last year's $606 ASP.
Sales of iPhones in the fiscal third quarter have typically been tame as many fans have historically either bought handsets in prior months or end up waiting for new models in the months to come.
In the earnings call, Cook said the growth of the iPhone across many markets has been higher than that of the smartphone industry itself.
Even though sales of the Apple iPhone rose less than 1% to 41.3 million for the quarter (slightly under Wall Street estimates), revenue attributed to the device rose a strong 20% year-over-year to $29.91 billion.
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But Apple is reportedly betting big on the design and features it introduced with the iPhone X. Rumors suggest that all three phones Apple is working on for the fall will mimic the iPhone X's design and adapt features like Animoji and Face ID unlocking. The company closed the day with a valuation of $935 billionーits next closest rival, Amazon, ended the day at $867 billion.
Apple Pay has been used for more transactions than popular services Square and PayPal, Cook said.
Revenue rose 17 per cent to Dollars 53.27 billion, also exceeding Street forecasts for USD 52.37 billion.
Profits hit US$11.5 billion, up from US$8.7b a year ago, while total sales climbed 17 per cent to US$53.3b, due to increasing revenues from the iPhone's App Store and sales of peripherals such as the Apple Watch and the company's headphones.
The biggest momentum for Apple continues to be "Services", which includes iCloud, Apple Music, and Apple Care. Revenue from services grew 31 percent during the June quarter to $9.5 billion.
Apple's expectation is that revenue will grow to between $60 billion and $62 billion in the last quarter of 2018.
"We're on target to reach our goal of doubling our fiscal 2016 services revenue by 2020", CEO Tim Cook assured investors on the call. Of course, the iPhone still pulled down almost $30 billion in total revenue, but Services has rapidly grown from a minor segment of Apple's business to a major component.