Today Apple released their earnings for Q3 of fiscal year 2015, which ended June 27th. In what seems to be a never-ending sequence of records, once again, Apple posted a record third quarter. Revenue for the quarter came in at $49.6 billion, up 33% from a year ago. Gross margin was $19.7 billion, also up 33% from Q3 2014. Operating income was up almost 37% to $14.1 billion, and net income was $10.7 billion for the quarter, a gain of 37.8% year-over-year. Earnings per share was $1.85, up from $1.28 in Q3 2014.

Apple Q3 2015 Financial Results (GAAP)
  Q3'2015 Q2'2015 Q3'2014
Revenue (in Billions USD) $49.605 >$58.010 $37.432
Gross Margin (in Billions USD) $19.681 $23.656 $14.735
Operating Income (in Billions USD) $14.083 $18.278 $10.282
Net Income (in Billions USD) $10.677 $13.569 $7.748
Margins 39.7% 40.8% 39.4%
Earnings per Share (in USD) $1.85 $2.33 $1.28

Apple’s iPhone business has been the primary factor in these record breaking quarters, and the iPhone 6 and 6+ sales continued to be strong. For the quarter, Apple sold 47.5 million iPhones, which is a gain of 35% in units. Even more impressive is that these 35% more units resulted in 59% more revenue, with iPhone sales totalling $31.4 billion for this quarter alone.

Mac sales have also been strong, and while Apple has generally outpaced the PC market in sales growth for a while, Apple saw an additional 5% in Mac unit sales for Q4 compared to Q3, and 9% from a year ago. This is at a time where the rest of the PC market is contracting, so Mac sales were an impressive 4.8 million units, with revenue of just over $6 billion for the quarter. The resurgence of the Mac has been quite the rise, with Mac revenue being eclipsed quite a bit by the iPad not very long ago. Times have changed though and Apple’s PC business is currently the only one that has seen an increase in sales according to the reports floated around in the last couple of weeks.

iPad sales though are not so rosy. The iPad sales were very strong, and while sales are not exactly terrible, the number of units being sold has been dropping for some time. Much debate has been about why this is, but certainly owners of the iPad have not felt the need to refresh their devices anywhere nearly as quickly as phones. For the quarter, there were 10.9 million iPads sold, which resulted in revenue of $4.5 billion. The number of units sold is down 13% from Q2, and down 18% year-over year.

Apple Q4 2014 Device Sales (thousands)
  Q3'2015 Q2'2015 Q3'2014 Seq Change Year/Year Change
iPhone 47,534 61,170 35,203 -22% +59%
iPad 10,931 12,623 13,276 -13% -18%
Mac 4,796 4,563 4,413 +5% +9%

Services, which include iTunes sales, AppleCare, Apple Pay, and will include Apple Music in the future, saw a nice jump as well with just over $5 billion in revenue for the quarter. This is up 1% from last quarter, and up 12% from last year.

“Other Products” which is Apple TV, Apple Watch, Beats, iPods, and accessories had a big quarter, and while individual numbers were not announced, it is likely due to initial sales of the Apple Watch which came out in the quarter. For Q3, this group had sales of $2.6 billion, up 56% from last quarter and up 49% year-over-year. Likely most of the increase can be attributed to the Watch, but without knowing average selling price, it would be pretty difficult to try and extrapolate unit sales without more information.

Apple Q2 2015 Revenue by Product (billions)
  Q3'2015 Q2'2015 Q3'2014 Revenue for current quarter
iPhone $31.368 $40.282 $19.751 63.2%
iPad $4.538 $5.428 $5.889 9.1%
Mac $6.030 $5.615 $5.540 12.2%
iTunes/Software/Services $5.028 $4.996 $4.485 10.1%
Other Products $2.641 $1.689 $1.767 5.3%

This pipeline post is quite a bit shorter than the Microsoft earnings, but for all of the right reasons. There is less to say when things are going as well as they are for Apple right now. iPhone sales are still a huge part of their balance sheet, and seem to have no sign of slowing down. People obviously wanted a larger iPhone and sales have skyrocketed since the iPhone 6 and 6+ were launched. But I think we were all expecting this based on past performance. I think what is most interesting is how much of the PC market Apple has managed to chip away with Mac sales, which are up an amazing 9% when the rest of the market contracted.

For Q4, Apple is expecting revenue of $49 to $51 billion, with a gross margin of 38.5 to 39.5%.

Source: Apple Investor Relations

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  • Shadow7037932 - Wednesday, July 22, 2015 - link

    > Apple Watch is already the most popular wearabl

    No it's not. The most popular *wearable* is hands down the Xiaomi Mi Band which sells a few million units each month.
  • xype - Wednesday, July 22, 2015 - link

    Interesting, but would make sense. Got any reliable link to the numbers?
  • name99 - Wednesday, July 22, 2015 - link

    Comparing to Mi Band is like saying the iPhone 1 was irrelevant because 220s sold in far larger numbers.
    Something like the aWatch clearly points to the future, the Mi Band points to the past.

    Don't fixate on the category "wearable" --- if you insist on being stupid about that then, hell, the most popular wearables are the sorts of digital watches we've had since 1970. Fixate on the category of "wrist computer".
  • nafhan - Wednesday, July 22, 2015 - link

    The iWatch is a wrist computer, and my Nintendo Wii is living room computer. Technically both statements are true.
  • Oxford Guy - Wednesday, July 22, 2015 - link

    "You're right. Apple has never been one about CRAZY R&D Efforts with low chances to succeed. They've always steadily iterated, and occasionally entered new markets when the time is right."

    The Apple Lisa was the single most innovative PC ever introduced, period.
  • FunBunny2 - Thursday, July 23, 2015 - link

    -- The Apple Lisa was the single most innovative PC ever introduced, period.

    Well. It just stolen from the Xerox Star.
  • Oxford Guy - Thursday, July 23, 2015 - link

    Cute, but stupid.
  • sligett - Wednesday, July 22, 2015 - link

    They spent over $2 billion on research last quarter. It can't all have been about better trackpads.
  • Oxford Guy - Wednesday, July 22, 2015 - link

    It takes a lot of effort to find and utilize tax loopholes to the fullest extent. Ask Microsoft.
  • name99 - Wednesday, July 22, 2015 - link

    How do you know that they haven't? You have no idea what they are doing in, for example, AI research.
    The real complaint you should have is not that they aren't doing the research, but that they aren't publishing anything. This IS a real concern, and one I have made publicly many times. But I fear that it is inevitable. Apple feels that they were ripped off regarding the iPhone, and that the court system was not a viable means of redress, partially because it's so slow and capricious, partially because it lends itself to mockery in the press and on the internet ("patenting round rectangles" and all that nonsense).

    So the new strategy appears to be to rely vastly more on trade secrets. They will create a new product family (watch) but they will tell would-be-competitors practically nothing helpful about it. How many sales does it generate? Which models do customers most favor? What do customers want improved? What are the characteristics of the SoC and the CPU? etc etc. Apple is saying nothing about these, and I don't expect that to change. Just like when the A8 came out (and soon enough the A9) Apple said nothing beyond "they're better CPUs".

    If Apple adds value prediction to their CPUs (something that has been discussed for years but has never been commercially implemented as far as I know) they will say nothing --- let other people spend a billion dollars doing that research. Likewise if Apple switches from a ROB to a checkpoint architecture, or any of a dozen other types of improvements that all have to build on substantial R&D.

    I certainly don't like this development, but I don't see a feasible alternative for Apple. The types of innovations they wish to protect, innovations in "usability" and "design" are easily mocked as obvious and trivial, so they cannot rely on the legal system and have to rely on secrecy. It's not wonderful, but that appears to be the solution our great society has decided upon.
    The best we can hope for, I think, is that apple's innovations DO leak out over time, as engineers leave the company. Learning how Apple did things five years after the fact is of less competitive consequence to Apple, while still benefiting society at least somewhat.

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