Apple stock price rose as much as 3% in after-hours trading Tuesday, after the company, thanks to its flagship device and profitable hardware business reported a spike in third quarter 2018 results as profit and sales exceeded Wall Street forecasts.
Apple (NASDAQ: AAPL) said revenue for its fiscal 2018 third quarter ended June 30, increased 17% on a year-over-year basis (y/y) to $53.3 billion, topping analysts’ consensus estimates of $52.34 billion. Earnings per share (EPS) came in at $2.34, up 40.1% from $1.67 y/y. The Street on average expected Cupertino to post EPS of $2.16. Net income was reported at $11.52 billion, up 32% from the $8.7 billion year-ago quarter. Operating cash flow printed $14.5 billion.
Apple benefited from a record $9.55 billion in revenue, or a 31% y/y surge in its Services division that includes iTunes, iCloud, and AppleMusic, among others. Strong iPhone sales was another positive marker. In fact, iPhone revenue catapulted by 20% compared to the same period last year, hitting almost $30 billion. Apple said iPhone shipments were 41.3 million versus analysts’ expectations of 41.6 million handsets, only 1% higher from the same quarter a year ago. It’s worth noting part of the reason iPhone was the largest contributor to Apple’s top line is because the $999 iPhone X was the company’s top-selling brand. This resulted in the average selling price of iPhone reaching $724, a sizable gain from a year ago and $30 more than Wall Street estimates.
Another closely watched area for Apple was China. Apple said it generated $9.6 billion in sales from Greater China, up from $8 billion in the prior June quarter.
“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” said in a statement Tim Cook, Apple’s CEO. “Our Q3 results were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline.”
Other positive markers for the company include an uptick in iPad sales. Apple sold 11,553 iPads and 3,720 Macs. The company also said its Services division, which could become its main revenue stream as iPhone sales plateau, is well on the way to hit $14 billion per quarter by year 2020.
“We feel great about the momentum of our services business, and we’re on target to reach our goal of doubling our fiscal 2016 services revenue by 2020,” Cook said.
Cupertio’s guidance for its fiscal 2018 fourth quarter was also encouraging. The company said it sees revenue between $60 billion and $62 billion, versus analysts’ expectations of $59.48 billion.
As of writing, AAPL is changing hands at $197.89, up $7.56, or 3.90% in premarket trade Wednesday. Cupertino’s market cap is currently worth about $954 billion, which means ticker would need to gain less than five percent from current levels for Apple to become the first $1 Trillion American company.