Apple’s Q4 2018 in five easy charts

The ups and downs of Apple’s revenue, earnings, iPhone sales, services and revenue from greater China.

Apple delivered strong quarterly results and disappointing guidance. The stock, which closed at $222.22, up $3.36 for the day, immediately dropped $11 in after-hours trading. It fell another $5 half an hour later.

Flat iPhone sales got more attention in the commentary that the 29% growth in iPhone ASP. (See bonus sixth chart below.)

Bombshell: Apple will no longer provide quarterly unit sales for iPhone, iPad and Mac. Folks on CNBC are having a hissy fit. Bad news for transparency. Bad news for me. I wonder if the SEC will have anything to say about this.

From the press release:

“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,” said Tim Cook, Apple’s CEO.

“We concluded a record year with our best September quarter ever, growing double digits in every geographic segment. We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac,” said Luca Maestri, Apple’s CFO. “We generated $19.5 billion in operating cash flow and returned over $23 billion to shareholders in dividends and share repurchases in the September quarter, bringing total capital returned in fiscal 2018 to almost $90 billion.”

Apple is providing the following guidance for its fiscal 2019 first quarter:
  • revenue between $89 billion and $93 billion [average Apple 3.0 estimate: $94.56 billion]
  • gross margin between 38 percent and 38.5 percent
  • operating expenses between $8.7 billion and $8.8 billion
  • other income/(expense) of $300 million
  • tax rate of approximately 16.5 percent before discrete items

My estimated year-over-year percentage increases:

  • Revenues up 20%
  • iPhone units flat
  • iPhone ASPs up 29%
  • EPS up 41%
  • Services up 17%
  • China revenue up 16%

Below: The five charts. Click the second column to see year-over-year growth. (Not seeing the charts? Try the website.)

BONUS 6th chart:



  1. Gregg Thurman said:

    2:11 PM PST can’t find Apple’s 10K. Anyone?

    Guidance is the sh*ts.

    November 1, 2018
    • Mark Visnic said:

      Guidance is similar to Amazon’s: light relative to consensus by a bit but likely to be exceeded based on actual business performance when the smoke clears.

      This is precisely why I don’t use short term options with Apple. I favor shares and longer-dated options. Apple’s business model doesn’t conform well to quarterly reporting.

      November 1, 2018
    • Mark Visnic said:

      The more I review, the more I disagree that guidance was bad.

      Here is the guidance from Apple for Q4 FY2018:
      Apple is providing the following guidance for its fiscal 2018 fourth quarter:
      revenue between $60 billion and $62 billion.

      They reported $62.9 billion in revs. in Q4. I expect they will report > $94 billion in January for Q1 FY2019.

      November 1, 2018
  2. Did I hear correctly? Did Luca just say Apple will not longer provide unit sales data for iPhone, iPad and Mac? Sucks for me.

    November 1, 2018
    • Mark Visnic said:

      Yes. It is something that Apple has needed to do for some time, as unit sales have been insignificant to Apple’s business model and growth trajectory for a number of years now. To the extent they have persisted in publishing unit numbers it has misled analysts and investors in putting disproportionate importance on it. Far more important is the growth and breadth of service offerings and revenues on the one hand and the growth of the installed base on the other. It is the latter that is singularly and squarely in Apple’s wheelhouse and competitive edge. No company has the device retention that Apple does. What good are new unit sales if migration of previous users is 60, 50, and 40% or less?

      My only lament is that it should lead to less opportunity borne from foolish interpretation by investors who don’t understand the company’s drivers.

      Track the metrics that matter Philip. I want to know more granularity in services revenue, the breadth of service offerings (new ones and growth of existing ones) and I want to know more precisely how the installed base is growing.

      November 1, 2018
    • Gregg Thurman said:

      I’m sorry this isn’t good for you, but, I’ve been against units sold estimating for a long time.

      I’m tickled pink with the change. Now we can focus on what’s important – REVENUE of the WHOLE. This means paying attention to what management GUIDES, and that means the rumor mongers will have a harder time influencing AAPL.

      I say that because, since Maestri’s appointment as CFO management has guided very tightly to what is subsequently reported, with actual results averaging 101.69% of the gap between high and low of revenue range, added to low of revenue range, for the last two years.

      Bottom line is that investors can rely on management’s guidance, and to hell with the wild guestimates from WS and the blogosphere.

      November 1, 2018
  3. Peter Kropf said:

    ’18 ASP is incredibly strong in every qtr. Q4 is very close to Q1; Q4 18 ASP is far far better than any other year’s Q4 to Q1 comparison.

    There’s something happening here, Mr Jones.

    19 Q1 ASP will probably be over $800. NOT BAD.

    November 1, 2018
  4. Michael Gabrys said:

    I definitely agree with the dropping of reported units. This provided transparency into ASPs and both created too much content for the press to talk about. Even now the press was calling the iPhone revenue a ‘miss’ due to unit ‘expectations’. This contributes to market volatility which makes a ton of people money (press on content and exchanges on trading volume).

    Importantly, the visibility also makes it more difficult to manage revenue. Let’s be honest folks, decisions are made at companies all the time that end of shifting revenue from one quarter to another. A physical good only has to be ‘shipped’ and it’s revenue. Shipped the next day can be almost un-noticeable. Especially for channel shipments.

    Have to love the ASPs on the iPhone. They must have produced and shipped more Max’s than people expected.

    Philip, sorry you’re losing content on Units/ASPs, but more bummed we’ll lose some of Asymco’s great charts.

    November 1, 2018
    • Gregg Thurman said:

      Philip, sorry you’re losing content on Units/ASPs

      The group should bump heads together to determine what is important to us, then let Philip do his thing.

      I’ll bet we end up discussing Apple’s future 10Qs in greater detail. What a novel idea for investors. : )

      November 1, 2018
      • Michael Gabrys said:

        Agree on discussing what’s important as a group. I’d like to participate. We should do it before Christmas so we have time time to model and iterate. Maybe we do a web conference call.

        November 1, 2018
      • Patrick Beyrouti said:

        IMHO…. Need to start focusing more on the installed base, TIM cook always talks about that number . The numbers we have today are the base line and that can only increase. GIVEN the special nature of the Apple clientele the installed base will never shrink. We should praise Apple for raising prices and focus on on its effectiveness with a client willing to pay premium prices. ASP is best indicator forward : assuming constant demand from a fixed worse case scenario installed base .
        Look for NEW product announcements . etc …..

        November 1, 2018
  5. Kathy Corby said:

    Not to second guess Apple”s guidance– god forbid– but it seems moderately conservative to me and doesn’t seem to take into account the potential catalysts of a truce in the trade war and the likely retracement of the dollar at some point. And the following quarter, if one is to believe the rumors, brings the significant expansion of the Apple video streaming services with much more original content. Presumably Apple can’t indulge in wishful thinking but we investors can. In any case, the mediocre guidance sets us up for an easier beat next quarter, which I am in support of. It reminds me a bit of old times when Steve would sandbag guidance then the analysts would go crazy because of the *huge beats*. Those were the days.
    And I can hold on to my Apple for two more days if that’s what it takes to get back to Apple share repurchases– I miss the Tim Cook put, but it’s only 36 hours away, guys. Hang tough.

    November 1, 2018
  6. Patrick Beyrouti said:

    Why are some insisting that UNIT sales are important?

    At some point Apple was selling zillions of iPods , category disappeared.
    At some point Apple was selling zillions of iPad minis , category almost extinct .
    AND yes there is no correlation between volume and performance ! (in the Apple universe) THIS is not your standard universe . SEE below , Apple clients are special.
    Yet Apple NET income kept growing .
    Less guidance is a Warren Buffet idea, he would actually eliminate guidance all together. When the X was introduced I was sooo focused on ASP and now my entire focus is on pricing power, how APPLE is able to continue rising prices in each category , cater for the high end clientele and collect premiums for shareholders. THE % increase in price is way better than a meager increase in volume , the size of the installed base will shield Apple of any future turbulence because they will always be buyers for its products … These buyers are not your ordinary clients: NOT effected by recessions, slow downs, tariffs, interest rates . Apple will easily report $95 billions for Q1FY19 .

    November 1, 2018
  7. Jonny Tilney said:

    I’m so pleased Apple has decided to stop the product number guessing game. What other supplier gives such data? Certainly not Samsung. I also understand we’ll be able now to see, or calculate the margins on hardware overall versus services. That’s a good thing too isn’t it.

    Don’t worry PED we’ll still love 3.0 without the iPhone numbers!

    November 2, 2018
  8. David Drinkwater said:

    For fun, let’s pretend that Apple’s TTM P/E ratio is correct at 20 (minutely lower than currently reported on Yahoo Finance, which has not been updated with last quarter’s EPS result. Now let’s replace September 2017 EPS with September 2018 EPS. Conserving TTM P/E ration at 20 gets you to a stock price today of ….

    $237, not $207.

    Mr Market is not being very efficient.

    November 2, 2018

Leave a Reply