The enduring popularity of the iPhone 6 line -- particularly in developing and rapid-growing markets such as China -- has allowed Apple to again beat quarterly best-ever records with its most recent fiscal Q3 report. The company sold more than 47.5 million iPhones, lower than analyst predictions, but which represents 35 percent year-over-year growth. Macs sold 4.7 million units, another record for a fiscal Q3 and up seven percent year-over-year.
Apple reported revenue of $49.6 billion in revenue, up nearly $12.2 billion from a year ago -- largely due to continued growth in China, which has leapt 59 percent year-over-year. Gross margin increases also helped, with an average of 39.7 percent compared to 39.4 percent a year ago. Overall, revenue grew 33 percent, while earnings per share reached $1.85, an increase of 45 percent. International sales accounted for 64 percent of all sales.
"In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent," said Luca Maestri, Apple's CFO. "We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program."
The company also reported record income from its combined services division, which covers the App and media stores as well as iCloud, iTunes Match and other non-software, non-hardware revenue. For the next quarter, Apple is expecting revenue between $49 billion and $51 billion, with gross margin of between 38.5 and 39.5 percent. Operating expenses are expected to fall between $5.85 and $5.95 billion, and the company is expecting a tax rate of 26.3 percent. Apple Chief Financial Officer Luca Maestri noted that the strengthening US dollar continues to add "headwinds" against foreign sales.
"We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch," said Apple CEO Tim Cook in a statement. "The excitement for Apple Music has been incredible, and we're looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall."
Despite the wealth of good news, the stock will likely suffer in light of what will be perceived as a "miss" on iPhone sales, which exceeded Apple's original guidance but falls slightly below analyst consensus estimates of 49 million. Cook and Maestri emphasized that while sales were down from the previous quarter's 61 million, part of the drop was due to rising foreign prices due to the strength of the US dollar rather than declining interest.
The iPad decline has continued, but is still selling in impressive numbers. Apple sold 10.9 million units, but reduced inventory, so actually sold 11.2 million units to end-users. This was down from sales of 13.3 million iPads in the year-ago quarter, but . Apple's growth in Mac sales may be due in part to the new 12-inch Retina MacBook and the refreshed 15-inch MacBook Pro, the former of which saw its first full quarter of sales. Maestri and Cook said that response to the new model had "delighted" the company.
Sales of the iPhone and iPad are predicted to drop significantly next quarter, and the one following, as buyers hold back in anticipation of the next models of iPhone and iPad, expected in September with a likely October rollout. Cook noted during the Q-n-A section of the call that he expects iPad sales to improve with the release of iOS 9, which has some key productivity tools for the iPad, along with continued expansion of enterprise and foreign-market sales, which will be accompanied by natural interest in the next new model.
He added that the iPad replacement cycle is lower than analysts expected, but will happen when changes and improvements add up to being compelling enough for people to give up the iPad they have now. Loyalty is still high, he said, calling it "still a fantastic product."
Apple's board of directors has declared a cash dividend of $.52 per share of the Company's common stock. The dividend is payable on August 13, 2015, to shareholders of record as of the close of business on August 10, 2015.
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