Apple Sold A Ton Of iPhones In Q3

Apple’s fourth-quarter earnings came in just hours after Apple Pay launched Monday (Oct. 20), with Apple delivering several record-breaking revenue, sales and profit numbers. Those numerical victories come from strong sales of the iPhone6 and 6 Plus, which are enduring huge backlogs.

Apple produced its strongest revenue in seven quarters, reporting $42.1 billion in revenue — up from last year’s $37.5 billion — and reported net profit of $8.5 billion, up from $7.5 billion in last year’s identical quarter. This resulted in a jump from $1.18 per diluted share to $1.42 per diluted share.

“We generated our strongest revenue growth rate in seven quarters far surpassing our expectations we communicated in July and establishing a new record for Apple’s September quarter revenue. These results bring to a close a record breaking fiscal 2014. Over the last four quarters, our products and services have generated a $183 billion in revenues, an increase of $12 billion over last year. We sold 243 million iOS devices and 19 million Macs, both all time highs,” said CEO Tim Cook. “Our revenue from iTunes software and services reached $18 million, which was more than the annual sales of two thirds of the companies in the Fortune 500 and we generated $6.45 in earnings per share, which is 14% higher than last year and also set a new record.”

The other Apple Pay supporting device–the Apple Watch–won’t go on sale until early next year. But don’t expect to be able to easily figure out its initial sales figures next year, if Apple has anything to say about it. Apple has created a new financial reporting category called “other products” and it will include Apple Watch, iPod, Beats headphones and speakers, Apple TV as well as peripherals and accessories for iPhone, iPad, Mac and iPod.

Why? Tim Cook was candid with financial analysts, saying the grouping is partially to obscure Apple Watch revenue. “To be straight, I am not very anxious in reporting a lot of numbers on Apple Watch and giving a lot of detail on it because our competitors are looking for it and so aggregating it is helpful from that point of view as well,” he said.

iPhone sales, cited as the major boost for this quarter’s revenue, gave Apple a 13 percent quarterly growth, and rang in at 39.3 million worldwide. That number, up 5.5 million year-over-year resulted in a 16 percent growth from last year’s numbers. iPhone sales continued to grow across new and developing markets, Cook said, which included a 17 percent growth in the U.S, 20 percent in Western Europe, 50 percent in Latin America and the Middle East, and more than 50 percent in Central and Eastern Europe. iPhone sales in China were up 32 percent from last year, which beat projections of 13 percent, which Cook called a growing market, specifically because of China’s Apple’s plans for its retail base jumping from 15 stores to 40.

Cook didn’t offer projections for iPhone 6 or 6 Plus sales, and instead spun analyst questions toward the high demand for the products that Apple can’t keep meet.

“It’s very difficult to gauge demand without first achieving finding the balance and it’s clear that as of today, and certainly as of the end of the quarter where you’re looking at the data, we’re not nearly, we’re not close, we’re not on the same plan.” Cook said. “I am really confident that supply is going to be great and that’s the reason you see incredibly strong guidance that we’re giving from $63.5 billion to $66.5 billion (in revenue projections for the current quarter).”

“I couldn’t be happier with the way the demand looks. …We do not envision as of today being able to achieve the extra inventory in the channel that we believe is needed when you think about the long food chains in some of the emerging markets where the distribution channels are not as official,” he later said.

Cook’s positive hardware outlook translated to his perspective of the Apple Pay launch, which he thinks will encourage people to join the iPhone world. The iPhone is expected to have a presence in 115 countries by the end of December’s projections.

“We also wanted to work on security and privacy and so we have the huge issues of the traditional credit card system and many people that have entered mobile payments are doing so in a way that they want to monetize the data that they collect from customers. And we think customers do not want this, that they wanted to keep their data private. We wanted to have ease of use, security, privacy and maximize all three. Doing so we will sell more devices because it’s a killer feature — far better than reaching in your pocketbook and trying to find the card you’re looking for and half the time it not working.”

Apple Pay doesn’t place the cost on the merchant or the customer since the product relies on commercial terms between Apple and the bank issuer — terms that Apple doesn’t discuss publicly. Cook called the system “the most customer-centric mobile payment system that there is.”

“We are very proud of it. We are very excited to sign up more retailers and also expand it around the world,” he said. This includes expanding to 500 additional banks by next year.

“Apple Pay is a classic app for taking something that is incredibly old, outdated, kludgy. Everybody is focused on everything except for the customer and putting the customer at the center of the experience and making something very elegant. And so I would look at those things and when I look at those things, I would as an investor, I feel great, as a personal investor I feel great.”

The success of Apple Pay overshadowed the decrease in sales for iPads, which dropped from 14.1 million to 12.3 million, in identical quarter comparisons. Cook said iPad users hold onto their iPads longer than they do a phone and he said that he expects to see an increase in consumer upgrades with the latest iPad models.