Despite flagging revenue from its flagship device, the iPhone, growth in Services and Wearables helped Apple beat Wall Street estimates for its fiscal fourth quarter.
Adjusted earnings per share of $3.03 in the period ending September 30 eclipsed the consensus forecast by analysts for $2.84. Total revenue reached $64 billion, about $1 billion better than expectations. Services — a category including Apple Music and the App Store — drove the overall 16% rise in revenue.
In two days, on November 1, the Apple TV+ streaming service will launch, but the financial impact of the initiative is not yet a conspicuous one in the massive scope of the trillion-dollar company. On a conference call with analysts to discuss the results, CEO Tim Cook noted the streaming debut and said it was “one of the great perks of my job” to be able to “binge-watch” the company’s slate.
Executives declined to offer any guidance to analysts when asked on the company’s quarterly conference call about how it plans to account for the giveaway of 12 free months of Apple TV+ to anyone purchasing a new Apple device. The bundling approach is expected to give Apple an advantage in the early going in its bid to challenge Netflix, Disney and other streaming rivals.
Apple no longer reports unit sales for devices, but said iPhone revenue fell 9% in the quarter, which was better than the 12% drop in the previous quarter but concerning to some investors. Along with earnings results, the company announced a deal through its Apple Card that will enable iPhone purchases to be paid off interest-free over 24 months, the latest effort to lure new customers.
While all of Apple’s quarterly results are closely tracked given its scale and importance to the global economy, the most consequential period tends to be the last calendar quarter of the year — its first fiscal quarter. That’s when revenue for the all-important holiday season is tallied up and when the launches of major new devices generally gets reflected in the numbers.
Shares closed at $243.26, basically flat for the day. They have been trading near an all-time high, sending Apple’s market value past $1 trillion.
The launch of Apple TV+ on November 1 is a major corporate priority. CEO Tim Cook and product executive Eddy Cue joined the cast and crew of The Morning Show for a gala premiere Monday in New York, with other launches including See and Dickinson.
Apple TV+, priced at $5 a month, is entering an increasingly crowded space, with Disney, WarnerMedia and NBCUniversal all mounting serious challenges to Netflix over the coming months.
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