Apple beats Q4 predictions but still sees shares fall

Despite managing to exceed expectations for its Q4 quarterly earnings, Apple still took a beating on the stock market, with shares dropping seven per cent in after-hours trading. The investor reaction is based largely on a weaker than expected holiday forecast, with analysts expecting guidance to project $93bn (£71.5bn), compared to Apples prediction of $89 to 93bn.

Looking at actual results rather than projections, Apple brought in revenues of $62.9bn for Q4, up 20 per cent year-on-year, with earnings per diluted share of $2.91, up 41 per cent. Services revenue reached an all-time high of $10bn, up 27 per cent year-on-year, with a one-time favourable adjustment of $640m excluded.

“Were 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 Apples history,” said Tim Cook, Apples CEO. “Over the past two months, weve delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac, as well as our four operating systems, and we enter the holiday season with our strongest lineup of products and services ever.”

Apples unit sales stayed roughly flat for the quarter, shipping 46.9m iPhones in the past three months, but revenues were up 29 per cent, with the companys strategy of increasing prices for its most high-end devices paying off. The average price of each unit was $793, compared to $618 last year.

Sales for iPads and Macs both dropped (six per cent and two per cent, respectively), but revenue on Other Products, which includes the Apple Watch, Apple TV, HomePod, AirPods and more, was up 31 per cent. In a surprise move, the firm announced during its investor earnings call that this will be the last quarter the company breaks out sales of iPhone, iPad and Mac, and will only be reporting total revenues in the future.

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

Looking at the full-year results, Apples revenues rose from $229.2bn to $265.6bn, with net income up 23 per cent year-on-year to $59.5bn.