Apple Inc. (AAPL) just beat Wall Street's expectations for the third quarter and gave investors something to be confident about in the coming months.
After Tuesday's closing bell, the tech titan beat on its top and bottom line, in addition to selling more iPhones than expected. More importantly, perhaps, it gave upbeat fourth-quarter sales guidance, indicating that the release of its upcoming 10th anniversary iPhone model will be right on pace with its traditional September launch.
Shares of Apple rose 6.1% in after-hours trading on Tuesday, hitting fresh highs of $159 a piece. They were up 7.1% to $159.25 on Wednesday morning.
Apple held a call with investors after the announcement, where it provided some color on the quarterly results. Here's five of the biggest takeaways from the call:
1. No hints on what the next iPhone will look like
One brave analyst ventured to ask about the wave of speculation about the 10th anniversary iPhone, noting there's been "a large amount of discussion in blogs" that the next model would be delayed. Experts said supply chain shortages would push back the release, as the iPhone 8 is expected to be packed with a number of high-end features, including a new bezel-less design, organic LED display and augmented reality features, among other things. Apple's latest guidance seems to suggest that things are running on schedule, however.
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That didn't stop the analyst from asking if there's anything unique about the upcoming iPhone launch compared to prior product releases. Unfortunately, CEO Tim Cook wasn't giving any hints.
"We have no comment on anything that is unannounced," Cook responded, before letting go a chuckle.
It makes sense that Apple is keeping tight-lipped about the endless rumors circulating about the new iPhone. Cook reiterated on the company's earnings call that the speculation created a "pause" in the number of iPhone units sold, as well as the number of people who upgraded, during the third quarter.
2. Tim Cook was more bullish than ever on the possibility of augmented reality
Cook has been excited about AR for a while, but he seemed even more enthusiastic about it on the earnings call. Apple has said repeatedly that once iOS 11 becomes available on the upcoming iPhone, the operating system will become the world's biggest AR platform. AR won't just be a boon for Apple's mainstay iPhone business, either. It'll also serve as a lift to its growing Services business, as developers release a ton of new products on the App Store that are capable of running AR technology.
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The Apple chief noted on the call that ARKit, the company's AR developer platform, will have uses across a variety of different markets, including entertainment, gaming, small business and enterprise.
"I think AR is big and profound, and this is one of those huge things that we'll look back at and marvel at the start of it," Cook told investors on Tuesday. "I couldn't be more excited about it."
3. The iPad has made a comeback
One surprising bright spot came from Apple's iPad business. The iPad segment had a rough second quarter as unit sales and revenue fell by double-digit percentages, underscoring broader gloominess in the tablet market.
The iPad is looking much better now, however, after Apple released the new 10.5-inch and 12.9-inch iPad Pro models. During the quarter, iPad units increased 28% quarter-over-quarter, while revenue jumped by the same percentage.
Apple also announced a slew of updates to iOS 11 that should pack a better user experience on the iPad. The company released split-screen capabilities for the iPad in iOS 10, but they're even more advanced in the coming iOS, thanks to new drag and drop features, a Files app and more.
4. China isn't becoming an easier market for Apple
Once again, China was the only region to report a year-over-year sales decline. Sales from Greater China dropped 9.5% to $8 billion, as Apple continues to face competition from local smartphone vendors like Oppo, Vivo and Huawei.
Apple maintained on the earnings call that the decline in China revenue was smaller than it has been in previous quarters and that it "remains encouraged" by improving iPhone sales in mainland China.
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"On top of that, Services grew extremely strong during the quarter," Cook said on the earnings call. "Hong Kong continued to drag down the total Greater China segment, but on a sequential basis, we're probably sort of at the trough of that, which is nice."
Cook also addressed Apple's decision to remove VPN apps from the App Store in China, saying that it wanted to follow local laws, but that he hopes the restrictions are loosened over time.
5. Apple's still working on that big autonomous driving project
As usual, Apple remained cryptic about what it's working on with respect to autonomous systems. No word yet on whether Apple Car, also known as "Project Titan," is real, but Cook seemed to suggest that something autonomous is definitely in the works.
Cook said Apple is very excited about the core technology around autonomous systems and that the result of its secret project could be something beyond cars.
"We do have a large project going and are making a big investment in this," Cook explained on the call. "Autonomous systems can be used in a variety of ways, and a vehicle is only one. There are many different areas, and I don't want to go any further than that."
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