Apple Inc. (AAPL) on Thursday reported blowout quarterly earnings and gave upbeat guidance for the coming quarter, taming any fears that the company might see underwhelming iPhone sales.
Shares of Apple were advancing more than 3% in after-hours trading on Thursday and were up 3.5% in pre-market trading on Friday, pushing the tech giant's market cap even closer to crossing the $900 billion threshold. The stock has surged more than 45% year to date.
Following the results, Apple held an earnings call with investors to give some color on the quarterly results. All eyes were focused on updates related to the iPhone X, but Apple executives shared plenty of other, just as illuminating details about several of the company's mainstay businesses.
Here are four of the most important takeaways from the earnings call.
1. China is making a comeback.
Quarter after quarter, Apple has struggled to regain momentum in the Greater China region. But based on Thursday's results, that may soon be a thing of the past.
Revenue in Greater China jumped 12% year-over-year to $9.8 billion, marking a strong reversal from its historically sagging sales there. Apple noted that it saw a solid uptick in sales of the iPhone, iPad, Mac and Apple Watch, as well as Services revenue.
"The China rebound was broad based across the products," Cook explained on the call. "I mean we literally were firing on all cylinders. That and our new products give us great confidence headed into this holiday season that this is going to be the best holiday season yet."
2. The iPhone 8 models are off to a good start.
Cook expressed great confidence in early sales of the iPhone 8 and iPhone 8 Plus models. The higher-end iPhone X has definitely been the star of Apple's next generation iPhone models, but it seems like consumers are just as excited by the iPhone 8/8 Plus.
The iPhone 8 and 8 Plus are now the most popular iPhone models and have top selling phones "every week" since being released last month, Cook said. He wouldn't elaborate on which model might be out-selling the other, but noted that the iPhone 8 Plus has gotten "off to the fastest start" of any Plus model so far.
"That, for us, was a bit of a surprise. A positive surprise, obviously," Cook said. "We'll see what happens next."
Cook added that it's the first time Apple has released three iPhone models at once, which has likely made for an interesting spread in terms of sales mix, average selling prices and other data points.
"It's only today that the first customers can sort of look at all three of those and I'm sure there's been some people that wanted to do that before deciding even which one," Cook said.
3. Cook offered his two cents on the $1,000 iPhone debate.
As the smartphone market has matured, so have the average selling prices. Apple certainly wasn't the first company to charge $1,000 for a phone, but it somewhat legitimized the trend when it released the $999 iPhone X. Since then, analysts and investors have tried to gauge whether consumers would turn up their noses in sticker shock or, as with most premium priced Apple products, open their wallets as usual.
Cook pointed out that many consumers are paying for their devices on a month-to-month basis (via carrier installments) rather than at full price. That, in affect, has helped mitigate some of the sticker shock surrounding the iPhone X, he said.
Many carriers are also offering promotions that reduce the average cost of the iPhone X, he added.
"You look at the U.S. carriers, I think you would find you could buy an iPhone X for $33 a month," Cook explained. "So if you think about that, that's a few coffees a week. It's less than a coffee a day at one of these nice coffee places."
4. Apple is still as bullish as ever about augmented reality.
There's nothing that Cook loves talking about more than AR. Cook in August called AR "big and profound," saying that it would be a big part of the company's future.
On Thursday, he reiterated his belief that AR will be a big deal in the enterprise market, particularly for increasing productivity in the workplace. Beyond that, he said it'll be big in classrooms and shopping.
Because of its complexity, Cook said he thinks Apple is the "only company" that could have brought AR mainstream. The technology requires both hardware and software integration, he added. Additionally, for AR to be available on smartphones, it requires deployment at a mass scale, which is something only Apple can handle, Cook said. Apple's software team "worked really hard" to make its ARKit usable on prior versions of the iPhone overnight, he noted.
He likened the emergence of AR-powered apps to the original introduction of the App Store.
"I think this is very much like in 2008, when we fired the gun in the overall App Store," Cook said. "I think it will just get bigger from here."
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