Today Apple released their earnings for Q3 of fiscal year 2015, which ended June 27th. In what seems to be a never-ending sequence of records, once again, Apple posted a record third quarter. Revenue for the quarter came in at $49.6 billion, up 33% from a year ago. Gross margin was $19.7 billion, also up 33% from Q3 2014. Operating income was up almost 37% to $14.1 billion, and net income was $10.7 billion for the quarter, a gain of 37.8% year-over-year. Earnings per share was $1.85, up from $1.28 in Q3 2014.

Apple Q3 2015 Financial Results (GAAP)
  Q3'2015 Q2'2015 Q3'2014
Revenue (in Billions USD) $49.605 >$58.010 $37.432
Gross Margin (in Billions USD) $19.681 $23.656 $14.735
Operating Income (in Billions USD) $14.083 $18.278 $10.282
Net Income (in Billions USD) $10.677 $13.569 $7.748
Margins 39.7% 40.8% 39.4%
Earnings per Share (in USD) $1.85 $2.33 $1.28

Apple’s iPhone business has been the primary factor in these record breaking quarters, and the iPhone 6 and 6+ sales continued to be strong. For the quarter, Apple sold 47.5 million iPhones, which is a gain of 35% in units. Even more impressive is that these 35% more units resulted in 59% more revenue, with iPhone sales totalling $31.4 billion for this quarter alone.

Mac sales have also been strong, and while Apple has generally outpaced the PC market in sales growth for a while, Apple saw an additional 5% in Mac unit sales for Q4 compared to Q3, and 9% from a year ago. This is at a time where the rest of the PC market is contracting, so Mac sales were an impressive 4.8 million units, with revenue of just over $6 billion for the quarter. The resurgence of the Mac has been quite the rise, with Mac revenue being eclipsed quite a bit by the iPad not very long ago. Times have changed though and Apple’s PC business is currently the only one that has seen an increase in sales according to the reports floated around in the last couple of weeks.

iPad sales though are not so rosy. The iPad sales were very strong, and while sales are not exactly terrible, the number of units being sold has been dropping for some time. Much debate has been about why this is, but certainly owners of the iPad have not felt the need to refresh their devices anywhere nearly as quickly as phones. For the quarter, there were 10.9 million iPads sold, which resulted in revenue of $4.5 billion. The number of units sold is down 13% from Q2, and down 18% year-over year.

Apple Q4 2014 Device Sales (thousands)
  Q3'2015 Q2'2015 Q3'2014 Seq Change Year/Year Change
iPhone 47,534 61,170 35,203 -22% +59%
iPad 10,931 12,623 13,276 -13% -18%
Mac 4,796 4,563 4,413 +5% +9%

Services, which include iTunes sales, AppleCare, Apple Pay, and will include Apple Music in the future, saw a nice jump as well with just over $5 billion in revenue for the quarter. This is up 1% from last quarter, and up 12% from last year.

“Other Products” which is Apple TV, Apple Watch, Beats, iPods, and accessories had a big quarter, and while individual numbers were not announced, it is likely due to initial sales of the Apple Watch which came out in the quarter. For Q3, this group had sales of $2.6 billion, up 56% from last quarter and up 49% year-over-year. Likely most of the increase can be attributed to the Watch, but without knowing average selling price, it would be pretty difficult to try and extrapolate unit sales without more information.

Apple Q2 2015 Revenue by Product (billions)
  Q3'2015 Q2'2015 Q3'2014 Revenue for current quarter
iPhone $31.368 $40.282 $19.751 63.2%
iPad $4.538 $5.428 $5.889 9.1%
Mac $6.030 $5.615 $5.540 12.2%
iTunes/Software/Services $5.028 $4.996 $4.485 10.1%
Other Products $2.641 $1.689 $1.767 5.3%

This pipeline post is quite a bit shorter than the Microsoft earnings, but for all of the right reasons. There is less to say when things are going as well as they are for Apple right now. iPhone sales are still a huge part of their balance sheet, and seem to have no sign of slowing down. People obviously wanted a larger iPhone and sales have skyrocketed since the iPhone 6 and 6+ were launched. But I think we were all expecting this based on past performance. I think what is most interesting is how much of the PC market Apple has managed to chip away with Mac sales, which are up an amazing 9% when the rest of the market contracted.

For Q4, Apple is expecting revenue of $49 to $51 billion, with a gross margin of 38.5 to 39.5%.

Source: Apple Investor Relations

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  • name99 - Wednesday, July 22, 2015 - link

    Uhh, Apple is a pocket computer company. And soon to be the premier writs computer company.
    To claim that pocket computers are not important is as stupid as claiming that PCs were not important. Remind me --- how did that work out for DEC?
  • FunBunny2 - Wednesday, July 22, 2015 - link

    -- And soon to be the premier writs computer company.

    The Watch is hardly a computer. It's just an X-term for the iPhone. Until such time as there's a battery at least twice as dense as today's best, and a SoC that can actually do some compute that's useful on 1 square inch, Watch will continue to be a fancy terminal.
  • name99 - Wednesday, July 22, 2015 - link

    And you don't think that will happen soon?

    People like you make fun of non-techies, but you're just as blind as them. For fsck's sake --- you have LIVED through the smartphone revolution, you have experienced first hand how fast things improved. But you don't have the imagination to see that the exact same pattern will happen with wrist computers? Only even faster thing time round, because Apple has more money to throw at the problem and more control over the entire process.

    It took three years to get from iPhone to iPhone4, the product that was clearly the great leap forward, the iPhone the way it wanted to be --- finally enough RAM, enough CPU and GPU, good enough screen that using it didn't feel like a compromise.

    If aWatch does the same thing in three years it will be impressive, but it's quite likely that this time round Apple can do even better; aWatch2 simply fixes the most glaring problems in aWatch (especially since it's probably already fully designed and the manufacturing is being specced out), but aWatch 3 is the chance to redo everything and kick it out the park, everything from a 14nmFF dual core SoC to Apple designed heart rate monitor and touch screen controller to dual microphones, maybe even a camera.
  • name99 - Wednesday, July 22, 2015 - link

    Oh, forgot to add. You're clearly unaware of what's coming in WatchOS2. As soon as September or October, you silly crack about "x-term for the iPhone", a statement that's already false in many ways, will become even more false.

    Once again you refuse to learn from history. The first iPhones were, to use your language, "x-terms for iTunes". But every OS release added more autonomy, first native apps, then setup without iTunes, wireless backing up, iCloud support for photos and music, etc etc. And once again, why do you expect the same pattern won't happen with aWatch?

    ALREADY we have seen the first step, from the crippled apps of WatchOS 1 (cf Apple's recommendation of web apps for iOS 1) to the watch-hosted apps of WatchOS 2 (cf the native apps of iOS2). People like you seem to have not a clue about how LONG it takes to do anything worthwhile, and so how long the relevant planning has been in place. You seem to imagine something like "Apple learns people want native IOS apps, or Watch apps, and so they reverse course and put together the dev environment and tools in six months". Don't be an idiot. Putting these things together takes years, and they are released on a particular phased schedule.

    As I pointed out in another comment, Apple checked into Clang the support for the ARMv7k ISA (the ISA used for WatchOS) in 2011! They were obviously laying the groundwork for the watch project back then 4 years ago (using a Marvel Armada CPU, which supports ARMv7k as a host CPU for the software development, while others designed the SoC). I expect Apple have the large scale plans for their SW and HW laid out at least four years in advance across all their product lines; and believe me, the aWatch 4 years from now is NOT today's aWatch but available in five different anodized colors...
  • FunBunny2 - Wednesday, July 22, 2015 - link

    -- Oh, forgot to add. ...

    Without twice or thrice the battery, none of that will happen. More to the point, name a Killer App for a 1 square inch display. And, as to all those cool health monitors, there is the minor matter of being able to read such from the top of the wrist.
  • FunBunny2 - Wednesday, July 22, 2015 - link

    -- finally enough RAM, enough CPU and GPU, good enough screen that using it didn't feel like a compromise.

    Finally??? As if there were some tech impediment??? It was just Steve's Reality Distortion Field convincing sheeple they should overpay. Until that didn't work anymore.
  • Oxford Guy - Wednesday, July 22, 2015 - link


    (Just post this at the top of the comments in any Apple-related article and save everyone all the trouble of reading and posting.)
  • kmmatney - Thursday, July 23, 2015 - link

    The improvements to the iPad have been too incremental to spur sales. They just need to come out with a 12" model, and sales will be up again.
  • bill5 - Friday, July 24, 2015 - link

    Man these guys are quite the Apple biased fanboys eh? Funny for these "great results" apple stock tanked after their release taking the whole Nasdaq with. Plus wasn't iWatch sales near a standstill? Hmmmm
  • bill5 - Friday, July 24, 2015 - link

    I recently sold my Apple stock. I dont think a gay man (Tim Cook) can successful lead a corporation over the long term. Apple seems to be struggling, and there will always be a question at the top. Take when they recently capitulated to Tayloir Swift. All I could think was "yeah, Tim Cook probably ordered them too because he's gay and gay men see female artists like Swift as some kind of unassailable, perfect, divas, so he was probably all "oh ma gosh taylor swift! do what she wants imediate-ly!". But the funny thing was if Steve Jobs had dome the same I wouldn't have looked at it that way, it would have been more of a bold business move. Cause Jobs actually had balls, so I would know he wasn't just surrendering, but that it was a strategic decision.

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