Apple's quarterly revenue calls have fallen in a predictable pattern for the past year or two: iPhone revenue is declining year-over-year, and the Mac remains mostly stagnant, but all other Apple business ̵[ads1]1; wearables and services are most notable – balloon.
That was the case again with Apple's Q4 2019 performance report today; iPhones were down, but the company had its highest sales ever in the September quarter thanks to good performance from services such as the App Store, AppleCare +, and Apple Pay, as well as strong sales of the iPad and Apple Watch. Total revenue was $ 64 billion.
Apple revealed during the lawsuit that iPhone 11 (sans Pro) is now the best-selling phone, and that iPhone sales were $ 33 billion – a 9% decline over the same quarter last year, albeit an improvement over the decline of 15% the company saw in the three previous quarters this year. (The improvement is likely due to the launch of iPhone 11 and the like in mid-September, just before the quarter ended.)
Mac sales were down 5%, but Apple CEO Tim Cook was quick to point out the earnings call with investors that the company released a major update to MacBook Air, one of the most popular computers, around this time last year . but haven't done so yet this year, which apparently explains some of the drop.
Apple is expected to update some of its laptops in the coming months and plans to immediately launch the magnificent Mac Pro. Mac Pro's point of view, aimed at creative professionals, makes it less of a mass market device than the MacBook Air.
Apple projected 18% growth in service revenue, an improvement over the previous quarter that brings the fiscal year 2019 to $ 46 billion. It was $ 12.5 billion for this quarter on its own. This was credited, among other things, to "record revenue at all times from payment services" such as Apple Pay. The company referred to the recent launches of Apple Card, Apple News + and Apple Arcade, but it did not provide individual figures for them during the conversation. Apple also said today that this was the best quarter ever for AppleCare.
iPad saw 17% growth driven by iPad Pro, but the big positive story from the company was that of wearables, which include Apple Watch and AirPods. The company had 54% growth in that category, and the quarter in question ended before the announcement or release of AirPods Pro.
In response to an investor question, Cook made it known that he sees laptops as Watch and its associated health functionality as the company's future. "There will be a day in the future that we look back on, and Apple's biggest contribution will be to people's health," he said.
Some investors are understandably concerned that many of Apple's growth areas rely on the iPhone. Users stick to their existing iPhones and choose to go further between upgrades than ever before, leading to ever-slower iPhone sales. But the Apple stock rose slightly after the call anyway, indicating that the market at least believes Apple still has plenty of room to grow in services and portable devices in the short term before the iPhone's declining momentum becomes a serious problem.
And in some cases, the numbers turn out: a significant portion of Apple's revenue that can be sustained (now running toe-to-toe with Macs) comes from customers buying for the first time in that category. And Cook came up with vague allusions to important new wearables products, which (not his words) could include the company's reputation augmented reality headset.
Despite declining iPhone sales, Apple users should probably not be too concerned about the future of the ecosystem they have invested in. The company said earlier this year that it has an installation base of 900 million iPhones globally. Whether it continues to grow is a concern for investors who are looking for large returns in their portfolios, but not for users; an installation base that sizes everyone but still ensures support, content and updates for many years to come.
Looking forward to Q1 2020, Apple is projecting revenues between $ 85.5 and $ 89.5 billion – Q1 is often a big quarter for the company, as it carries holiday sales and much of the immediate revenue after launch from the new iPhone, series.