Apple’s Q218 earnings most important (and impressive) metric

“On May 1st, Apple announced its financial results for the last quarter,” Diesel writes for Seeking Alpha. “The company’s report was full of good news for its investors including but not limited to the fact that it beat estimates both on top and bottom lines.”

“As soon as Apple’s report was released, the first thing I looked at was the company’s service revenues. As an investor of Apple, this is very important to me because service revenues signify how much Apple can ‘milk’ its ecosystem beyond selling hardware,” Diesel writes. “Many hardware companies make money only once from their products (at the time of the sale transaction) while companies like Apple can make money again and again from a product even after it has been already sold (in some cases for years).”

“The ‘most important (and impressive) metric’ from Apple’s earnings report… [is one that] analysts often ignore and investors do not appreciate enough: ‘Service revenue per device.’ While Apple does not report on this particular metric, it is easy to estimate it from the other metrics Apple reports on,” Diesel writes. “The company generated $150 per each iPhone and iPad it sold during the quarter from its services. Apple makes more in service revenues per phone than many phone makers generate from their phone sales. This is unbelievably impressive.”

“At the current rate of growth, Apple’s service revenues will pass $50 billion within 5 years even if its iPhone sales growth slows down,” Diesel writes. “Services revenues are growing at a rapid rate and Apple’s growth will continue even if consumers’ iPhone upgrade cycle moves from 2 years to 3 years. In fact, if iPhone upgrade cycle moves from 2 years to 3 years, the company’s service revenue per iPhone will rise from $140 to $210. In other words, if people upgrade their iPhones, Apple makes money, if they hold onto their iPhones, Apple makes money again. Apple just makes money one way or another.”

Read more in the full article here.

MacDailyNews Take: Yup.

Apple’s services business is an unstoppable locomotive that, someday, even Mr. Market might fairly value. — MacDailyNews, August 9, 2017

SEE ALSO:
Apple Services: The nitrous in Cupertino’s profit engine – November 27, 2017
Apple’s Services (App Store, Apple Music, Apple Pay) business is an unstoppable juggernaut that’s still just gathering strength – May 3, 2017
Inside Apple’s massive services results – August 9, 2017
Misunderstanding Apple Services – August 7, 2017
Dispelling the Apple Services myth – May 3, 2017
Apple’s Services business: $7 billion in revenue last quarter alone – May 3, 2017
Apple’s Services (App Store, Apple Music, Apple Pay) business is an unstoppable juggernaut that’s still just gathering strength – May 3, 2017

9 Comments

  1. The most important metric i get from Apples impressive results is that speculators and investors are a bunch of liars, either deliberate or sheer stupidity. Their opinions, especially doom and gloom about Apple should be ignored. These opinions they spout are not worth anything. Wait for the results Apple gives out

    1. It’s not the investors who are liars. The lies are being told by analysts and journalists.

      If anybody is fool enough to believe them after all the times that this exact scenario has played out, then they deserve to lose their money.

      Apple’s guidance has been fairly conservative for as long as I can remember and they have a great track record for meeting or exceeding their guidance every quarter. Analysts frequently make gloomy predictions about Apple and journalists happily print those stories, but time and again they have turned out to be totally untrue.

      You would be wise to bear in mind Apple’s guidance and ignore anybody who suggests that Apple is not going to meet that level of performance.

      in particular, ignore any rumours about supply chain problems because that has proven to be a wholly unreliable data point and extrapolating a trend from an already unreliable data point is for fools.

      Above all else, ignore any rumours in the run-up to Apple declaring it’s financial results because Apple is obliged to remain silent at that time, so unscrupulous manipulators can spread false stories, knowing that Apple is not able to put the record straight

    2. I tend to believe it’s deliberate because I don’t think they could be that stupid as they keep using the same ridiculous tactics each quarter.

      At least this past quarter the doom and gloom was worthwhile for Apple and shareholders. Apple bought up a whole bunch of devalued Apple stock that the gutless sheep tossed away. I’m grateful for that much. Yes, analysts are liars and cheats, but steadfast Apple shareholders are able to benefit from even that vile filth. Any Apple shareholder who listens to analysts spouting negative supply chain rumors a week or two before earnings must want to lose money.

      1. Cramer offers up a piece of data that’s not mentioned here as an “impressive metric,” but should be:

        “the company now has 270 million subscribers throughout its ecosystem. As Cramer points out, that’s more than Amazon’s 170 million for Prime, and it also dwarfs what Netflix and HBO can lay claim to.”

        With one-trick-pony-hood lessening (iPh singular focus), Apple Music growing (and Spotify not making $$. This scenario mimics Fitbit, a prominent name in the beginning, only to be displaced by AAPL), sights set on developing media offerings, and generally a much more diversified offering (add HW, SW, Wearables) Apple’s large subscription base and history of user commitment to the brand, this stat is the most impressive of all. TC is building a foundation that is beaucoup impressive. He’s building in a methodical & sure manner…”slow” for today’s mind, but sure.

    1. They love them the way smokers love cigarettes.

      Apple begins to resemble a pharmaceutical company. The goal is to amass profits through the manufacture of the highest-quality, most effective consumer products in their class. The business model is to market them widely as the keys to happiness, making them fashionable to appeal strongly to the status-conscious, particularly young people, and maintaining premier pricing and aspirational branding.

      As adoption of the products takes hold in a growing cult of users 🤩, rival companies smell the money 🤑 and copy the IP 😈, vastly expanding the reach of the product category through lower pricing. Through saturation and overuse, users develop unhealthy dependencies 😵 and become recurring buyers 🤤, leading cartels to expand service distribution networks 🛥🛩. At first governments become complicit in such highly-profitable enterprises 🤠. Too late, the inherent addictiveness of the technology is seen as a threat to economic and social stability 🏦👨‍🎤, and regulatory agencies begin warming up for an assault on substance abuse 📢.

        1. It is a ditzy theory alright (one I made up on the spot) but you seem to be alone amongst commenters here in an appreciation for the art and absurdity of zany conspiracy theories. The others seem to desperately believe in them. Where, oh where would we all be without True Believers? In a kinder, gentler place, that’s where. Call it Planet Snowflake. Its delicate denizens would entertain themselves by peering through telescopes to watch the spectacle of Planet Ares self-destructing.

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