Apple is ever-so-close to becoming the first U.S. company worth more than $1 trillion: The company closed in on the magic number on Tuesday in after-hours trading after posting better-than-expected results for its fiscal third quarter, which ended June 30.
In addition to consumers buying more expensive iPhones, the results were also positively impacted by a growth in Apple Music and other services, with Apple CEO Tim Cook telling investors that he was excited about the company’s plans for TV.
Apple ended the trading day with a market cap of $935.3 billion. Investors sent the company’s stock up $7.31, or close to 4%, in after-hours trading.
The company generated $53.3 billion in revenue during the quarter ending June 30, compared to $45.4 billion during the same quarter last year. The company’s net income for the quarter was $11.52 billion compared to $8.72 billion a year ago. This translated to diluted earnings per share of $2.34, compared to $1.67 during the same quarter in 2017.
Analysts had expected earnings per share of $2.18 on $52.37 billion in revenue.
The results had Cook cheering: “We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” he said in a press release. “Our Q3 results were driven by continued strong sales of iPhone, Services, and Wearables, and we are very excited about the products and services in our pipeline.”
Apple sold 41.3 million iPhones during the quarter, compared to 41 million a year ago. More importantly, consumers kept buying more expensive iPhones this quarter, with the average sales price rising to $724, up from $606 last year. Cook said the more expensive iPhone, X, was once again the most popular iPhone model this quarter. “It has been the top-selling iPhone since the launch,” he said.
iPad sales were also up slightly, to the tune of 11.55 million compared to 11.42 million during the same quarter last year.
Also significant is a continued growth in the company’s non-hardware revenue: Apple generated $9.55 billion with services during its fiscal Q3, compared to $7.23 billion a year ago. This segment includes Apple Music and App Store sales as well as Apple Care and iCloud subscriptions.
Propelled by the rise of Apple Music and app subscriptions, services have quickly become a major revenue contributor for the company. In fact, Apple now makes almost as much money with services as with iPad, and Mac computer and laptop sales combined.
“Apple Music grew by over 50% on a year-over-year basis,” Cook said during Tuesday’s earnings call, where he also called out that more than 300 million users now pay for subscriptions of apps available on the App Store.
Cook also expressed optimism about the company’s video initiatives, which he said were informed by larger trends affecting the industry: “Cord cutting in our view is only going to accelerate,” he said. Cook said Apple wasn’t quite ready to share all the details on its plans for TV, but said the company had staffed up and was working on a major project. “I couldn’t be more excited about what’s going on there,” he said.
Apple had hired Sony Pictures Television executives Jamie Erlicht and Zack Van Amburg for its still-undisclosed TV projects last year. The company also announced a multi-year partnership with Oprah Winfrey last month.
“We are very excited to work with Oprah,” Cook said Tuesday. “We think that we can do some great original content together.”
Cook also used the earnings call to extensively comment on the Trump administration’s tariffs on foreign goods from countries like China. He said Apple hadn’t been directly impacted by the first rounds of tariffs, but he cautioned that tariffs could have an overall negative impact on the economy. “Our view on tariffs is that they show up as a tax on the consumer, and wind up resulting in lower economic growth and sometimes can bring about significant risk and unintended consequences,” he said.
The specific risk for Apple of a general economic downturn caused by far-reaching tariffs would be difficult to quantify, Cook added. However, he said he remained optimistic that the issue could get sorted out between the affected countries. “We are hoping that calm heads will prevail,” Cook said.