Apple didn’t sell as many iPhones during its most recent quarter as Wall Street had hoped, and investors responded by sending the company’s stock down 7% in after-hours trading.
The Cupertino, Calif., company sold close to 47 million iPhones during the quarter ending on Sept. 30, which is about the same amount it sold a year ago. iPad sales were down 6% year-over year, totaling 9.7 million for the quarter. Mac sales were down 2%, totaling 5.3 million.
Apple’s CFO Luca Maestri said Thursday that the company would stop reporting these kinds of unit sales in the future. “A unit of sale is less relevant to us today than it was in the past,” Maestri said.
The timing for that announcement was curious, but there may have been a grain of truth in Maestri’s reasoning: While unit sales were flat for the quarter, the average sale price of an iPhone rose to $793, signaling that consumers are getting more comfortable with spending money for the company’s high-end phones. This resulted in iPhone revenue growing 29% year-over-year.
These higher average sales numbers were a key contributor to Apple’s earnings. The company generated $62.9 billion in revenue, compared to $52.6 billion during the same quarter last year. The company’s net income for the quarter was $14.13 billion compared to $10.71 billion a year ago. This translated to diluted earnings per share of $2.91, compared to $2.07 during the same quarter in 2017.
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Analysts had expected earnings per share of $2.78 on revenue of $61.5 billion.
But more than the results for its most recent quarter, analysts were looking for guidance for the current holiday quarter. Not only do consumer electronics companies sell most of their products during the holiday season, the company’s guidance is also seen as a key indicator of how well the new iPhone models have been performing.
Apple introduced a second-generation iPhone X, dubbed the iPhone XS, in September, and began shipping it to consumers at the end of that month. A second model, the iPhone XR, didn’t actually make its way onto store shelves until late last month.
The company forecast revenue between $89 billion and $93 billion for the current holiday quarter, which was also less than Wall Street had hoped for, further raising doubts about the company’s iPhone sales. Maestri attributed the more cautious forecast to currency issues, as well as depressed consumer demand in some emerging markets.
A bright spot for Apple was the company’s services business, which includes revenue from the App Store, Apple Music, as well as iCloud subscriptions. Services revenue for the quarter surpassed $10 billion for the first time, growing 27% year-over-year.
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