It’s earnings day for Apple and the company just reported revenue of $62.9 billion with profit of $14.12 billion. Apple says it sold 46.89m iPhones, 9.69m iPads, and 5.3m Macs during the quarter. Next on the docket is Apple’s quarterly earnings call with investors. Head below for live coverage…

In Apple’s earnings press release, Cook touted several milestones for Apple: the App Store anniversary and shipping the 2 billionth iOS device:

Apple is providing the following guidance for the upcoming holiday quarter:

  • Revenue between $89 billion and $93 billion
  • Gross margin between 38 percent and 38.5 percent
  • Operating expenses between $8.7 billion and $8.8 billion
  • Other income/(expense) of $300 million
  • Tax rate of approximately 16.5 percent before discrete items

The call is scheduled to begin at 2PM PT/5PM ET and will be live streamed on Apple’s investor relations website. Tim Cook will kick things off with an overview of Apple’s numbers, followed by a more detailed look with CFO Luca Maestri. Things will wrap with a Q&A session with analysts.

Live blog:

Tim Cook:

  • “We’re capping FY18 off with our best September quarter ever.”
  • Rehashing “record” revenue and growth from iPhone, Services, Wearables
  • iPhone revenue up 29 percent YOY
  • “Very successful launch of iPhone XS and iPhone XS Max. Our most advanced iPhones ever with industry-first 7nm chip. The A12 Bionic is many years in the making and a huge technological leap forward.”
  • “Just last week, we began shipping XR bringing iPhone X breakthroughs to even more users. The product reviews have been overwhelmingly positive.”
  • Cook touting features of iOS 12: Shortcuts, performance improvements, Screen Time, and more
  • Talking new iPad Pro: Faster than “vast majority of PCs,” full Smart Keyboard, and more.
  • Now talking Group FaceTime in iOS 12.1
  • Best quarter ever for Services with $10B revenue, records for App Store, Apple Pay, cloud services, and more
  • Strong growth in paid subscriptions, reaching over 330 million users
  • “Exceptional” performance of Apple Pay, transaction volume up 3x YOY, generated more transactions than PayPal Mobile
  • Apple Pay Cash highest-rated peer-to-peer platform by Consumer Reports
  • New quarterly revenue record for Mac thanks to MacBook Pro and back-to-school
  • Touting macOS Mojave, watchOS 5, and tvOS 12.1 features: “World class hardware, software, and services that define Apple’s ecosystem.”
  • Talking new MacBook Air, Mac mini introduced earlier this week
  • “Biggest upgrade ever to the small but muscular Mac mini”
  • “Another record quarter for Wearables. Apple Watch has become an essential part of users’ lives.”
  • ECG app still coming “later this year” to watchOS Tim Cook says.
  • Apple “looks forward” to bringing more health features to its users, Cook says
  • “Record Q4 results” for retail stores, “transforming stores to places where customers come to connect and learn. We hosted over 250k Today at Apple sessions this quarter.”
  • Education: “More than 5k schools, colleges worldwide are now using Everyone Can Code, 350 schools using Everyone Can Create.
  • Environment: “Milestone year for Apple’s commitment to the planet. 100 percent global operations powered by renewable energy, made progress doing the same in the supply chain.”
  • “We could not be more bullish about Apple’s future.”

Luca Maestri: 

  • “Biggest upgrade ever to the small but muscular Mac mini”

  • ECG app still coming “later this year” to watchOS Tim Cook says.

  • Going into more details about earnings release

  • Double digit revenue growth in every geographic segment, new revenue record every quarter

  • Record revenue in “almost every market”

  • iPhone growth of 20 percent or more in “several markets”

  • Customer satisfaction of iPhone “highest in the industry.”

  • “Best quarter ever for Services in total and virtually every market around the world.”

  • “Well on our way to doubling fiscal 2016 revenue by 2020.”

  • “30,000 third-party subscription apps available on the App Store today, largest of which represents 0.03 percent of overall Services revenue”

  • New MacBook Pro in July pushed strong double-digit growth for Mac, new all-time quarterly record for Mac revenue

  • Nearly half of iPad customers this quarter were new to iPad, active install base hits new all-time high

  • “Other” category up 31 percent thanks to Wearables, Apple TV, and HomePod.

  • “We made great progress in the enterprise market, where iOS is transforming how business gets done.”

  • Industry-wide adoption of iOS by retailers, many replacing POS systems with iOS-based solutions.

  • Deals with IBM, Salesforce, and more

  • $237 billion in cash + marketable securities

  • Over $23 billion returned to investors during the quarter

  • “We will start reporting revenue and cost of sales for total products and total services beginning December quarter.”

  • This means Apple will begin reporting Services margin during the next quarter

  • AAPL will stop reporting unit sales for iPhone, iPad, and Mac beginning the December quarter, “number of units sold in quarter is not representative of underlying state of business.”

  • More coverage on this change here.

  • “Other products” category will be renamed to “Wearables, Home, and accessories” beginning next quarter

Q&A: 

  • This means Apple will begin reporting Services margin during the next quarter

  • More coverage on this change here.

  • Q: Trajectory for emerging markets with slowing growth? Color on App Store subscription model?

  • Cook: “Turkey, India, Brazil are markets where currencies have weakened over the recent period, in some cases that results in us raising prices. Those markets are not growing the way we would like to see. Each of the emerging markets has a bit of a different situation. I don’t see it as an issue that’s common between those. In relation to China specifically, I would not put China in that category. Our business in China was strong last quarter, grew 16 percent. iPhone was very strong there, double digit growth there. App Store in China has seen a slowdown on new game approvals, new regulatory setup in China and things are not moving the way they were moving previously.”

  • “App Store provides best and safest place for users to get apps. While it is not perfect, we review 100,00 apps per week between new apps and updates. Offers users a one-payment model for purchasing apps and subscriptions.”

  • Q: Apple’s goal in health care? Opportunity for Services growth?

  • Cook: “Apple has a huge opportunity in health. We have an intense interest in the space and are adding products and non-monetized services – so far – to that. I don’t want to talk about the future because I don’t want to give away what we’re doing. This is an area of major interest to us.”

  • Q: How is current trade, geopolitical, etc affecting guidance for holiday quarter?

  • Maestri: We are very very excited about the lineup of products and services we have going into holiday – strongest lineup we’ve ever had. Guidance represents a record holiday quarter. The fact that the launch timing of the new iPhones is essentially reverse order versus last year. That has an affect on Q4 and Q1. Last year, we launched the top-end of our iPhone lineup during Q1 and placed the entirety of the channel field in Q1. This year, launched top-end during Q4. This resulted in a more pronounced ASP growth in Q4. Second, when I look at currencies around the world, virtually every foreign currency has gone against US dollar in the last few months.

  • In last few weeks, we’ve launched unprecedented number of new products. They’re all ramping now and the ramps are going well, but uncertainty around supply/demand balance.

  • Q: More color on decision to stop offering unit sales for iPhone, iPad, and Mac?

  • Maestri: Our goal is to make the best products and provide the best experiences. When you look at financial performance in recent years, units sold has not been representative of business strengths. No correlation between revenue, net profit and units sold. Our product ranges have become wider over time, and therefore a unit of sale is less relevant for us at this point compared to the past because we’ve got this much-wider lineup. Our top competitors do not provide unit sales information either.

  • Cook: Our intention is to continue to give revenue guidance at company level and gross margin guidance. Our guidance isn’t changing, it’s the actual report that changes.

  • Q: Staggered iPhone launch affect on iPhone XS demand?

  • Cook: The XS and XS Max got off to a really great start and have only been selling for a few weeks. We have very, very little data on XR, usually there is some amount of ‘wait until another product shows up,’ but in looking at the sales data for XS and XS Max, there’s not obvious evidence on that in the data.

  • Q: Areas of interest for Services growth?

  • Maestri: We have a very large and growing install base of all our product categories. It has been growing over last several quarters, so opportunity to monetize services business continues to grow. Of course, we’ll also be improving quality of services we provide. We have stated that we want to double Services from FY16 by 2020, very very confident about future of Services.

  • Cook: In terms of AR, just a year ago we launched ARKit 1.0, then 1.5, and 2.0. The number of things you can do are growing significantly and developers have done things and are working on things.

  • Q: Any plans to diversify the supply chain given trade and geopolitical events?

  • Cook: If you look at the products that we are manufacturing, they’re manufactured everywhere. We have significant content from US market, from Japan to Korean to many countries. Great content from China as well. There are many hands in the products, the vast majority of R&D is in the U.S. The basic model of looking around the world and finding the best in different areas, I don’t expect that model to go out of style. I think it’s great for all countries and citizens of countries involved in that. I’m still in the mindset that I feel very optimistic and positive that discussions will be fruitful. These trade relationships are big and complex and do need a level of focus and updating and modernization, so I’m optimistic that the countries can work these things out for the benefit of everyone.

  • Q: NAND prices fell significantly, why not flowing through to margin?

  • Maestri: We are going to be getting benefits from memory in particular on a sequential basis. Obviously, we’re going to be benefiting from the leverage in the December quarter. On the other hand, currencies have weakened and higher cost structures at this point in the cycle because of so many new product launches.

  • Q: Future of Apple retail in India?

  • Cook: We’ve had productive discussions with India movement and I fully expect at some point they will agree to allow us to bring our stores into the country. We’ve been in discussions with them and they are going quite well. There are import duties in some or most of the product categories. We do manufacture some of the entry iPhones in India and that project has gone well. I’m a big believer in India and remain bullish.

  • Q: Some people may fear iPhone units could go negative YOY, color on no more unit sales?

  • Maestri: Our approach to guidance has not changed at all. in terms of reporting results. We’ve heard significant interest in providing information on revenue and cost of sales and gross margins for products and services. December quarter will be first time we provide that information for Services business. I’ve given the rationale on why we do not believe unit sales are relevant to our business. For instance, units sales at top-end of iPhone line have been very strong, but you don’t necessarily see that at the number that is reported. We’ll provide commentary when important relevant, but we make our decisions from a financial standpoint to optimize revenue and gross margin dollars.

  • Cook: Our installed base is growing at double digits, so that’s probably a much more significant metric for us from an ecosystem POV and customer loyalty. Second, this is a little bit like if you go to the market and push your cart to the cashier and they say, ‘how many units you have in there?’ It doesn’t matter how many units you have in terms of the overall value of what’s in the cart.”

  • Cook: “Turkey, India, Brazil are markets where currencies have weakened over the recent period, in some cases that results in us raising prices. Those markets are not growing the way we would like to see. Each of the emerging markets has a bit of a different situation. I don’t see it as an issue that’s common between those. In relation to China specifically, I would not put China in that category. Our business in China was strong last quarter, grew 16 percent. iPhone was very strong there, double digit growth there. App Store in China has seen a slowdown on new game approvals, new regulatory setup in China and things are not moving the way they were moving previously.”

  • “App Store provides best and safest place for users to get apps. While it is not perfect, we review 100,00 apps per week between new apps and updates. Offers users a one-payment model for purchasing apps and subscriptions.”

  • Cook: “Apple has a huge opportunity in health. We have an intense interest in the space and are adding products and non-monetized services – so far – to that. I don’t want to talk about the future because I don’t want to give away what we’re doing. This is an area of major interest to us.”

  • Maestri: We are very very excited about the lineup of products and services we have going into holiday – strongest lineup we’ve ever had. Guidance represents a record holiday quarter. The fact that the launch timing of the new iPhones is essentially reverse order versus last year. That has an affect on Q4 and Q1. Last year, we launched the top-end of our iPhone lineup during Q1 and placed the entirety of the channel field in Q1. This year, launched top-end during Q4. This resulted in a more pronounced ASP growth in Q4. Second, when I look at currencies around the world, virtually every foreign currency has gone against US dollar in the last few months.

  • In last few weeks, we’ve launched unprecedented number of new products. They’re all ramping now and the ramps are going well, but uncertainty around supply/demand balance.

  • Maestri: Our goal is to make the best products and provide the best experiences. When you look at financial performance in recent years, units sold has not been representative of business strengths. No correlation between revenue, net profit and units sold. Our product ranges have become wider over time, and therefore a unit of sale is less relevant for us at this point compared to the past because we’ve got this much-wider lineup. Our top competitors do not provide unit sales information either.

  • Cook: Our intention is to continue to give revenue guidance at company level and gross margin guidance. Our guidance isn’t changing, it’s the actual report that changes.

  • Cook: The XS and XS Max got off to a really great start and have only been selling for a few weeks. We have very, very little data on XR, usually there is some amount of ‘wait until another product shows up,’ but in looking at the sales data for XS and XS Max, there’s not obvious evidence on that in the data.

  • Maestri: We have a very large and growing install base of all our product categories. It has been growing over last several quarters, so opportunity to monetize services business continues to grow. Of course, we’ll also be improving quality of services we provide. We have stated that we want to double Services from FY16 by 2020, very very confident about future of Services.

  • Cook: In terms of AR, just a year ago we launched ARKit 1.0, then 1.5, and 2.0. The number of things you can do are growing significantly and developers have done things and are working on things.

  • Cook: If you look at the products that we are manufacturing, they’re manufactured everywhere. We have significant content from US market, from Japan to Korean to many countries. Great content from China as well. There are many hands in the products, the vast majority of R&D is in the U.S. The basic model of looking around the world and finding the best in different areas, I don’t expect that model to go out of style. I think it’s great for all countries and citizens of countries involved in that. I’m still in the mindset that I feel very optimistic and positive that discussions will be fruitful. These trade relationships are big and complex and do need a level of focus and updating and modernization, so I’m optimistic that the countries can work these things out for the benefit of everyone.

  • Maestri: We are going to be getting benefits from memory in particular on a sequential basis. Obviously, we’re going to be benefiting from the leverage in the December quarter. On the other hand, currencies have weakened and higher cost structures at this point in the cycle because of so many new product launches.

  • Cook: We’ve had productive discussions with India movement and I fully expect at some point they will agree to allow us to bring our stores into the country. We’ve been in discussions with them and they are going quite well. There are import duties in some or most of the product categories. We do manufacture some of the entry iPhones in India and that project has gone well. I’m a big believer in India and remain bullish.

  • Maestri: Our approach to guidance has not changed at all. in terms of reporting results. We’ve heard significant interest in providing information on revenue and cost of sales and gross margins for products and services. December quarter will be first time we provide that information for Services business. I’ve given the rationale on why we do not believe unit sales are relevant to our business. For instance, units sales at top-end of iPhone line have been very strong, but you don’t necessarily see that at the number that is reported. We’ll provide commentary when important relevant, but we make our decisions from a financial standpoint to optimize revenue and gross margin dollars.

  • Cook: Our installed base is growing at double digits, so that’s probably a much more significant metric for us from an ecosystem POV and customer loyalty. Second, this is a little bit like if you go to the market and push your cart to the cashier and they say, ‘how many units you have in there?’ It doesn’t matter how many units you have in terms of the overall value of what’s in the cart.”