Apple’s $88.3 Billion Quarter Is Its Biggest Ever, But It Didn’t Exceed Everyone's Expectations

In announcing Apple’s earnings Thursday, CEO Tim Cook painted the rosy picture that’s become typical of a company that seems to have its best quarter nearly every quarter.

“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup,” he said in the earnings press release. “iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November.”

While those are all true statements, Apple did not meet analysts’ expectations for iPhone unit sales. While most experts predicted the company would sell more than 80 million units for the three months ending on Dec. 31, the company reported shipments of 77.3 million phones, a 1% decrease from the same period last year.

The decrease in iPhone shipments, however, did little to affect the Cupertino, California–based electronics manufacturer’s sales or bottom line, which hit record highs (again) in a holiday period where the company sold its priciest mobile phone ever, the iPhone X. Apple recorded revenue of $88.3 billion, which beat average analyst estimates of $87.3 billion, and profit of $3.89 per share, higher than analyst’s average expectations of $3.86 per share.

That’s more impressive, said Cook on the company’s earnings call, if investors consider that this year’s first quarter was only 13 weeks compared to the 14-week period last year.

Using phrases like “most popular” to describe the iPhone X on the call, Cook avoided using another superlative: most expensive. The device, which comes in $999 and $1,149 iterations, was largely the reason why Apple had such a good sales quarter, where the average iPhone sale price came in at $796, according to data compiled by Bloomberg. That compared to an average iPhone price of $695 in the first quarter of last year.

In short: Even if Apple is selling fewer iPhones, it’s still growing because those phones, which accounted for nearly 70% of the company’s revenue, are more expensive.

For other business segments, Apple saw revenue growth in its iPad and services businesses, but decreases in its Mac division, where sales were $6.9 billion, down nearly 5% from last year’s three-month period. Cook also noted it was the “best quarter ever for Apple Watch” with over 50% growth in revenue and units, but the company did not break out specific numbers for that device.

Apple’s CEO also confirmed there would be no further delays for the company’s smart speaker, HomePod, which is expected to ship to customers next week.

The company projected revenue of $60 billion to $62 billion in the second quarter and a tax rate of 15%, following a one-time move in which it paid $38 billion to repatriate overseas cash. The company now sits on a $285 billion cash reserve. “The new tax rate in the United States is complex,” said Apple Chief Financial Officer Luca Maestri. “It may be a bit bumpy as we understand the law in full.”