Wearables and services lead Apple to record Q4 revenue

Sales of iPhones still down but success of iPhone 11 makes vendor 'bullish' for next year

Barnstorming sales of Apple's services and wearables products have led the vendor to a record Q4.

The tech titan's total revenue for the three months ending 30 September 2019 was $64bn (£49.4bn), a rise of two per cent year on year.

Services hit its own record with turnover growing 18 per cent to $12.5bn, growing double digits in the China market, where Apple has recently seen sales stagnate.

The wearables unit - which includes AirPods, Apple Watch and Beats - saw sales surge 54 per cent to $6.5bn.

However, its iPhone continues its downward trend, though the release of the iPhone 11 and iPhone 11 Pro models towards the end of the quarter saw sales hit a positive note.

Sales of the flagship smartphone totalled $33bn, a nine per cent decline on last year's figure, though CEO Tim Cook called it a "significant improvement" over the 12 per cent decline seen in Q3 and the 16 per cent decrease seen in H1.

The success of the latest iPhone has led the vendor to put its revenue guidance for Q2 of 2020 at between $85.5bn and $89.5bn.

"Since its launch, the iPhone 11 has quickly become our best-selling iPhone," he told analysts on an earnings call, transcribed by Seeking Alpha.

"The significant upswing in demand in the final part of the quarter is mirrored in the overwhelmingly positive reviews, customer feedback and in-store response we've seen for this new generation of devices, not to mention a wave of the best photos you've seen from a smartphone.

"It's early but the trends look very good…We've put our current thinking in the guidance and you can tell from that we are bullish."

Elsewhere, its stalwart Mac generated $6.9bn in sales, a decline of nearly five per cent, which Cook chalked up to a "tough comparison" to last year's quarter which saw updates to its MacBook Pro model.

However, Cook claimed that for the overall fiscal 2019, Apple generated its highest annual revenue ever from its Mac business, due to student-friendly pricing and a surge in popularity of its MacBook Air laptop.

Much mention was made during the call of its soon-to-be-launched Apple TV streaming service, which led an analyst to enquire whether the iPhone would become a subscription service, which Cook did not rule out.

"In terms of hardware-as-a-service or as a bundle, there are customers today who essentially view the hardware [as subscription] because they are on upgrade plans and so forth," he stated.

"So to some degree that exists today. My perspective is that we will grow in the future to larger numbers that will grow disproportionately.

"One of the things we are doing is trying to make it simpler for people to get on these monthly financing things…we are cognisant that there are lots of users out there who want a recurring payment and the receipt of new products on some standard basis, and we are committed to making that easier to do than perhaps it is today."