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The Lost Link between Apple’s iPhone Revenue and Unit Sales

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iPhone revenue soared 29%

Recently, Apple’s (AAPL) iPhone unit sales haven’t been telling the whole story about the health of its iPhone business. In the past, iPhone unit shipments were more representative of the strength of the business, but that has changed.

In the fourth quarter of fiscal 2018, Apple sold 46.9 million iPhone units, essentially flat compared to a year earlier. Despite its iPhone unit sales staying flat, iPhone revenue soared 29% YoY (year-over-year) in the quarter. This scenario played out in the whole of Apple’s fiscal 2018, during which its quarterly iPhone unit sales either fell or stayed flat but its iPhone revenue grew at a double-digit rate.

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Selling fewer iPhones at higher prices

The lost link between iPhone unit sales and iPhone revenue is that recently, Apple has been selling fewer iPhone units at higher prices. In the fourth quarter, for instance, the iPhone’s average selling price shot up to $793 from $618 a year earlier, even beating the consensus estimate of $751.

iPhone lifts Apple’s top line

The iPhone is Apple’s largest business, so its effect on Apple’s overall performance is significant. The 29% YoY growth in iPhone revenue in the fourth quarter led to Apple’s total revenue rising 20% YoY to $62.9 billion in the quarter. Revenue fell 12% YoY in Samsung’s (SSNLF) Mobile segment in the comparable quarter. Alphabet’s (GOOGL) revenue rose 27.8% YoY in the segment that houses its phone-making business.

Microsoft (MSFT) and Sony (SNE) reported revenue rises of 18.5% and 5.8% YoY, respectively, in the third quarter.

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