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Apple’s first-quarter earnings were massive

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Apple had an absolutely massive holiday quarter, fueled mostly by strong sales of the iPhone 7. It was a striking turnaround from the prior quarter, when the company reported its first drop in revenue and profit in 15 years.

Analysts had been expecting Apple to post $77.38 billion in revenue last quarter. Instead, it generated $78.4 billion in revenue. That’s a 3.3% increase over the $75.9 billion the company posted in the same quarter last year.

Apple sold more iPhones in the last three months of 2016 than it did over the same period in 2015, breaking a streak of declines. The company sold 78.29 million iPhones in the quarter, roughly 4 million more than its previous record.

The company’s $78.4 billion in revenue is the most it’s ever generated in a single quarter, but its profit actually fell by about 2.5%, down from $18.4 billion to $17.9 billion, suggesting that Apple spent more to make and market its newest devices than it has in previous quarters.

Apple’s 78 million iPhones was an increase of roughly 5% from a year ago. “iPhone had a tremendous quarter,” CEO Tim Cook said on the company’s earnings call. He suggested that demand for the iPhone 7 Plus, which is larger and sports a better camera, had been particularly strong.

Phone, things were a bit of a mixed bag: iPad sales were down nearly 22%, to $5.5 billion, suggesting that the newer iPad Pro models, seemingly targeted at users looking to replace their laptops with tablets, have not been a huge hit.

Sales were up 7% over the same quarter last year, to $7.24 billion. Apple released new high-end MacBook Pro laptops in the quarter, and they seem to have sold well despite fewer ports and a confusing second screen on its keyboard.

Apple’s “other products” business line—a catchall term for its smaller hardware products, such as the iPod, AirPods, Beats headphones, wifi routers, and the Apple Watch—generated roughly $4 billion, down about 8% from the same quarter last year. Apple has never commented on Apple Watch sales.

In the quarter, services sales were up 18%, to $7.2 billion, over last year. On the earnings call, Cook said that Apple believes its services sector sales will be the size of a Fortune 100 company on its own, with the aim of double the business in the next four years.

In recent years, Apple has invested in China (and continues to do so), but regulations on foreign businesses have, in part, slowed down its advances into the quickly growing Chinese middle class. As a secondary plan, CEO Tim Cook has made overtures toward India, as well.

 

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