Apple yesterday (25 October) announced financial results for their fiscal 2016 fourth quarter ended 24 September, 2016. Stronger than expected iPhone sales meant that the company exceeded analysts' expectations. Despite this, the results marked the third quarter where Apple posted a year-over-year revenue decline.

 Financial Highlights 

– The Company posted quarterly revenue of USD$46.9bn (£38.5bn) and quarterly net income of USD$9bn (£7.4bn), or USD$1.67 (£1.37) per diluted share.

– These results compare to revenue of USD$51.5bn (£42.3bn) and net income of USD$11.1bn (£9.1bn), or USD$1.96 (£1.61) per diluted share, in the year-ago quarter.

– Gross margin was 38%, compared to 39.9% in the year-ago quarter. International sales accounted for 62% of the quarter’s revenue.

“Our strong September quarter results cap a very successful fiscal 2016 for Apple”, said Tim Cook, Apple’s CEO. “We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24% to set another all-time record.”

The strong iPhone sales come as a welcome surprise. Apple generates roughly 60% of its revenue from iPhone sales. However, there were questions around whether consumers decided to upgrade to the iPhone 7 and 7 Plus, or if they would wait for the upgraded iPhone 8 or 7s.

It appears the popularity of the iPhone 7 Plus over the iPhone 7 also helped the better-than-expected results. The Plus offers a higher profit margin than the smaller, less expensive iPhone 7.

Another factor behind the results could be Samsung’s misfortunes. Apple’s close competitor was forced to recall its Note 7, due to its propensity to catch fire. This could push some previous Samsung users to opt for an Apple device.

“We are pleased to have generated USD$16.1bn (£13.2bn) in operating cash flow, a new record for the September quarter”, said Luca Maestri, Apple’s CFO. “We also returned USD$9.3bn (£7.6bn) to investors through dividends and share repurchases during the quarter and have now completed over USD$186bn (£153bn) of our capital return program.”

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