MacRumors

Apple today reported revenue of $45.4 billion and net quarterly profit of $8.7 billion, or $1.67 per diluted share, in its fiscal third quarter ended June 24.

Apple CEO Tim Cook and CFO Luca Maestri discussed the results on a conference call today. MacRumors has prepared a complete transcript of the call ahead.

Tim Cook

Good afternoon, and thanks everyone for joining us. Today, we're proud to announce very strong results for our fiscal third quarter, with unit and revenue growth in all of our product categories. We'll review our financial performance in detail, and I'd also like to talk about some of the major announcements we made in June at our Worldwide Developers Conference. It was our biggest and best WWDC ever, and the advancements we introduced across hardware, software, and services will help us delight our customers, and extend our competitive lead this fall, and well into the future.

For the quarter, total revenue was at the high end of our guidance range at $45.4 billion. That's an increase of 7 percent over last year, so our growth rate has accelerated in three consecutive quarters this fiscal year. Gross margin was also at the high end of our guidance, and we generated a 17 percent increase in earnings per share. iPhone results were impressive, with especially strong demand at the high end of our lineup. iPhone 7 was our most popular iPhone, and sales of iPhone 7 Plus were up dramatically compared to 6s Plus in the June quarter of last year. The combined iPhone 7 and 7 Plus family was up strong double digits year over year. One decade after the initial iPhone launch, we have now passed 1.2 billion cumulative iPhones sold.

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During today's earnings call covering the third fiscal quarter of 2017, Apple CEO Tim Cook briefly mentioned the company's super popular hard-to-come-by wireless earphones, the AirPods.

According to Cook, production capacity has been bumped up, but because of the high level of demand, Apple is still unable to make enough to reach supply/demand balance.

We're also seeing incredible enthusiasm for AirPods. 98 percent customer satisfaction based on Creative Strategy's survey. We have increased production capacity for AirPods and are working very hard to get them to customers as quickly as we can, but we are still not able to meet the strong level of demand.

Priced at $159, Apple's AirPods are wire-free earphones that feature Bluetooth and an Apple-designed W1 chip for a better connection and simple transfers between different devices. AirPods are equipped with an infrared sensor to detect when they're in the ear, and they support a range of touch-based gestures.

Since launch, AirPod supplies have been severely constrained and ship out from the online Apple Store in the U.S. in six weeks. That six week mark has not budged since December, but Apple retail stores occasionally have them in stock as do third-party retailers like Best Buy.

It's no secret that Apple is working on an autonomous driving system, thanks to statements from Apple CEO Tim Cook, information published by the DMV, and the presence of Apple's autonomous test vehicles on the road, but during today's earnings call, Cook re-emphasized Apple's deep interest in the technology, and he even hinted Apple's work on autonomy could be used for more than vehicles.

"In terms of autonomous systems, what we've said is that we are very focused on autonomous systems from a core technology point of view," Cook said. "We do have a large project going, and we're making a big investment in this from our point of view."

Cook went on to call autonomy "the mother of all AI projects," a statement he's shared before in an interview with Bloomberg. Cook also hinted that Apple has other autonomous projects in the works beyond a car system.

"Autonomous systems can be used in a variety of ways -- a vehicle is only one, but there are many different areas of it. And I don't want to go any further with that," he said.

Apple has presumably been working on an autonomous driving system since 2014, when rumors of its efforts to create an electric vehicle first surfaced. Apple has now moved away from creating a full vehicle and is said to be focusing on self-driving technology instead.

Since April, Apple has been testing its autonomous driving system in several Lexus RX450h SUVs, which can be spotted on the roads around its Cupertino headquarters.

During today's earnings call covering the third fiscal quarter of 2017, Apple CEO Tim Cook was asked about ARKit and how he foresees developers using the service when it first launches. In response, Cook once again reiterated his excitement about augmented reality, and in short, said he expects to see a wide variety of applications shortly after iOS 11 becomes available this fall.

Cook pointed towards many of the demos that we're already seeing, which have ranged from games and entertainment to more practical applications like furniture placement and measurement.

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"I could not be more excited about AR and what we're seeing with ARKit," said Cook. "What categories? What's on the web in terms of what people are doing? It's all over the place, from entertainment to gaming." He went on to say that he expects to see small business solutions, consumer solutions, and enterprise solutions, though he mentioned enterprise "takes a little longer to get going sometimes."

"I think AR is big and profound," he went on to say. "This is one of those huge things that we'll look back at and marvel at the start of it. I think customers are going to see it in a variety of ways and it feels great to get [AR] going at a level that can get all of the developers behind it."

In an interview with CNBC after the earnings call, Cook said he believes the iPhone will become even more essential than it already is once augmented reality features are widely available.

"The smart phone is becoming even more important to people because it's going across so much of your life and you can tell by some of the things we did at WWDC that that will only continue," Cook told CNBC's Josh Lipton. "And with things like AR… I think it becomes even more essential than it currently is. I know it's hard to believe, but I think that's the case."

When iOS 11 launches in the fall, it's set to become the largest AR platform in the world thanks to the myriad iPhones and iPads that are in the hands of customers. Developers are already building a huge range of ARKit-based apps and games, which will also start launching this fall.

Apple in June introduced new 10.5 and 12.9-inch iPad Pro models with new features like a faster processor and an improved ProMotion display with a 120Hz refresh rate, and it appears these new tablets are appealing to consumers.

Apple sold over 11.4 million iPads during the third quarter of 2017, according to today's earnings results, bringing in nearly $5 billion in revenue for the company.

That's up 15 percent from the third quarter of 2016, where Apple sold just under 10 million iPads. Compared to the second quarter of 2017, iPad sales are up an impressive 28 percent, indeed suggesting the new iPad Pro models have been a hit.

Apple also released a low-cost revamped "iPad" earlier this year, and its $329 price tag combined with a speedy A9 processor may also be driving iPad sales. iPad sales may climb even higher next quarter as the new iPad Pro models were introduced towards the end of the third quarter in June.

At 11.4 million iPads sold, Apple far exceeded analyst expectations. Many analysts forecasted a decline in sales, predicting Apple would sell only 7 to 9.8 million iPads during the quarter.

Prior to mid-2016, Apple saw a 10 quarter decline in iPad revenue, but numbers have climbed since the introduction of the iPad Pro and Apple's effort to position it as a full PC replacement.

Apple today announced financial results for the third fiscal quarter of 2017, which corresponds to the second calendar quarter of the year. For the quarter, Apple posted revenue of $45.4 billion and net quarterly profit of $8.7 billion, or $1.67 per diluted share, compared to revenue of $42.4 billion and net quarterly profit of $7.8 billion, or $1.42 per diluted share, in the year-ago quarter.

Gross margin for the quarter was 38.5 percent compared to 38 percent in the year-ago quarter, with international sales accounting for 61 percent of revenue. Apple also declared a quarterly dividend payment of $0.63 per share, payable on August 17 to shareholders of record as of August 14.

Apple sold 41 million iPhones during the quarter, up slightly from 40.4 million a year earlier, while Mac sales rose slightly to 4.29 million units from 4.25 million units in the year-ago quarter following the introduction of a number of updated Macs in June.

iPad sales saw a significant increase on the strength of new iPad Pro models released late in the quarter and a low-cost iPad earlier in the year, rising to 11.42 million from 9.95 million. iPad unit sales were up 28 percent compared to the previous quarter and 15 percent year-over-year.

“With revenue up 7 percent year-over-year, we’re happy to report our third consecutive quarter of accelerating growth and an all-time quarterly record for Services revenue,” said Tim Cook, Apple’s CEO. “We hosted an incredibly successful Worldwide Developers Conference in June, and we’re very excited about the advances in iOS, macOS, watchOS and tvOS coming this fall.”

Apple's guidance for the fourth quarter of fiscal 2017 includes expected revenue of $49–52 billion and gross margin between 37.5 and 38 percent.

Apple will provide live streaming of its fiscal Q3 2017 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

A complete transcript of the conference call with Apple CEO Tim Cook and CFO Luca Maestri, including questions and answers, is available ahead.

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Snapchat parent company Snap is in talks to purchase Zero Zero Robotics, the company that created the $500 Hover Camera Passport Drone that's currently sold exclusively at Apple retail stores and Apple.com, reports The Information.

The Hover Camera Passport is an ultra lightweight drone that's designed to work as a personal camera, following closely behind a person and capturing hands-free photos and videos using face and body tracking. Given its small size (242 grams) and its foldable carbon fiber body, the Hover Camera Passport can go essentially anywhere.

If Snap establishes a deal with Zero Zero Robotics, the Hover Camera Passport and future related products would join Snap's existing Spectacles, which are camera-equipped sunglasses meant to capture short videos and upload them to Snapchat.

Right now, the Hover Camera Passport is exclusive to Apple Stores, and Apple has inked a deal with Zero Zero that has made demo products available in many Apple retail stores around the world. Should Snap purchase Zero Zero, the latter company's deal with Apple would presumably end.

Zero Zero is said to have approached Snap in an effort to secure additional funding, but a potential purchase price isn't available. Snap has reportedly been looking into acquiring drone companies since mid-2016, and has already purchased one small drone maker in Los Angeles.

In the continued release of Apple news originating from developers digging through HomePod firmware, we now have some of the first user interface sounds that HomePod users could be hearing once the smart home speaker launches this December.

Developer Avery Magnotti discovered the sounds within a file named "audioOS" of the HomePod firmware that Apple released this past weekend. In order of appearance in the file, the sounds are called:

alarm1.wav
Lighthouse.wav
SessionInactive-b238.wav
SetupFinal-b238.m4a
SetupStepSource-b238.m4a
SetupStepTarget-b238.m4a
timer1.wav
TwoShot-b238.wav
WOCAudioPasscodeTone.wav

To hear what the files sound like, Magnotti posted a video on his YouTube channel, sharing samples of each file listed. Alarm1 and Timer1 sound like simple tones that HomePod users might be able to choose from when setting up timers in their kitchens. The rest are a bit more unclear, although each Setup file is likely related to the initial pairing process of HomePod and a user's iPhone.

HomePod firmware-related reveals have been steadily rolling out since Saturday, revealing the general design of the iPhone 8, referencing a "split" status bar, including potential new Apple Watch skiing workouts, and more. Magnotti himself revealed yesterday that the HomePod's Siri display measures in at 272 x 340.

The reason that there are so many iPhone and Apple Watch bits of news coming out of the new HomePod firmware is because Apple's smart speaker will run on a modified version of iOS when it launches, and the firmware being investigated by developers relates to iOS 11.0.2. Apple announced the HomePod at WWDC this year, and it will launch this December for $349.

Apple is set to report its earnings results for the third quarter of its 2017 fiscal year at 1:30 p.m. Pacific Time today.

Apple provided the following guidance for its third quarter on May 2:

• revenue between $43.5 billion and $45.5 billion
• gross margin between 37.5 percent and 38.5 percent
• operating expenses between $6.6 billion and $6.7 billion
• other income/expense of $450 million
• tax rate of 25.5 percent

That guidance suggests Apple will report its second-best third quarter earnings results in the company's history. The quarter corresponds with April 1, 2017 through July 1, 2017.

Apple's Fiscal Third Quarter

• 2013: $35.3 billion
• 2014: $37.4 billion
• 2015: $49.6 billion
• 2016: $42.3 billion
• 2017: $43.5+ billion

Wall Street's consensus is that Apple will report approximately $44.9 billion revenue and earnings per share of $1.57, according to dozens of estimates averaged by Thomson Reuters and Yahoo Finance.

Apple is forecasted to have sold 40.7 million iPhones, 9 million iPads, and 4.3 million Macs, according to average estimates shared by Wells Fargo, compared to 40.4 million, 9.95 million, and 4.25 million respectively in the year-ago quarter.

MacRumors.com compiled third quarter estimates from several financial institutions and analysts tracking Apple and the company's stock. The figures are listed below, ranked from highest to lowest in quarterly revenue.

All signs point to Apple reporting an above-average and generally unsurprising June quarter. The most interesting takeaway will be Apple's fourth quarter guidance and any clues that provides about the so-called iPhone 8.

In addition to iPhone sales, investors will be looking for continued growth of Apple's services category, which includes the likes of the App Store, iTunes Store, Apple Music, Apple Pay, AppleCare, and licensing fees.

Apple CEO Tim Cook and CFO Luca Maestri will discuss the company's financial results on a conference call at 2:00 p.m. Pacific Time. MacRumors.com will transcribe the call as it unfolds for those unable to listen.