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The first two fiscal quarters of 2019 were disappointing for both Apple and investors, thanks to a historic holiday season shortfall and a subsequent year-over-year second quarter decline. Today, Apple announced its fiscal third quarter 2019 results, including revenues of $53.8 billion — just enough to be a company record, though the number is up only 1% compared with last year, roughly flat with the year-ago quarter.

Analysts had estimated revenues of $53.3 billion, centered within Apple’s guidance range of $52.5 to $54.5 billion, and all but identical compared with last year’s $53.265 billion third quarter. Apple had also projected gross margins of 37%-38% and operating expenses of 8.7-8.8% for the quarter.

For the quarter, Apple is listing net sales for the iPhone of $25.986 billion, versus Mac sales of $5.82 billion, iPad sales of $5.023 billion, “wearables, home and accessories” sales of $5.525 billion, and services sales of $11.455 billion. That’s down sharply for the iPhone from last year’s $29.47 billion, but up for the Mac ($5.258 billion), iPad ($4.634 billion), and other products ($3.733 billion), with a nice bump from last year’s $10.17 biilion for services.

As for regional distributions, net sales were down from $12.14 billion to $11.925 billion in Europe, and down from $9.55 billion to $9.157 billion in Greater China. These shortfalls were offset by a slightly improvement in the Americas, which grew to $25.056 billion from last year’s $24.5 billion of total revenues, as well as Japan (up to $4.082 billion from $3.87 billion) and the Asia Pacific region (up to $3.589 billion from $3.17 billion).

After becoming the first U.S. company to do so, Apple has exceeded $1 trillion in market capitalization briefly in both 2018 and 2019, but spent much of the year under the historic number. It jolted investors by stopping device unit sales reporting at the end of 2018, as iPhone, iPad, and Mac shipments all appeared to have flattened out. Instead, the company pointed investors to its total product line revenues, including increasingly popular wearables, and growing services revenues from subscriptions, Apple Pay, and Apple Music.

To that end, services revenue was up 16% in the second quarter, which ended just after the rollout of Apple News+, and before the releases of three new services, Apple Card, Apple Arcade, and Apple TV+. But the launch of Apple News+ disappointed both publishers and early adopters, and was not expected to contribute materially to any services revenue growth. Even so, services revenue was up nearly 13% for the third quarter, a particularly bright spot alongside wearables, which increased roughly 48% over last year’s levels.

iPhone sales are a continued sore spot for the company. They slowed in late 2018 as the company increased the prices of its flagship iPhones, starting the iPhone XR at $749 and adding the iPhone XS Max at $1,099, numbers that made the devices all but unaffordable in developing markets. Customers also began to hold onto their iPhones longer, in part due to a discounted battery replacement program Apple implemented during 2018. However, Apple CEO Tim Cook appears to be unconcerned about the slowdown.

“This was our biggest June quarter ever — driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac and significant improvement in iPhone trends,” Cook said. “These results are promising across all our geographic segments, and we’re confident about what’s ahead. The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.”

For the fourth quarter, Apple is predicting revenue between $61 and $64 billion, gross margin between 37.5% and 38.5%, operating expenses between $8.7 and $8.8 billion, $200 million of other income, and a tax rate of 16.5%. The company is also issuing a $0.77 per share cash dividend, payable August 15, 2019 to shareholders on record as of August 12, 2019.

Further details on the results will be forthcoming in a quarterly earnings call, which we’ll be covering live.

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