Last year, during Apple's fiscal first quarter of 2014, the tech giant sold 51 million iPhones. This year, analysts are expecting Apple to have delivered a record 66.5 million iPhones in the same period, up 30% from the year-ago quarter thanks to the popular addition of the iPhone 6 and iPhone 6 Plus to the company's smartphone line. Is such a huge jump in year-over-year iPhone sales really possible?
Here are two key metrics to watch when Apple reports earnings Tuesday that will help investors check in on the health of Apple's iPhone business.
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iPhone sales Headed into the report, there are plenty of reasons to be bullish about Apple's iPhone sales. Here's the latest evidence Apple sold a record number of iPhones during the October-December quarter.
iPhone 6. Image source: Apple.
November global iPhone sales were up 26% from the year-ago month, according to estimates from Counterpoint Research. Further, Counterpoint analyst Neil Shah wrote that "iPhone 6 and 6 Plus momentum will continue into December and help Apple register its best ever iPhone quarter."
Shah pointed particularly to the soaring iPhone market share in Asia. In South Korea and Japan, iPhone market share actually reached record levels in November.
iPhone market share in Japan jumped to more than half of sales for October and November, according to Shah, with Counterpoint estimating a 51% share for the iPhone among smartphone shipments in the country during November. Before the iPhone 6 and iPhone 6 Plus were launched, Apple's share of shipments in Japan was only in the mid-teens.
In Korea, Samsung's home market, Apple's November smartphone market share soared to 33% from less than 10% in the month before the new models were introduced, according to Shah's post.
In China, where Apple's share of smartphone shipments remains small, at just 12%, November iPhone shipments grew in impressive 45% compared to the previous year.
This isn't the first optimistic report or study on Apple's iPhone business for Apple's first quarter. Here are a number of other reasons to have high hopes for Apple's iPhone business:
- Apple posted record debut weekend sales when it launched its iPhone 6 models in September even though China wasn't on the list of launch countries like it was in 2013, when the previous iPhone launch weekend sales record was set.
- Data on new mobile device activations from Flurry suggest the holiday seasons panned out incredibly well for Apple device sales.
- A study by UBS analyst Steven Milunovich in November indicates there is likely to be a high level of Android switchers during the quarter.
Guidance One big quarter for iPhone doesn't mean much if sales don't hold up comparably to the year-ago quarters in the quarters following Apple's fiscal Q1. So, perhaps just as important as Q1 iPhone sales will be Apple's guidance for Q2. While the company doesn't break out guidance by projected unit sales, it may be possible to extrapolate from revenue expectations how the company feels about potential iPhone sales during the quarter.
So, what can we expect Apple to guide for in Q2? Last year, iPhone unit sales declined 14% sequentially from Q1 to Q2. But if Apple really does report something close to the monstrous consensus of 66.5 million iPhones during Q1, it may not be easy for Apple to maintain a sequential decline as small as 14% again this year. I'll be looking for guidance for revenue of about $54 billion -- a number big enough to suggest Apple's Q2 iPhone units sales could be around 20% higher than the year-ago quarter.
But if Apple is planning on launching the Apple Watch during Q2, as has been predicted, extrapolating how much of Apple's projected revenue is predicted to come from iPhones will be very difficult, since some of the year-over-year incremental growth in revenue could come from Apple Watch. Still, considering the Apple Watch likely won't hit the market any later than midway through Q2, guidance of $54 billion in revenue is an upbeat enough figure to suggest Apple is as healthy as ever.
For more on what to expect from Apple's earnings report on Tuesday, check out this earnings preview.
The article 2 Metrics to Watch When Apple, Inc. Reports Earnings Today originally appeared on Fool.com.
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