Apple Hit $1 Trillion: Growth In Asia & China Key Going Forward

Apple (AAPL ) became the first publicly listed U.S. company to reach $1 trillion in market cap Thursday after it reported strong quarterly financial results earlier in the week. But as iPhone unit sales slow, some of Apple’s biggest growth opportunities might be found in Asia.

Quick Q3 Overview

Apple’s quarterly earnings soared by 40% to reach $2.34 per share, coming in above the Zacks Consensus Estimate. Apple’s fiscal Q3 revenues climbed 17% to hit $53.27 billion, also topping our $52.34 billion estimate. Plus, total iPhone revenues jumped by 20% to $29.91 billion.

However, iPhone unit sales rose less than 1% to 41.3 million, which illuminates how much the high-priced iPhone X has helped Apple. Luckily, Apple’s Services business, which also includes Apple Music and Apple Pay, saw its quarterly revenues soar 31% to reach $9.55 billion—accounting for nearly 18% of total Q3 revenues. Now, Tim Cook’s firm looks ready to compete against Spotify (SPOT ) and soon enough Netflix (NFLX ) , Amazon (AMZN ) , and Hulu, with a streaming TV push.

Apple also competes against Google’s (GOOGL ) app store and Amazon’s voice assistant business, all the while it takes on digital payment firms Square (SQ ) and PayPal (PYPL ) . With all that said, Apple’s ability to grow in Asia will likely prove vital for the company as it tries to blow past $1 trillion (also read: After 42 Years, Apple Reaches the $1 Trillion Market Cap Milestone).

Growth in Asia

Apple’s quarterly revenues in Greater China hit $9.55 billion, which marked a 19% surge from the year-ago period. The region accounted for 18% of Apple’s total quarterly revenue, down slightly from last quarter’s 20%.

Apple opened its 50th retail store in Greater China during its third quarter. The company also said that the June quarter marked record sales of iPads in Mainland China. “If you look at it on a geographic basis, the top three selling phones in urban China were iPhone, where iPhone X was number one and has been for a couple of quarters,” Cook said on Apple’s Q3 conference call.

“This is the fourth consecutive quarter that we’ve had double-digit growth in Greater China…” he continued. “We did pick up share in iPhone and iPad, but if you look more holistically at our complete line, we had double-digit growth from services to iPad to iPhone and to our other product category which the watch did extremely well, and so there are lots of good things happening there.”

Apple also saw an uptick in the “Rest of Asia Pacific,” with revenue up 16% to $3.17 billion. Overall, at $16.59 billion, Greater China, Japan, and the rest of Asia Pacific accounted for over 31% of Apple’s quarterly revenue.

Investors should note that U.S. and European growth remained strong. Revenue in the Americas popped by 20% to hit $24.54 billion. Meanwhile, European revenues climbed by 14% to reach $12.14 billion.

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