Similar to last quarter’s 3% guide up, we expect the midpoint of revenue guidance for the Dec-18 quarter to be 3% ahead of the Street, or $96B. The Street is currently expecting Dec-18 revenue of $93B and Loup Ventures is expecting $99B. The biggest difference between our estimate and the Street’s is our higher ASP assumptions. We are also expecting 3% iPhone unit growth vs. the Street at less than 1%, and margins to be in line with consensus at 38.2%
Exiting tomorrow’s new product event, Apple will have refreshed products that account for about 50% of revenue in FY19. This compares to last year when the company refreshed products accounting for 37% of revenue. This is a near-term (1 year) positive for unit growth and, while our estimates remain unchanged, our confidence in those estimates has increased. Lastly, we believe upside to Street ASP numbers will start in the Mar-19 quarter as interest in XR builds.
XR: Everybody’s iPhone
We expect the iPhone XR to be the most popular iPhone in 2019 (accounting for 38% of units), as consumers begin to see the phone in the wild and recognize its value. We believe the iPhone XR will be “everybody’s iPhone” because it’s a premium device at a more accessible price point, representing the greatest value in the iPhone lineup. Here’s our take on last weeks launch.
Despite being a better value, XR should still move Street ASPs higher in FY19, given our belief that the weighted ASP (factoring in capacity mix) of XR will be $796. This assumes the following XR capacity mix: 64GB at 42%, 128GB at 40%, and 256GB at 18%.
Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio.