Apple Stock Drops Despite Massive Revenue Growth

Apple’s third quarter results easily beat its own guidance and the Street’s consensus, with sales of 47.5 million iPhones and 4.8 million Macs, more than making up for expected weakness in iPad sales.

Apple failed, however, to beat some of the more bullish forecasts for iPhone sales; shares quickly dropped more than 7% in after-hours trading.

Watch sales remain a mystery. CFO Luca Maestri told Reuters that sales beat internal expectations, but didn’t say what they were.

MORE: Here’s How Much Apple Made From the Apple Watch

“We had an amazing quarter, with iPhone revenue up 59% over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,” said Tim Cook in a press release. “The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.”

“In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33% and earnings per share up 45%,” said CFO Maestri. “We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.”

By the numbers:

— Revenue: $49.6 billion, up 32.5%
— EPS: $1.85 per share, up 44.5%
— iPhone: 47.53 million, up 47.6%
— iPad: 10.9 million, down 17.7%
— Mac: 4.796 million, up 8.8%
— Services: $5.03 billion, up 12%
— Other products: $1.641 billion, up 49.5%
— Gross margin: 39.7%, up from 39.4%
— Revenue guidance: $49 to $51 billion
— Gross margin guidance: 38.5% to 39.5%