The iPhone X was Apple’s most popular smartphone last quarter, but as the newness wears off, are people still excited about buying a $1,000 phone?

Apple will report its fiscal third-quarter earnings on July 31. It’s traditionally the slowest quarter for the consumer-tech giant, but investors tend to watch closely for any indication about the coming two quarters, when Apple tends to release its latest smartphones (this traditionally happens in September, near the end of the company’s fiscal fourth quarter) and begins the busy holiday quarter.

But even a slow quarter for Apple is nothing to sneeze at: In last year’s fiscal third quarter, Apple generated $45.4 billion in revenue.

Analysts surveyed by Thomson Reuters expect Apple to have generated $52.3 billion in this year’s third quarter, up about 15% over last year. (It also happens to be about the midpoint of the revenue guidance Apple itself gave on May 1.)

The overwhelming majority of Apple’s revenue in any given quarter comes from iPhone sales, accounting for as much as two-thirds of revenue in recent quarters.

After the release of the $1,000 iPhone X in September, the average price of an iPhone skyrocketed. Apple said on its last earnings call that the iPhone X was its best-selling individual model every week of the quarter. Look to see whether Apple has managed to maintain that momentum with the costly phone, or whether cheaper models, such as the $700 iPhone 8 it announced at the same time as the X, have started to cut into the X’s popularity.

According to a recent report from Consumer Intelligence Research Partners, Apple’s three newest phones, the X, the 8, and 8 Plus, accounted for 54% of all iPhone sales in this quarter. But the research group suggests that the iPhone 8 Plus was the most popular, itself accounting for 24% of total iPhone sales this quarter.

There have been rumors that Apple plans to release three versions of its next iPhone, all shaped like the X but in the sizes of the iPhone 8, X, and 8 Plus. Perhaps it is seeing what the analysts see, that people still want a larger phone. But we’ll have to wait until September to find out more.

Apple’s cyclical revenue cycle has become more pointed in recent years—while revenue has generally trended upward, the differences between the strongest and weakest quarters have become more stark.

But there will be plenty to chew over when Apple reports results after the close of US trading on Tuesday.

One of the biggest success stories for Apple in recent years has been its services business, which includes app, music, and games sales, AppleCare, and Apple Pay fees. It’s now the size of a Fortune 100 company on its own, generating only slightly less revenue than Nike did over the last four quarters.

Look to see whether services have continued to grow, and cover any drop-off in iPhone sales in Apple’s slowest quarter.

Apple’s computer business surprisingly leapfrogged its iPad business in 2016, and has remained its second-best hardware product, trailing only the iPhone. Apple has refreshed just about all of its computers since then, and even as the company dumps money into promoting the iPad as a replacement to the computer for many people, it seems consumers have still tended to enjoy buying Macs. (That being said, the cheapest MacBook is about as expensive as the costliest iPad, so it takes fewer computers to generate more revenue.)

Apple’s only true new product line launched since Tim Cook took over as CEO is the Apple Watch. We still don’t know how many have been sold, as the company continues to include the wearable in a bucket it calls “Other Products” on its earnings reports, which also includes sales of Beats headphones, iPods, Apple TV, accessories, and Apple’s AirPods wireless earbuds. It seems that AirPods have been a success since they were released in late 2016 (although again it’s impossible to know for sure), so it’s unclear whether the uptick in recent quarters for Other Products is entirely down to the Apple Watch, or something else.

Look for any indication of the Watch’s health on the earnings call—Cook likes to, rather confusingly, conflate sales of the watch and its headphones into a “wearables” business that he said in 2017 was already the size of a Fortune 400 company on its own.

It’ll also be worth watching to see whether Apple has made any headway in markets it previously identified as growth opportunities, including China and India. It has struggled recently in both, losing ground to more affordable but still high-quality phone makers in India, where Apple recently lost three key executives in the region. It seems its strategy of selling older models to the countries’ burgeoning middle classes has not worked as well as hoped, when competitors are selling similar phones for less.

But perhaps the most important thing to come out of the third-quarter earnings report is the big-picture trend. After a (relatively) rough 2016, Apple returned to revenue growth early in 2017, and it doesn’t seem like that trend is about to reverse itself anytime soon.



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