Apple Q3 2020 earnings call -- what you need to know

How has Apple weathered COVID-19 times? Yesterday's earnings call offers us some deep insight into how the company has been doing.

Apple had a great Q3 2020 quarter, blowing away expectations and setting a record June quarter despite everything that's been going on. The company reported earnings of $2.58 a share, up 18 percent year-over-year, on revenues of $59.7 billion, an increase of 11 percent over the year prior.

Wall Street had been predicting earnings of $2.04 per share on revenue of $52.25 billion.

The earnings call that followed was also packed with deep insights into how the company has managed to weather the pandemic so well.

Let's take a look at the highlights.

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Diversity was a major theme

Tim Cook CEO: "Throughout the call, I'll speak in greater detail about Apple's support for equity and justice, topics of great urgency on a number of fronts."

Cook: "…we committed $100 million to launch Apple's Racial Equity & Justice Initiative as well as new and renewed internal efforts to foster diversity and inclusion at all levels of the company."

June quarter record

Cook: "We set a June quarter record with revenue of $59.7 billion, up 11% from a year ago. Both products and services set June quarter records and grew double digits, and revenue grew in each of our geographic segments, reflecting the broad base of this success."

iPad and Mac are growing

Cook: "We expected iPad and Mac growth to accelerate, and we saw very strong double-digit growth for these devices this quarter."

Wearables dipped, but still strong

Cook: "Wearables growth decelerated as we expected but still grew by strong double digits and set a revenue record for a nonholiday quarter."

It's not just about hardware

Cook: "Reflecting the deep integration of hardware, software and services, Services generated a June quarter record of $13.2 billion, up 15% year-over-year… there were 2 distinct trends … results for advertising and Apple Care were impacted by the reduced level of economic activity and store closures … second, we had strong performance in our digital services with all-time revenue records in the App Store."

Cook positions the App Store as being good for all

Cook: "We do not have a zero-sum approach to prosperity, and especially in times like this, we're focused on growing the pie, making sure our success isn't just our success and that everything we make, build or do is geared toward creating opportunities for others. The App Store is a great example. This quarter, a new study by independent economists at The Analysis Group found that the App Store facilitated more than $0.5 trillion in commerce globally in 2019 alone."

Virtual WWDC was a hit

Cook: "More than 22 million viewers tuned in across all of Apple's streams. For our developers, we distributed more than 72 hours of video content. That's 3 full days of video. The week saw more than 200 direct-to-video engineering and design sessions and about 4,500 person-to-person appointments with developers across 227 virtual labs."

Paid subscriptions boost

Luca Maestri CFO: "In aggregate, paid subscriptions grew more than 35 million sequentially, and we now have over 550 million paid subscriptions across the services on our platform, up 130 million from a year ago. With this momentum, we remain confident to reach our increased target of 600 million paid subscriptions before the end of calendar 2020."

Wearables are huge

Maestri: "Wearables, home and accessories established a new June quarter record with revenue of $6.5 billion, up 17% year-over-year. Our Wearables business is now the size of a Fortune 140 company, and we set June quarter records in the majority of markets we track."

Apple retail doesn't rely on bricks and mortar

Maestri: "Our retail business had record June quarter revenue, thanks to the performance of our online store."

Yes, the iPhone is selling well

Cook: "The fact that if you look in the major geographies like the U.S., we had the top 2 selling smartphones. In the U.K., we had 3 of the top 4. In Australia, we had 5 of the top 6. And in Japan, we had the top 4. Urban China, we were -- iPhone 11 was the top-selling smartphone in the country. And so these are some very different geographies with very different competitive situations and we're doing fairly well."

There was pent up demand for the iPhone SE

Cook: "The iPhone SE, it's also clear that from the early data, we're seeing a higher switcher number than we did in the previous year, which we feel very good about. And it also seemed to appeal to some people that were holding onto the device a little longer because they wanted a smaller form factor phone."