Apple Changes The Way It Breaks Out China, App Store, Accessory Revenue

If you look at the data sheet that Apple reports along with its standard earnings release, you’ll notice a few changes this quarter. The company adjusted how it reports revenue for different geographic regions and product categories as China and app store revenue have become significant in their own right over the last few years. (You can compare how this past quarter’s reporting looks compared to the one before with the images at the top and bottom of this post.) The company started breaking out China as a standalone region, after including it for years in a group called “Asia-Pacific,” which excluded Japan. Because Apple’s business has blown up there over the past few years, and China contributed $6.8 billion last quarter, the company is showing it as its own category. That’s more than the $4.4 billion in revenue Japan produced last quarter. “We have established a new operating segment for China, given the contribution of that region to our business,” said chief financial officer Peter Oppenheimer on the earnings call. With the new category, you can see how revenue from China has ballooned. They also broke out app store and iTunes sales in a different way. Before every product category got grouped with accessory revenue, and then app store sales got bundled into a category called “Other Music Related Products and Services.?Today app store and iTunes revenue gets bundled with AppleCare revenue in a category called, “iTunes/Software/Services.” That category brought in nearly $3.7 billion last quarter, up 22 percent from a year earlier. Accessories also get their own category and they contributed $1.8 billion in revenue last quarter, up 25 percent from the same time a year before. Oppenheimer said, “We believe this presentation is a logical grouping of revenue sources and provides greater transparency into our results.”?He added, “These changes have no impact on overall reported income.”

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