Apple earnings beat estimates thanks to 35M iPhones sold

Apple today released its fiscal third quarter earnings report, with revenues of $37.4 billion and earnings per share (EPS) of $1.28.

Analysts had expected Apple to report earnings of $1.23 per share on revenues of $37.99 billion.

Although Apple missed revenue estimates, the company’s says its stronger than expected EPS is the result of solid iPhone sales. This quarter the company reported 35.2 million iPhones sold, up from 31.2 million units sold in Q3 2013.

According to Apple chief Tim Cook, “our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters.”

Apple reported $7.7 billion in profit this quarter, up from $6.9 billion in Q3 2013. Last quarter, Apple reported $10.2 billion in profit on revenues of $45.6 billion.

Although Apple’s Q3 2014 was light on consumer-ready releases, the company’s annual developer conference, WWDC, set the stage for what analysts expect to see in Q4. OS X Yosemite, iOS 8, and HealthKit all debuted at WWDC, but investors are likely more interested in a number of widely rumored yet unannounced products, including the iPhone 6 and the iWatch.

Apple sold 16.35 million iPads during Q2 2014 — less than analysts expected. This quarter, that figured dropped to 13.2 million units sold.

According to market research firm eMarketer, Apple is expected to lose share of the total U.S. tablet market this year, but may see slight growth in its overall share of U.S. smartphone users. More, from eMarketer:

Apple’s share of U.S. smartphone users will rise to 40.5 percent in 2014, up from 40 percent last year and 36.5 percent in 2012. While the number of overall iPad users continues to increase, Apple is losing share as others enter the market. Apple’s share of US tablet users is expected to fall to 51.8 percent in 2014, according to eMarketer, down from 54.5 percent last year.

Prior to the bell, Apple shares hovered around $94 per share, not far from September 2012’s record highs. In after hours trading, the company is down slightly by less than one percent.

Ruth Reader contributed to this report.