Apple reported earnings for its March quarter Tuesday that fell in line with expectations, although revenue was down from the same period last year. However, Apple’s guidance for next quarter was higher than analysts expected.
Apple stock spiked over 4% in extended trading. Here’s how the company did compared to what Wall Street expected:
- EPS: $2.46 vs. $2.36 forecast by Refinitiv consensus estimates
- Revenue: $58.02 billion vs. $57.37 billion forecast by Refinitiv consensus estimates
- Q2 iPhone revenue: $31.05 billion vs. $31.03 billion, forecast by Refinitiv consensus estimates
- Q2 services revenue: $11.45 billion vs. $11.37 billion, forecast by Refinitiv consensus estimates
- Projected Q3 revenue: $52.5 to $54.5 billion vs. $51.94 billion forecast by Refinitiv consensus estimates
Apple’s total sales were down 5% from the same period last year, although it doesn’t seem to matter to investors as the stock is up.
Guidance for Apple’s fiscal third quarter was higher than expected, suggesting Apple’s iPhone demand machine is revving again and that services revenue continues to grow. In January, Apple cut its first-quarter forecast, blaming slow iPhone sales in China.
In an interview with CNBC’s Josh Lipton, CEO Tim Cook said that Apple’s performance in China had improved over the previous quarter and saw greater strength towards the end of the quarter. Cook also said that a sales tax cut had helped decrease the price of Apple products, which had helped. Cook said that the trade relationship between the U.S. and China had improved as well.
“The tone is much better than it was in the November-December timeframe. I think that affects consumer confidence in a very positive way,” Cook said.
“I believe that the trade relationship — I don’t mean the tariff, I mean the tone — is much better today than it was in the November-December time frame. That affects consumer confidence in a positive way,” Cook said.
Apple said that it had $10.22 billion in sales in its Greater China category, which also includes Taiwan and Hong Kong.
Apple also said that it would spend $75 billion on share repurchases and it also approved 75 cent dividend per share, a 5% increase. Apple announced that it would spend $100 billion during this period last year.
Apple has recently been signaling to investors that iPhone sales aren’t the critical number to watch. Apple instead is highlighting its services revenue, which includes products like iCloud, Apple Music, AppleCare warranties and others. Apple reported $11.45 billion in services revenue, which is up 16% from the same time last year.
Apple isn’t providing a new installed base figure from its last update of 1.4 billion devices, but Cook did say that it hit an all-time record last quarter across all categories.
Apple’s individual product lines are still critical for the company. Recently, it has been highlighting the strength of its Wearables business, which includes Apple Watch, AirPods, and other headphones, and was up 30% year-over-year.
Here’s how the product lines break down:
- iPhone: $31.05 billion vs. $31.10 billion expected
- iPad: $4.87 billion vs. $4.21 billion expected
- Mac: $5.5 billion vs. $5.85 billion expected
- Wearables: $5.1 billion vs. $4.79 billion expected
