For what’s usually a quiet quarter, Apple was busy.
It’s the company’s latest earnings report for the fiscal year following a busy holiday season. While the company’s supplier partners hinted at a rough quarter, the company’s earnings suggests otherwise.
Apple reported a fiscal second quarter earnings $2.73 cents a share, up 30 percent year-over-year, on revenues of $61.1 billion (statement). Wall Street was expecting earnings of $2.67 per share on revenue of $60.8 billion.
Here’s the company’s breakdown for the quarter:
- iPhones: 52.21 million, up 3 percent on the year-ago quarter
- iPads: 9.11 million, up 2 percent on the year-ago quarter
- Macs: 4.07 million, down 3 percent percent in the year-ago quarter
- Services (includes iTunes and Apple Pay): $9.19 billion, up 31 percent percent on the year-ago quarter
- Other products (accessories and Apple Watch are included, but they’re not broken out separately): $3.95 billion, up 38 percent on the year-ago quarter
Apple chief executive Tim Cook said the “strong” quarter was largely thanks to its newest iPhone X and accessories division — even if it didn’t break out its Watch figures.
“Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter,” said Cook. “We also grew revenue in all of our geographic segments, with over 20 percent growth in Greater China and Japan.”
On a conference call with analysts, Cook talked up product developments such as the iPad, education efforts and ARKit. But the biggest item worth noting is that Apple’s services engine is driving recurring revenue. Cook said:
We generated almost $34 billion in earnings in 6 months and we’re very bullish on Apple’s future. We have the best pipeline of products and services we’ve ever had. We have a huge installed base of active devices that is growing across all products, and we have the highest customer loyalty and satisfaction in the industry. Our Services business is growing dramatically. Our balance sheet and our cash flow generation are strong, and that allows us to invest significantly in our product road map and still return a very meaningful amount of capital to our shareholders. Recent corporate tax reform enables us to deploy our global cash more efficiently. In the United States, we expect our direct investment in the economy to exceed $350 billion over the next 5 years, including $30 billion in capital expenditures.
Simply put, you can gripe about a $1,000 iPhone X and volume, but the device still prints money. To that end, CFO Luca Maestri noted that iPhone X customer satisfaction was 99 percent. Maestri also noted the services hook. He said:
Our Services business is growing at a very fast pace all around the world, with revenue up more than 25% year-over-year in each of our 5 geographic segments. The App Store set a new all-time revenue record in the March quarter, and Apple Music reached a new record for both revenue and paid subscribers, which have now passed 40 million. iCloud storage revenue was up by over 50% year-over-year to a new all-time record, and AppleCare revenue grew at its highest rate in 5 quarters, setting a new March quarter record.
The company also declared a cash dividend of 73 cents per share, payable in mid-May.
Apple said it expects revenue between $51.5 billion and $53.5 billion for its current third quarter.
Wall Street was expecting an outlook of $2.11 in earnings and revenues of $51.47 billion.