Apple on Thursday reported fiscal second quarter results that beat Wall Street’s soft expectations, driven by stronger-than-expected iPhone sales. Apple CEO Tim Cook told CNBC the quarter was “better than expected.”
However, Apple’s overall revenue fell for the second straight quarter. Shares of the tech giant soared nearly 2% in extended trading and continued to climb as Apple released forecast data points for the current quarter.
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Here’s how the company has fared compared to Wall Street expectations, according to consensus expectations from Refinitiv:
- EPS: $1.52 per share versus $1.43 expected
- Revenue: $94.84 billion versus $92.96 billion expected
- gross margin: 44.3% vs. 44.1% expected
Apple reported net income of $24.16 billion for the quarter, compared to $25.01 billion in the same period last year. Total revenue declined 3% from $97.28 billion in the previous quarter.
Here’s how Apple’s individual product lines have fared compared to StreetAccount’s consensus expectations:
- iPhone Earnings: $51.33 billion versus $48.84 billion expected
- Mac Earnings: $7.17 billion versus $7.80 billion expected
- iPad Earnings: $6.67 billion versus $6.69 billion expected
- Sales of other products: $8.76 billion versus $8.43 billion expected
- Income from services: $20.91 billion versus $20.97 billion expected
Apple has not provided any formal guidance and has continued its practice dating back to 2020 and the start of the Covid-19 pandemic. Management typically provides some data points when calling analysts.
Apple CFO Luca Maestri said the company expects total revenue to decline about 3% in the current quarter.
“We expect our June quarter revenue performance to be similar year-on-year to the March quarter, provided the macroeconomic outlook does not deteriorate from our current-quarter guidance today,” Maestri said in a call to analysts. He added the company faces macroeconomic challenges in digital advertising and mobile gaming, which are part of Apple’s services business.
The highlight of Apple’s report was iPhone sales, which an IDC estimate showed were up from the year-ago quarter, even as the broader smartphone industry shrank nearly 15% over the same period.
iPhone revenue rose 2% for the quarter ended April 1, suggesting that parts shortages and supply chain issues that had hampered the product for the past few years — including an iPhone factory shutdown late last year — had finally eased .
“It was a pretty good quarter from an iPhone perspective, especially compared to the market when you look at market stats,” Cook told CNBC’s Steve Kovach.
Apple Chief Executive Officer (CEO) Tim Cook waves to people during the opening of Apple Inc.’s first flagship store in Mumbai, India, April 18, 2023.
Imtiyaz Shaikh | Anadolu Agency | Getty Images
Apple’s Mac and iPad businesses didn’t fare as well. The company warned last quarter that both businesses would decline, in part due to parts shortages, but they fell further than expected.
Apple’s Mac sales fell more than 31% to just over $7.17 billion. But that’s a tough comparison to the same period last year, when Apple was still benefiting from the end of a pandemic boom in PC sales and a switch to proprietary chips that offer longer laptop battery life.
“There are really two reasons for this,” Cook said. “One is the macro situation in general. And the other is where we’re still comparing to the very difficult comparison of the M1 MacBook Pro 14- and 16-inch from last year’s quarter.”
iPad sales fell nearly 13% to $6.67 billion.
Apple’s services business includes monthly subscriptions, revenue from Apple’s App Store, warranties, and revenue from search licenses from companies like Google. Apple reported $20.9 billion in services revenue, up 5.5% year over year, suggesting the company’s highest-margin business continues to grow.
Apple’s wearables division, including the Apple Watch and headphones like AirPods, fell 1% in the quarter, beating analysts’ expectations. Last fall, the company launched a more expensive Apple Watch called the Ultra.
Apple’s regional business in China, which includes the mainland, Taiwan and Hong Kong, reported revenue of $17.81 billion, down from $18.34 billion a year earlier. Analysts had hoped China’s demand for electronics would rise in the quarter as the company exits Covid-era lockdowns and other restrictions.
While sales shrank in most of Apple’s monitored regions, they rose to $8.11 billion in the Asia-Pacific region.
Cook expressed optimism about Apple’s prospects in India after visiting the country last month, where he opened Apple Stores and met with politicians.
“The switcher and first-time buyer metrics are looking very good there for India,” Cook said. Apple uses the term “switcher” to refer to first-time iPhone buyers who previously had Android devices.
As expected, Apple’s board of directors approved $90 billion in share buybacks and dividends. Apple said it paid $23 billion in buybacks and dividends in the March quarter. Apple also increased its dividend by 4% to 24 cents per share.
Cook also said Apple isn’t planning layoffs like other big tech companies have begun over the past year. “I see this as a last resort and that’s why we’re not talking about mass layoffs at the moment,” he said.
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