Apple earns $58B in revenue as services hit all-time high of $11.5B

Posted:
in AAPL Investors edited April 30
Apple has earned revenue of $58 billion in the second quarter of the 2019 fiscal year, according to its financial results revealed on Tuesday, with the earnings per share raising to $2.46 and services reaching record highs.



For the March quarter, Apple's revenue of $58 billion is down 5% year-on-year from the $61.1 billion reported in the same quarter in 2018. The earnings are within Apple's forecast range of between $55 billion and $59 billion that it issued in January, a quarter where it famously missed expectations following lower-than-expected iPhone revenue.

Revenue from the iPhone for the quarter is declared as $31 billion, down from $37.6 billion last year. Mac revenue is at $5.5 billion, down from $5.8 billion, and iPad landed at $4.9 billion, up from $4 billion in the year ago quarter.

The company's "Wearables, Home and Accessories" category has net sales of $5.1 billion, an increase from the $3.9 billion brought in during the same quarter in 2018.

Services, a reliable growth engine for the company, earned $11.5 billion in revenue, up from $9.9 billion last year year, and up from January's $10.9 billion all-time-high.

"Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record," Apple CEO Tim Cook said in a prepared statement. "We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services. We're looking forward to sharing more with developers and customers at Apple's 30th annual Worldwide Developers Conference in June."

The quarter is the first to follow Apple's earnings misstep in January, and analysts have been keen to see the company stabilize and reverse course as soon as possible. Analyst expectations were for Apple to hit its revenue forecast, as well as having a marginally higher gross margin, and a greater reliance on Services to fill in from any losses caused by reduced iPhone sales volume -- a statistic which Apple will not be divulging in any significant way.

Analysts suggested there would be an earnings per share of around $2.37, with an update to the share buyback scheme adding another $100 million to the pot.

For the third quarter, Apple is forecasting revenue between $52.5 billion and $54.5 billion, with a gross margin between 37% and 38%. Operating expenses are tipped to be between $8.7 billion and $8.8 billion.
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Comments

  • Reply 1 of 29
    melgrossmelgross Posts: 31,647member
    Not bad, considering. Phone sales and computer sales drops are following the industries drops. A nice part is iPad sales rising from $4 billion a year ago to $4.9 billion. I’m curious to know how tablet sales did overall, that’s been declining for everyone, except for under $100 models from china with unknown branding.
    edited April 30 StrangeDaysSoliSpamSandwichmuthuk_vanalingamwatto_cobra
  • Reply 2 of 29
    jas99jas99 Posts: 26member
    Up almost 10 points after hours. 
    watto_cobra
  • Reply 3 of 29
    apple ][apple ][ Posts: 8,650member
    Oh, noes! Apple is doomed. :#
    watto_cobra
  • Reply 4 of 29
    lkrupplkrupp Posts: 7,060member
    AAPL up almost 5% after hours, around $209. If that holds will they open above the $1Trillion market cap tomorrow? 
    watto_cobra
  • Reply 5 of 29
    jungmarkjungmark Posts: 6,687member
    Doooomed. Apple is within its guidance. That’s fantastic. 
    watto_cobra
  • Reply 6 of 29
    eightzeroeightzero Posts: 2,349member
    They hit my prediction: banking a metric fucktonne of money.
    watto_cobra
  • Reply 7 of 29
    maestro64maestro64 Posts: 4,562member
    melgross said:
    Not bad, considering. Phone sales and computer sales drops are following the industries drops. A nice part is iPad sales rising from $4 billion a year ago to $4.9 billion. I’m curious to know how tablet sales did overall, that’s been declining for everyone, except for under $100 models from china with unknown branding.
    I think what we are begin to see, consumers are spending more on intangible items like services verse items which you can put your hands on and keep and enjoy over time. I see people going out to dinner more, so many place I go are packed and there is a wait and it is more than the trendy places. All the hardware today is good enough, same with cars, other than styling on car there is no must have feature unless you want electric, beyond that cars have topped out on the power curve, there is no must have feature which was not there 3 yrs ago and cars are lasting longer. My daily driver is 12 yrs old 166K miles and it like new runs well and have no issue with it why replace it.


    It all about making people feel good and services is where it is at.
    viclauyycwatto_cobra
  • Reply 8 of 29
    Cue the YouTube critics. “Apple is done. Everyone is switching to Android. The iPhone 11 renders are ugly. The iPad Pro is a toy. But Apple revenue is up. Meanwhile every Samsung Fold given to reviewers has broken, and Huawei has been caught faking photos yet again, this time enhancing pictures you take of the moon with pre-existing images of the moon stored in a database. But that’s ok because Apple is doomed.”
    viclauyycStrangeDayswatto_cobra
  • Reply 9 of 29
    karmadavekarmadave Posts: 312member
    A couple of things stand out, which in my opinion are alarming trends:

    1. iPhone sales are falling. This could be a reflection of a maturing market and longer upgrade cycles, but I suspect Apple's 'premium' pricing strategy has something to do with it. A good benchmark would be to compare sales for Samsung phones.

    2. China. Apple's sales, in China, may have peaked and are going in the opposite direction. However, I tend to think this has more to do with the above as well as competition from local Chinese firms such as Huawei.

    Wearables and Services are continuing to grow, but not enough to fill the iPhone sales decline. Basically, Apple's over-reliance on one product (iPhone) is finagling coming back to bite them. While most companies with kill for these types of revenues and profits, this is a negative growth strategy...
    muthuk_vanalingam
  • Reply 10 of 29
    canukstormcanukstorm Posts: 1,919member
    karmadave said:
    A couple of things stand out, which in my opinion are alarming trends:

    1. iPhone sales are falling. This could be a reflection of a maturing market and longer upgrade cycles, but I suspect Apple's 'premium' pricing strategy has something to do with it. A good benchmark would be to compare sales for Samsung phones.

    2. China. Apple's sales, in China, may have peaked and are going in the opposite direction. However, I tend to think this has more to do with the above as well as competition from local Chinese firms such as Huawei.

    Wearables and Services are continuing to grow, but not enough to fill the iPhone sales decline. Basically, Apple's over-reliance on one product (iPhone) is finagling coming back to bite them. While most companies with kill for these types of revenues and profits, this is a negative growth strategy...
    "This could be a reflection of a maturing market and longer upgrade cycles"

    Not could be, it IS a reflection of both.  It definitely isn't because of price because iPhone sales started stagnating before iPhone X was introduced.  On top of that, other smartphone makers, with the exception of Huawei, have taken a hit
    watto_cobra
  • Reply 11 of 29
    sirozhasirozha Posts: 550member
    Apple’s profit is 16% down this quarter when compared with the same quarter last year. However, the stock is up over 4%. I guess Wall Street finally gets Apple the same way it gets Amazon. 
    edited April 30 MisterKitmuthuk_vanalingam
  • Reply 12 of 29
    rwesrwes Posts: 165member
    sirozha said:
    Apple’s profit is 16% down this quarter when compared with the same quarter last year. However, the stock is up over 4%. I guess Wall Street finally gets Apple the same way it gets Amazon. 
    Is it their profit that's down 16% or do you mean their revenue?
    watto_cobra
  • Reply 13 of 29
    sirozhasirozha Posts: 550member
    rwes said:
    sirozha said:
    Apple’s profit is 16% down this quarter when compared with the same quarter last year. However, the stock is up over 4%. I guess Wall Street finally gets Apple the same way it gets Amazon. 
    Is it their profit that's down 16% or do you mean their revenue?
    Profit. 
    muthuk_vanalingam
  • Reply 14 of 29
    Cue the YouTube critics. “Apple is done. Everyone is switching to Android. The iPhone 11 renders are ugly. The iPad Pro is a toy. But Apple revenue is up. Meanwhile every Samsung Fold given to reviewers has broken, and Huawei has been caught faking photos yet again, this time enhancing pictures you take of the moon with pre-existing images of the moon stored in a database. But that’s ok because Apple is doomed.”
    I think Google’s turd drop yesterday made analysts realize selling new devices is tough for anybody right now, not just Apple. 

    Nobody wanted a Pixel, even after a $200 price drop. 
    bshanksirozhatmaywatto_cobra
  • Reply 15 of 29
    eightzero said:
    They hit my prediction: banking a metric fucktonne of money.
    I doubled down and bought more Apple shares before the quarterly report. 
    watto_cobra
  • Reply 16 of 29
    SpamSandwichSpamSandwich Posts: 31,090member
    jas99 said:
    Up almost 10 points after hours. 
    Tomorrow should be back in line with the price about 6 months ago.
    watto_cobra
  • Reply 17 of 29
    designrdesignr Posts: 502member
    While I think it's great that Apple's services revenue is growing, as I understand that category it includes the following items:

    App Store - directly related to Apple hardware sales
    Apple Music
    iCloud - pretty much exclusively oriented around Apple hardware
    iTunes - dying isn't it?
    Apple Pay - tied to Apple hardware
    AppleCare - only reason to buy is because you own Apple devices ... almost disingenuous to include an extended warranty/service plan in "services" as most of us are likely thinking about it

    Even if we add the following in the future:

    Apple News+ - pretty much exclusively oriented around Apple hardware
    Apple TV+ - pretty much exclusively oriented around Apple hardware
    Apple Arcade - directly related to Apple hardware sales
    Apple credit card

    Most of these are rather tightly coupled to their devices. In fact I wonder why I would use any of those if I didn't own Apple devices. So if a long term trend of device (unit) sales decline materializes, this could portend an eventual service revenue decline as well and so both narratives look bad.

    This is part of the reason that Apple trending toward premium device pricing and ignoring the lower end could leave them as an also-ran services platform.

    Apple had (and still has) an enormous opportunity starting with their iPhone (specifically) and iOS (more generally) platform. But with platform plays, volume (units) matters.

    Apple could apply itself to a more entry level price point in phones and still garner a decent margin (no one thinks they should make $0 on those) but deliver larger unit sales that parlay into an even larger services platform. So while Apple played the "we're grabbing 90% of the profits" game until now, which was fine, it seems a shift toward volume to build a solid, growing, renewable and sticky base that feeds to services might be a strategy worth considering. Arguments about what Apples has always done are not necessarily relevant. How a company gets to point A might not be the best way to get them to point B. Companies transition all the time. IBM became more of a services company. Microsoft is heading that way too. Heck even Amazon is almost more of a cloud services company than it is a retailer. Apple could be the consumer-oriented equivalent of IBM...a broad mix of hardware and services, etc. But I believe this will require a solid, broad, large base of hardware to work in the consumer market and remain viable and sustainable.

    edited April 30 muthuk_vanalingam
  • Reply 18 of 29
    rogifan_newrogifan_new Posts: 3,979member
    I can’t get excited about services. I mean what’s exciting about Apple taking 30% or 15% of someone subscribing to HBO via the TV app? To me Apple is at its best when making great products. Taking a commission off of someone else’s revenue is not a great product. I struggle to even call it a service. It’s like a tax that gets passed on to the consumer.
    muthuk_vanalingamgatorguy
  • Reply 19 of 29
    designrdesignr Posts: 502member
    I can’t get excited about services. I mean what’s exciting about Apple taking 30% or 15% of someone subscribing to HBO via the TV app? To me Apple is at its best when making great products. Taking a commission off of someone else’s revenue is not a great product. I struggle to even call it a service. It’s like a tax that gets passed on to the consumer.
    It's a good point. A pretty valid argument can be made that the bulk of Apple's "services" are really just a (digital) retail model (selling other people's product at a markup).

    Of course we'll never see it, but I'd love to see the breakdown among:
    • App Store (digital reselling/retail)
    • Apple Music (digital reselling/retail)
    • iCloud
    • iTunes (digital reselling/retail)
    • Apple Pay
    • AppleCare

    edited April 30
  • Reply 20 of 29
    canukstormcanukstorm Posts: 1,919member
    I can’t get excited about services. I mean what’s exciting about Apple taking 30% or 15% of someone subscribing to HBO via the TV app? To me Apple is at its best when making great products. Taking a commission off of someone else’s revenue is not a great product. I struggle to even call it a service. It’s like a tax that gets passed on to the consumer.
    What you've described is called rent seeking
    gatorguy
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