Sales of Apple’s iPhone rebounded last quarter, helping the world’s most valuable company topped its earnings estimates and weathered an industry-wide downturn that has hurt much of its lineup.
Total revenue for the fiscal second quarter was $94.8 billion, beating analysts’ forecast of $92.6 billion, according to a statement Thursday. Although sales fell by 2.5% during this period, Apple had warned investors not to expect a drop about twice that size.
The results suggest Apple is beginning to recover from a slump that has plagued both the computing and smartphone industries. It is a special relief for investors afterwards Qualcomm Inc., a key supplier fresh concerns about the phone inquiry earlier this week. Apple’s sales in China — a pain point for other tech companies — were also slightly better than expected.
As expected, Apple announced plans for $90 billion in share buybacks — just like last year. The company also increased its quarterly dividend by 4% to 24 cents per share.
Shares gained 2% in late trade after the report was released. They had closed at $165.79, up 28% for the year.
While the performance was better than expected, it marked two straight quarters of declines in revenue — a first for Apple since the pandemic began. Earnings were flat year over year at $1.52 per share. This compares to an average estimate of $1.43 per share.
On a conference call with analysts, Apple said revenue for the current period would decline by a similar amount to the previous quarter ended April 1. That suggests a drop of around 3%. The company also said it will continue to see negative currency impacts.
Apple made $51.3 billion in revenue from the iPhone — its flagship product — in the second quarter, beating analysts’ forecasts of $49 billion. That’s just up 1.5% year over year but marks a record performance for a March quarter, Chief Executive Officer Tim Cook said. The surge came “despite the challenging macroeconomic environment,” he said in the statement.
Like many tech CEOs who provide earnings reports, Cook spoke about artificial intelligence. He said it has tremendous potential and Apple will continue to weave it into products in thoughtful ways.
From a supply perspective, Q2 was an opportunity for the iPhone 14 to recover. The device had suffered restrictions in the previous period due to the Covid guidelines in China.
The iPad saw sales decline 13% to $6.67 billion, roughly in line with estimates of $6.7 billion. New models, including an updated entry-level version and Pro models with M2 chips, didn’t do much to boost purchases during the quarter.
Likewise, revenue in the Mac division fell 31% to $7.17 billion. That was behind forecasts of $7.7 billion. Research firms were already warning that it was a dismal quarter for the lineup, with IDC estimating that Mac shipments fell about 40% in the quarter. Apple had updated the MacBook Pro and Mac mini, adding faster processors, but failed to boost sales of the devices.
The home, wearables and accessories division, which includes AirPods, the Apple Watch and the TV set-top box, fell less than 1% to $8.76 billion. That topped the estimate of $8.5 billion. The company added a faster processor to the Apple TV in the holiday quarter and updated its HomePod speaker in the March quarter.
The services business, which includes iCloud, Apple Music, the App Store and streaming service TV+, brought in $20.91 billion and missed estimates of $21.1 billion. Nevertheless, it was an increase of 5.5% compared to the previous year. Last quarter, Apple promised that service revenue — alongside the iPhone — would accelerate.
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