Apple Tops Sales Estimates on Services Growth and iPhone Stability

Apple Tops Sales Estimates on Services Growth and iPhone Stability
Depositphotos

Apple reported revenue and profit that beat analysts’ estimates and projected continued sales momentum, calming concern about demand for the iPhone, according to Bloomberg. The company also unveiled a new plan to return more money to shareholders and said services sales jumped 31 percent.

Apple revenue rose 16 percent to $61.1 billion in the fiscal second quarter. That was the fastest growth in more than two years. Profit came in at $2.73 a share, the company said Tuesday in a statement. Analysts expected sales of $60.9 billion and earnings per share of $2.64. Fiscal third-quarter revenue will be $51.5 billion to $53.5 billion, also ahead of Wall Street forecasts.

Apple sold 52.2 million iPhones in the fiscal second quarter, up 2.9 percent from a year earlier. Analysts had projected of 52.3 million, on average, although some investors expected fewer units. The average selling price was $728, versus analysts’ expectations of $740. That suggested the flagship iPhone X didn’t perform as well as some anticipated when it launched last year.

Earlier this year, CFO Luca Maestri said iPhone revenue would grow by at least 10 percent year-over-year in the fiscal second quarter. Apple easily hit that goal, with 14 percent iPhone revenue growth in the period. CEO Tim Cook highlighted strong revenue growth from iPhones, services and wearable devices like the Apple Watch. He was unconcerned about the high price of the iPhone X. "It’s priced for the value that it is, an incredible product with lots of leading edge innovations that sets us up for the next decade," Cook said in an interview.

Apple reported record services revenue of $9.2 billion, easily beating analysts’ forecasts. The App Store, Apple Music, iCloud storage and Apple Pay all generated record sales, Cook said. The company is expanding these offerings with original videos and a news subscription service. Apple has said services will be a $50 billion annual business by 2021.

The company’s Other Products segment continued to see strong growth with revenue up 38 percent to $3.95 billion. The category includes AirPods headphones, the Apple Watch, Apple TV, and the HomePod. Cook noted that sales of wearable devices jumped almost 50 percent, year-over-year. Apple Watch sales have been driven by strong demand for new models with cellular connectivity. Thus far, however, the HomePod has lagged rivals like Amazon’s Echo speakers.