Apple’s iPhone Sales Exceed Expectations in Q2 Earnings Report

Apple Earnings Highlights

• Apple beats Wall Street’s expectations for earnings per share and revenue
• iPhone sales boost better-than-expected performance
• Mac and iPad sales fall further than expected on parts shortage
• Services business shows 5.45% annual increase in revenue
• Apple’s greater China business reports $17.81B sales, down from last year
• $90 billion in share repurchases and dividends authorized by Apple

Apple Earnings Overview

Apple reported its Q2 earnings on Thursday. This surpassed Wall Street’s sales and revenue expectations due to better-than-anticipated iPhone sales.

Apple CEO Tim Cook described the quarter as “better than we expected.” However, Apple’s overall sales declined for the second consecutive quarter. Refinitiv consensus expectations compared to the company’s performance are as follows:

EPS of $1.52 compared to $1.43 anticipated, revenue of $94.84 billion compared to $92.96 billion anticipated, and gross margin of 44.3% compared to 44.1% anticipated. During the quarter, Apple recorded $24.16 billion in net income compared to $25.01 billion the previous year.

Apple Product Lines Mostly Exceed Revenue Expectations

The performance of Apple’s individual product lines versus StreetAccount consensus expectations was as follows: iPhone revenue of $51.33 billion compared to $48.84 billion expected, Mac revenue of $7.17 billion compared to $7.80 billion expected, iPad revenue of $6.67 billion compared to $6.69 billion expected, Other Products revenue of $8.76 billion compared to $8.43 billion expected, and Services revenue of $20.91 billion compared to $20.97 billion expected.

Apple did not provide formal guidance, continuing its practice from 2020 and the start of the Covid-19 pandemic, but management typically provides some data points on a call with analysts.

Apple’s iPhone Sales Growth Outshines Product Line Declines

The highlight of Apple’s report was the growth in iPhone sales from the year-ago quarter. Surprisingly, the broader smartphone industry contracted nearly 15% during the same period, according to an IDC estimate.

iPhone revenue increased by 2% during the quarter, indicating that parts shortages and supply chain issues that had hampered the product for the last few years had finally subsided.

Apple’s Mac and iPad businesses didn’t fare as well, with both segments declining more than anticipated due to parts shortages.

Apple’s Services Business Shows Growth, Wearables Exceed Expectations

The company’s Services business, which includes monthly subscriptions, revenue from Apple’s App Store, warranties, and search licensing revenue from companies like Google, reported $20.9 billion in revenue, a 5.45% annual increase, demonstrating that the company’s most profitable business line continues to grow.

Apple’s wearables division, which includes Apple Watch and headphones such as AirPods, fell 1% during the quarter, exceeding analyst expectations.

Apple’s greater China business, which includes Taiwan and Hong Kong in addition to the mainland, reported $17.81 billion in sales, down from last year’s $18.34 billion.

Apple Authorizes $90B in Buybacks, Dividends

As expected, Apple’s board authorized $90 billion in share repurchases and dividends.

In the March quarter, Apple paid $23 billion in buybacks and dividends. It also increased its dividend 4% to 24 cents per share.

Cook confirmed that Apple was not planning layoffs. Unlike other big tech companies that have initiated them over the past year.