All-time high sales of $23.87 billion in Apple’s Services division, which includes Apple TV+, helped offset sluggish iPhone sales and ongoing challenges in the Chinese market, which drove down Apple’s overall revenues and income in its fiscal second quarter of 2024.
Here are the top-line numbers:
Net income: Slipped 2% to $23.64 billion, or $1.53 per share. That topped estimates of $1.51 per share analysts surveyed by Zacks Investment Research were expecting.
Revenues: Fell 4% to $90.75 billion from $94.84 billion. That exceeded sales of $89.99 billion expected by Zacks analysts.
Services Revenue: $23.87 billion, up 14% from the previous-year quarter.
Products Revenue: $66.89 billion, down 9.5% from the year-ago period.
Sales of iPhones, Apple’s main revenue driver, fell 10% to $46 billion, with its wearables category, which includes the Apple Watch, also falling 10% to $7.9 billion. That was partly offset by sales of Mac computers, which rose 4% to $7.5 billion, driven largely by the MacBook Air.
This quarter’s results were affected by comparisons to the year-ago period when Apple was able to replenish iPhone channel inventory an replenish pent-up demand impacted by the pandemic, which boosted revenues by $5 billion. Without that one-time situation, iPhone sales would have been roughly flat in the quarter, Apple CEO Tim Cook explained.
Cook, who recently visited China and helped inaugurate a new Apple Store in Shanghai, said the latest results showed a sales “acceleration” in Mainland China from the first quarter, “and it was driven by iPhone.” Other Apple products didn’t see growth there, he said, “so clearly we work to do. It is the most competitive market in the world.”
The company touted the progress in its Services segment, which includes music, movies and TV shows, including Apple TV+ and Apple Music. The segment, which also includes in-app purchases, pre-ordered music and movies, as well as subscriptions that renew automatically, saw 14% growth in sales. Services represented 26% of Apples’s overall revenues in the quarter.
The record Services performance encompassed both the developed and emerging markets, with paid accounts and subscriptions growing by double digits, said Luca Maestri, Apple’s CFO.
“Thanks to very high levels of customer satisfaction and loyalty, our active installed base of devices has reached a new all-time high across all products and all geographic segments, and our business performance drove a new EPS record for the March quarter,” Maestri said.
Apple now has more than 1 billion paid subscriptions. Maestri said the company expects the segment to grow by double digits in the next quarter, and by about the same rate as the first half of the fiscal year.
Cook touted new shows on Apple TV+, including “Palm Royale” and “Sugar,” starring Colin Farrell, as well as the psychological thriller “Wolfs” due out this fall, which will reunite Brad Pitt and George Clooney.
Maestri said Apple expects to grow in low single digits in the June quarter. The company has $58 billion in net cash, he said.
Apple is planning to introduce a new product next week and will hold its worldwide development conference next month.
Apple’s board of directors declared a cash dividend of $0.25 per share of the company’s common stock, an increase of 4% — the 12th year in a row it was raising its quarterly dividend. It is payable on May 16 to shareholders of record as of the close of business on May 13.
The board of directors also authorized an additional program to repurchase up to $110 billion of the Company’s common stock.
Apple’s shares were up as much as 7% in after-market trading.
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