Apple Beats the Street
Apple announced their 2nd quarter financial results on Tuesday and once again they outperformed the expectations of the analysts. For the quarter, Apple had revenue of $58.0 billion and net quarterly profit of $11.6 billion, or $2.46 per diluted share, compared to revenue of $61.1 billion and net quarterly profit of $13.8 billion, or $2.73 per diluted share, in the year-ago quarter. While this represents a decline of 5 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.46 was down 10 percent. This was predicted by Apple however, in their guidance in January.
Wall Street expected $2.36 of earnings on $57.37 billion in revenue for Apple’s 2nd quarter so Apple handily beat these projections. Apple also exceeded the prediction on services revenue by posting a remarkable $11.45 billion in quarterly revenue with 68% margin from services. Apple also posted the strongest iPad sales growth in 6 years.
Tim Cook said, “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. 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.”
Apple also had strong guidance for their weakest upcoming quarter:
• revenue between $52.5 billion and $54.5 billion
• gross margin between 37 percent and 38 percent
• operating expenses between $8.7 billion and $8.8 billion
• other income/(expense) of $250 million
• tax rate of approximately 16.5 percent
Apple also declared an increased quarterly dividend payment of $0.77 per share, up from $0.73. The dividend is payable on May 16 to shareholders of record as of May 13. In addition to the increase in the dividend payment, Apple says it has authorized another $75 billion for share repurchases.
All of this was good news to the shareholders and Apple stock took a nice jump back to making the company have a $1 trillion market cap for a bit on Wednesday.
The growth of the services sector of Apple’s business is truly amazing especially as you consider that some new services for Apple TV, Apple Arcade and Apple Card are coming up this year. At about a $40 billion a year clip, Apple services if a stand-alone company would be about number 75 in the Fortune 500. The greatest story in America business history keeps getting better! Congratulations to all of the Apple team on an excellent quarter!
