Apple Q2 FY 2019 Earnings Report: iPhone Struggles But iPad And Services Expandby Brett Howse on April 30, 2019 8:45 PM EST
- Posted in
- Financial Results
Today Apple announced their earnings for the second quarter of their 2019 fiscal year. Revenue was down 5.1% to $58.0 billion this quarter. Gross margin for the quarter was 37.6%, down from 38.3% a year ago. Operating income was down 15.6% to $13.4 billion, and net income fell 16.3% to $11.6 billion. This resulted in earnings per share of $2.46, down 9.9% from a year ago.
|Apple Q2 2019 Financial Results (GAAP)|
|Revenue (in Billions USD)||$58.015||$84.310||$61.137|
|Gross Margin (in Billions USD)||$21.821||$32.031||$23.422|
|Operating Income (in Billions USD)||$13.415||$23.346||$15.894|
|Net Income (in Billions USD)||$11.561||$19.695||$13.822|
|Earnings per Share (in USD)||$2.46||$4.18||$2.73|
Although Apple no longer provides individual unit sales of their products, iPhone sales continue to struggle. Revenue for this quarter for iPhone was down 17.3% to $31.0 billion, and this is at a time where per-unit prices are at their highest in history of the iPhone. What once seemed like an unstoppable force has met the immovable object of market saturation.
Mac sales were also down, but only 4.5%, with revenues of $5.5 billion for the quarter. As with iPhone, we are no longer privy to the unit sales numbers though.
iPad has seen a bit of a resurgence after several years of revenue declines. iPad revenue was up 21.5% over Q2 2018, with revenues of $4.9 billion for the quarter. Here Apple has not only increased the price of their Pro models, but also lowered the entry level price for the basic iPad, and this two-tiered approach seems to have helped correct the declining sales, at least for now.
Apple’s ever-expanding list of products in their Accessories group continues to do well, so much so that the group is now called Wearables, Home and Accessories. Lack of an Oxford comma can be forgiven since this segment had revenues increase 30% to $5.1 billion for the quarter.
Finally, Apple’s Services segment also continues to grow, thanks to their 1.4 billion active devices. Services, which includes iTunes, Apple Music, iCloud, and other products grew 16.2% to $11.4 billion. If you divide that by active devices, Apple is generating $8.18 per device in service fees in just three months.
|Apple Q1 2019 Segment Revenue (Billions USD)|
|Wearables, Home, and Accessories||$5.129||$3.944||+30.0%|
Apple has approved a cash dividend of $0.77 per share, and authorized a repurchase of an additional $75 billion in shares. Looking forward to Q3, the company is expecting revenue between $52.4 and $54.5 billion, with gross margin of between 37% and 38%.
Source: Apple Investor Relations
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nirolf - Tuesday, April 30, 2019 - linkOne of the reasons I have an iPhone 7 is the size. The X series is too large and too heavy. And too expensive, the cheap alternative (XR) comes in one size only - “too big”.
I hope they’ll realize at some point that size was one of the reasons the small iPhone constantly outsold its big brother.
plewis00 - Wednesday, May 1, 2019 - linkI have to agree with you there. I thought the 6/7/8 was the perfect phone size and still do when I pick one up. The SE is a bit too small but I see the appeal for many. I have an X now and appreciate the better battery life over the 6/7/8 which frankly, was poor and I guess that’s the compromise. Hoping for some innovation but know we won’t get it and either way it won’t stop their crazy margins.
goatfajitas - Wednesday, May 1, 2019 - linkIsnt the smaller iPhone X and XS pretty close to the same size as the iPhone 6/7/8? larger screen, smaller bezels but physically close to the same size? I dont care one way or another about Apple or their phones, I just thought that iPhone X/XS was a nice smaller size phone.
sheh - Wednesday, May 1, 2019 - linkiPhone X-XS: 143x71mm
iPhone 6-8: 138x67mm
iPhone SE: 124x58mm
(Admins: Reply without JS enabled doesn't link correctly to the parent message?)
patel21 - Wednesday, May 1, 2019 - link#MeToo I wished they had released full display version in iPhone 7 body. With a good battery and it would have been a winner.
jimjamjamie - Wednesday, May 1, 2019 - linkThe iPhone 7 is peak iPhone for me thus far. Up there with the iconic 4 and 5S/SE.
TEAMSWITCHER - Wednesday, May 1, 2019 - linkThis was my biggest concern when I upgraded to the iPhone XS Max. But I came up with a plan... I switched to a wallet case with my new iPhone, eliminating the need to carry both a wallet and a cell phone. The overall net payload, in both size and weight and number of items to track, was less. Problem solved.
watzupken - Wednesday, May 1, 2019 - linkTo be honest, I am not sure how long will services sustain them at the rate the company is going. When it comes to hardware, there is barely any innovation in features along with very lackluster design and Apple is just playing catch up now. Apple is very dependent on its walled ecosystem to keep their users on their hardware, and on their services/ software. By opening up their services, I believe this will increase their user base for now allowing them to show nice numbers on their PnL and to shareholders. On the flipside, they are venturing out of their walled garden and leaving themselves vulnerable trying to compete in services in areas that they have little experience in, and with strong competitors already providing these services. If these services fail to impress, they risk losing people that are still happily living in their walled garden as well.
goatfajitas - Wednesday, May 1, 2019 - linkAt the very least they will need to stop costing more and giving less than their competitors. The model just doesn't hold up when you look at an $1100 phone that does less than its competition and is hardly better then previous gen. As it is the biggest feature they are touting for the iPhone 11 is the camera. pfft.
trparky - Wednesday, May 1, 2019 - linkTo be fair that's all that Samsung says as well. Samsung says they've got a faster processor, more RAM, etc. Does it really matter? Nope. Samsung is in the same boat Apple is in.