- Apple beat expectations in its fiscal-first-quarter earnings on Tuesday, posting revenue, earnings per share, and second-quarter revenue guidance that surpassed analyst estimates.
- CEO Tim Cook said the coronavirus has affected the company’s China manufacturing and retail operations. Apple said the “uncertainty” around the outbreak meant that the company was giving a wider-than-usual revenue forecast.
- Apple’s iPhone revenue surpassed Wall Street’s expectations, but services revenue narrowly missed.
Apple’s business made a roaring comeback in the final three months of 2019 as sales of its newest iPhone models and wearable gadgets, such as AirPods, resulted in a 9% increase in revenue that was billions of dollars above Wall Street’s expectations.
Apple’s robust product sales boosted the company’s bottom line, which topped Wall Street targets. And the company’s forecast revenue midrange for the current quarter was above the average analyst expectation.
But company executives tempered the good news with cautiousness about the outbreak of the coronavirus in China and the “uncertainty” surrounding the situation.
“We’re still gathering lots of data points and monitoring it very closely,” Apple CEO Tim Cook said during a conference call with analysts, adding that the situation has affected some of Apple’s suppliers and retail operations in mainland China.
Apple said it was factoring the uncertainty surrounding the disease into its revenue forecast, which it described as “wider than usual.”
Shares of Apple, which have increased about 8% in the weeks leading up to the announcement of its fiscal first quarter results, were up about $4, or 1.29%, in after-hours trading on Tuesday after the earnings results.
Here's a look at Apple's key numbers during its fiscal first quarter:
- Fiscal-first-quarter revenue: $91.8 billion. Analysts expected $88.37 billion. In the same period one year ago, the company posted revenue of $84.3 billion.
- Earnings per share (EPS): $4.99. Analysts expected $4.55. In the same period one year ago, Apple earned $4.18 per share.
- iPhone revenue: $55.96 billion. Analysts expected $51.5 billion.
- Services revenue: $12.72 billion. Analysts expected $12.98 billion.
- Fiscal-second-quarter guidance (FQ2): $63 billion to $67 billion. Analysts expected $62.33 billion. In the same quarter one year ago, Apple earned $58 billion in revenue.
An iPhone comeback and a wearables surge
Apple's iPhone revenue was up year over year for the first time since its smartphone business began to dip in the same quarter one year ago.
Apple said its breakout quarter was driven by strong demand for the iPhone 11 and iPhone 11 Pro, which it launched in September. The earnings results are further evidence that Apple's newest iPhones sold better than expected. Analysts had largely estimated that this year's iPhone would be the model to bring Apple's smartphone business back to growth.
Apple, however, had a notably weak first quarter of fiscal year 2019, when iPhone sales cratered by 15%. That means Apple had a lower bar to clear to bring year-over-year revenue back to growth.
Apple also said its active installed base has grown to more than 1.5 billion, up from 1.4 billion.
The company's wearables, home, and accessories division, which includes popular products like AirPods and the Apple Watch, grew to $10 billion, a significant increase from the $7.3 billion in revenue it brought in during the year-ago holiday quarter.
"This was a strong quarter for Apple, primarily driven by strong sales of the iPhone 11 lineup," Yoram Wurmser, eMarketer's principal analyst, said. "One note of caution in an otherwise strong report was that Services (which included Apple TV+) grew slightly below expectations. This miss could be attributed to the competition from Disney +, which launched at roughly the same time."
Apple's services revenue, which has been a focal point over the past year as iPhone sales have slowed, also grew to $12.72 billion in revenue, up from $10.87 billion in the year-ago quarter. That also represents minor growth from the $12.5 billion in revenue Apple's services business earned last quarter, but analysts had expected $12.98 billion.
All told, the results indicate that Apple may have overcome its yearlong iPhone sales slump. Analysts already have high expectations for the 2020 iPhone as well, as its rumored support for 5G is expected to drive upgrades.