Following the iPhone maker’s announcement of an expanded stock repurchase program and its fiscal second-quarter earnings that exceeded
projections, Apple shares increased 7% during extended trading on Thursday. Following last year’s $90 billion authorization, Apple revealed that its board had approved $110 billion in share repurchases, a 22% increase.
Based on data from Birinyi Associates, it’s the largest buyback in history, surpassing Apple’s prior repurchases. Apple blamed the quarter’s 4% decline in overall sales and the 10% year-over-year decline in iPhone sales on the challenging comparison with the previous year.
Here’s how Apple did versus LSEG consensus estimates in the quarter ended March 30:
- EPS: $1.53 vs. $1.50 estimated
- Revenue: $90.75 billion vs. $90.01 billion estimated
- iPhone revenue: $45.96 billion vs. $46.00 billion estimated
- Mac revenue: $7.5 billion vs. $6.86 billion estimated
- iPad revenue: $5.6 billion vs. $5.91billion estimated
- Other Products revenue: $7.9 billion vs. $8.08 billion estimated
- Services revenue: $23.9 billion vs. $23.27 billion estimated
- Gross margin: 46.6% vs. 46.6% estimated
Apple CEO Tim Cook told CNBC’s Steve Kovach that total sales for the June quarter would increase in the “low single digits,” despite the company not providing any official guidance. In the June quarter of last year, Apple reported sales of $81.8 billion, whereas LSEG analysts had projected $83.23 billion. Luca Maestri, the head of Apple finance, stated on a conference call with analysts that the company anticipates double-digit percentage growth in iPad sales for the current quarter compared to the previous one. Furthermore, he stated that the Services division is expected to keep growing at around the same high rate that it has reached over the last two quarters.
With a 2% decrease from $24.16 billion, or $1.52 per share, at the same time last year, Apple recorded a net income of $23.64 billion, or $1.53 per share. Cook told CNBC that the company’s revenues in the second quarter of its fiscal year were negatively impacted by a difficult comparison to the same period last year when it realized $5 billion in delayed sales of the iPhone 14 due to supply concerns centred around Covid. “If you remove that $5 billion from last year’s results, we would have grown this quarter on a year-over-year basis,” Cook stated. “And so that’s how we look at it internally from how the company is performing.”
Apple reported that iPhone sales dropped by over 10% to $45.96 billion, indicating a lacklustre market for the September-released current generation of devices. Analyst estimates were met by the sales, and Cook stated that iPhone revenue would have remained unchanged in the absence of the previous year’s higher sales. Mac sales increased by 4% to $7.45 billion, although they are still below the 2022 high point for the category.
Cook claimed that the company’s new MacBook Air models, which were introduced in March with an improved M3 chip, were the main drivers of sales. Apple reports that sales of its AirPods headphones and Apple Watch were down 10% year over year to $7.9 billion under the category of Other Products.
The $3,500 Vision Pro virtual reality headset, which Apple debuted during the quarter, is the company’s first big product category launch in years. However, sales of the item are anticipated to be modest when compared to Apple’s other main product lines. “We’re only scratching the surface there so we couldn’t be more excited about our opportunity there,” Cook stated. Sales of the iPad have suffered since Apple hasn’t introduced a new model since 2022. The division’s revenue dropped 17% to $5.6 billion. On May 7, Apple is anticipated to release new iPads, which may spark interest in the lineup again.
Cook said that Apple has “big plans to announce” at its iPad product event next week and at the Worldwide Developers Conference in June.
The company’s Services business was a bright spot during the quarter. Sales rose 14.2% to $23.9 billion. That’s how Apple reports revenue from its subscription services, warranties, licensing deals with search engines, and payments. The company has a broad definition of subscribers, including users subscribing to apps through Apple’s App Store. It has over 1 billion paid subscriptions.
Sales in Greater China, Apple’s third largest region, were off 8% to $16.37 billion in
revenue, which was significantly better than the $15.25 billion in sales expected by FactSet analysts, potentially quelling investor worries the iPhone maker may have been losing market share to local competitors such as Huawei.
“I feel good about China. I think more about long term than to the next week or so,” Cook said.
Cook told CNBC that iPhone sales grew in China during the quarter, which “may come as a surprise to some people.”
