Amid concerns of slow iPhone sales and lackluster demand for iPhone X, Apple has announced strong growth in revenue during the second quarter of 2018. For the quarter ending March 31, 2018, Apple announced quarterly revenue of $61.1 billion, a year-over-year growth of 16 percent and well ahead of street estimates.
Apple said international sales accounted for 65 percent of the quarter’s revenue and earnings per share came in at $2.73, up 30 percent from same period last year. In terms of sales, Apple sold 52.2 million iPhone during the quarter, generating a revenue of $38 billion. The sales were up 3 percent from the year-ago quarter while the revenue was up 14 percent due to increase in average sales price of iPhone.
During the earnings call, Apple CEO Tim Cook said that consumers chose iPhone X more than any other iPhone model each week during the quarter ending March. “We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, Services and Wearables,” Cook said.
During the second quarter, the sales of iPad came in 9.1 million units, a year-on-year growth of 2 percent. The revenues from iPad sales came in at $4.1 billion, which accounted for a growth of 6 percent from Q2 2017. Apple was also affected by the declining PC sales with Mac sales declining 3 percent in the second quarter of 2018 compared to same period last year. In Q2 2018, Apple sold 4 million Mac products to generate a revenue of $5.48 billion dollar, which remained flat from last year.
Apple does not offer sales figure from Apple Watch, AirPods and other peripherals but it did confirm revenues from other products were up 38 percent from last year. In Q2 2018, the other products revenue stood at $3.95 billion, a stronger growth compared to $2.87 billion reported during second quarter of 2017. The silver lining continues to be the services division, which is growing faster than ever predicted.
Apple reported revenue of $9.19 billion during the second quarter, a sequential growth of 8 percent and year-on-year change of 31 percent. The services division includes revenue from products like App Store, Apple Music, iCloud, Apple Pay, Apple Care and other services. Apple is slowly but steadily expanding its subscription-based offerings and with strong growth in services revenue, it is evident that consumers are responding positively to whatever Apple offers.
The earnings announced after the closing bell also put to rest questions surrounding the demand for Apple products, primarily the iPhone, in China. Apple announced revenue from Greater China market grew 21 percent during the second quarter. “We also grew revenue in all of our geographic segments, with over 20% growth in Greater China and Japan,” Cook added.
It said revenue from Americas grew 17 percent while that from Europe jumped by 9 percent. In Japan, Apple saw a revenue growth of 22 percent while in the rest of Asia Pacific, the revenue was up by around 4 percent. Cook particularly addressed how the company is doing in India, the world’s fastest growing smartphone market.
“India, we set a new first-half record. So we continue to put great energy there and try to – our objective over time is to go in there with all of our different initiatives from retail and everything else. And so we’re working toward those things. It’s a huge market and it’s clear that many people will be moving into the middle class over time, as we’ve seen in other countries,” Cook said in response to analyst question.
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Apple also announced $100 billion share buyback announcement where it will use the overseas cash brought back to the US as part of Trump administration’s repatriation program. It also announced 16 percent increase in quarterly dividend offered to shareholders. “With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure,” said Luca Maestri, Apple’s CFO.
For the third quarter, Apple is guiding revenue between $51.5 billion and $53.5 billion and gross margin between 38 percent and 38.5 percent. This makes analysts believe that iPhone sales are not a cause for concern despite decline in orders reported by some of Apple’s key suppliers.