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)
  Q2'2019 Q1'2019 Q22018
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
Margins 37.6% 38.0% 38.3%
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)
  Q2'2019 Q2'2018 Year/Year Change
iPhone $31.051 $37.559 -17.3%
iPad $4.872 $4.008 +21.5%
Mac $5.513 $5.776 -4.5%
Wearables, Home, and Accessories $5.129 $3.944 +30.0%
Services $11.450 $9.850 +16.2%

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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  • goatfajitas - Wednesday, May 1, 2019 - link

    Point taken, but Samsungs flagships do cost less and do more than Apple's. Reply
  • trparky - Wednesday, May 1, 2019 - link

    Yes, but the price difference isn't that much. Maybe $150, if that. The Galaxy S10 (not the S10e) costs nearly $900 in the US, that's very much approaching Apple price territory. Reply
  • trparky - Wednesday, May 1, 2019 - link

    The Galaxy S10+ costs nearly $1000 in the US. YIKES! Reply
  • goatfajitas - Wednesday, May 1, 2019 - link

    Yes, the S10/S10+ is way overpriced. Even being that it is way overpriced, it still costs less and does more than the iPhone XS/XS+. My point is that in a word of overpriced phones, Apple is still the king of milking it and overpricing it and it's not surprising that sales are slowing. Reply
  • TEAMSWITCHER - Wednesday, May 1, 2019 - link

    Apple phones have FAR better resale value... The price difference is negligible. Reply
  • goatfajitas - Wednesday, May 1, 2019 - link

    Way to miss the point. Tx Reply
  • RadiclDreamer - Wednesday, May 1, 2019 - link

    Tell that to the $2000 fold and its disastrous demo units sent out to reviewers. Reply
  • name99 - Wednesday, May 1, 2019 - link

    Apple is “touting features for the iPhone 11”?
    Damn, you have access to very different media than I do! In my world, I need to wait till September to see what features “they” are touting.
    Reply
  • name99 - Wednesday, May 1, 2019 - link

    Apple Watch 4, AirPods, and FaceID aren’t innovation?
    Tough crowd!
    I think you’re being somewhat unrealistic in your expectations. A new platform (phone, iPad, watch, ARM Mac this year? glasses in 2021?) is a once in a decade thing for good companies. Apple probably hits that once every 4 years on average, even apart from the lesser innovations...
    Reply
  • sheh - Wednesday, May 1, 2019 - link

    iPhone X-XS: 143x71mm
    iPhone 6-8: 138x67mm
    iPhone SE: 124x58mm
    Reply

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