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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  • 0iron - Thursday, May 2, 2019 - link

    " Lack of an Oxford comma can be forgiven since this segment had revenues increase..."
    LOL 🤣
    Reply
  • peevee - Thursday, May 2, 2019 - link

    "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. "

    Maybe, just maybe, this is the reason. After all, the optimal price (the price with maximum profit) is not highest possible you can imagine. After some point, people say "fk it, it is not $1000 better than my phone from 2 years ago".
    Reply
  • nikon133 - Thursday, May 2, 2019 - link

    I keep revisiting idea to go back to iPhone... I have been using it in 3Gs days, and it served me well for the time (until iOS6 crippled it - but that's water under the bridge).

    At this stage price is really what turns me off. I have paid most expensive 3Gs - and it was quite a beast for the time, enormous 32GB of storage and all that - around NZ$1300. You cannot buy anything current for that price nowadays. Cheapest XR is NZ$1400. Xs is NZ$1900, but that's 64GB... I tend to keep my phones well over 2 years, so considering lack of SD card, I would go for next model... which is NZ$2200.

    I just cannot justify this. Androids in NZ$600 - 1000 serve my needs perfectly. If I have extra money to burn, I'll rather burn it on my other interests.
    Reply

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