Investors will get a timely update on Apple (NASDAQ: AAPL) later this month. The company just scheduled a date for its fiscal second-quarter report: April 30. The update will not only reveal whether Apple's iPhone business continues to struggle to live up to last year's tough comparisons, but will also provide an important view into the tech giant's invigorated effort to bulk up its services business.
Here's an overview of some of the key areas investors will want to watch when Apple reports its fiscal second-quarter earnings.
The Street will undoubtedly be watching Apple's top-line growth closely. CEO Tim Cook shocked investors earlier this year when he said the company would miss its initial revenue guidance for its fiscal first quarter by a whopping $7 billion. The news sent shares tumbling. When Apple announces its fiscal second-quarter results, therefore, it will need to report revenue within its guidance range for the period in order to regain investor confidence in its guidance methodology.
And considering that Apple's revenue fell 5% year over year in fiscal Q1, investors will likely be looking for signs that the company can make progress on mitigating its declining revenue
Unfortunately, any sign of improving revenue likely won't come from Apple's fiscal second quarter, as management guided for revenue between $55 billion and $59 billion during the period. The midpoint of this guidance range represents a 7% year-over-year decline. But this doesn't mean investors shouldn't look for a sign of improving top-line trends; management's fiscal third-quarter revenue guidance will hopefully call for a narrower year-over-year decline.
Apple's iPhone revenue will obviously be a hot topic for fiscal Q2. It fell 15% year over year in Q1 -- a stark contrast from the 29% iPhone revenue growth in the prior quarter.
If you combine management's guidance for total revenue to fall 7% year over year in fiscal Q2 with the fact that the iPhone accounts for over half of Apple's total revenue, it means that management almost certainly anticipated another meaningful decline in iPhone revenue during the quarter. Indeed, this segment likely saw another double-digit year-over-year decrease. The big question, therefore, is whether the decline was even worse in fiscal Q2 than it was in fiscal Q1.
Finally, investors will want to check on Apple's services business, which represents the company's second-largest segment. The iPhone's recent troubles have prompted management to double-down on efforts to diversify beyond smartphones. Indeed, just last week it announced four new services to bolster the segment.
Services revenue has been rising sharply, up 27% year over year in calendar 2018. Without a reason to expect a slowdown, investors should look for similarly strong growth from the segment in fiscal Q2.
Apple will report its fiscal second-quarter results after market close on Tuesday, April 30.
10 stocks we like better than AppleWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 1, 2019
Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.