Apple shares are rallying, pushing the company's market value back to the trillion dollar level, after its services business fueled better-than-expected results in the second quarter, with initiatives such as a new subscription news service offsetting lower demand for its flagship iPhone. However, revenue fell compared to the same period one year ago.
The company reported quarterly revenue of $58 billion, topping the $57.37 billion expected by analysts polled by Refinitiv, but down 5 percent compared to the same period one year ago. Apple posted second-quarter earnings per share of $2.46, beating a projected $2.36, but that was a decline of 10 percent year-over-year.
Apple's services segment, which also includes Apple Music, Apple Pay and the iCloud, posted revenue of $11.45 billion. Analysts expected services revenue of $11.37 billion. Revenue from iPhone sales was $31 billion, roughly in line with expectations but a decline of 17 percent year-over-year. Sales of iPads and wearables devices such as the Apple Watch increased.
“Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record,” Apple CEO Tim Cook said in a statement.
“We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services. We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June," he said.
Apple provided third-quarter revenue guidance of between $52.5 billion and $54.5 billion, easily topping Wall Street's expectations.
The company's stronger-than-anticipated results came amid scrutiny of the health of its iPhone business, which has long served as Apple's primary revenue driver. Apple issued a rare warning ahead of its first-quarter results, noting that it was seeing decreased demand for the iPhone in China.
In the second quarter, Apple's revenue for Greater China declined 22 percent to $10.2 billion. Revenue rose slightly year-over-year in the Americas and Japan and sank slightly in Europe.
During a conference call, Cook said Apple has seen a "positive response" to price discounts in the Greater China market, adding that the company has seen an "encouraging trend" in iPhone demand globally heading into the third quarter.
"We certainly feel a lot better than we did 90 days ago," Cook said regarding the iPhone business.
Apple stopped disclosing iPhone unit sales last November, arguing that the once-key metric was no longer the best representation of its success given recent emphasis on services. The company unveiled a trio of new subscription services related to television, news and games in March.
The iPhone maker said it would conduct an additional $75 billion in share repurchases and declared a cash dividend of $0.77 per share of common stock, up 5 percent from last year. Dividends will be paid out on May 16.