Apple (AAPL 0.02%), the tech titan known for its iPhone and thriving ecosystem, released its fiscal 2024 second-quarter earnings on May 2, showcasing a mixed financial performance. Here's a quick snapshot.
Compared to analyst predictions, Apple outperformed on earnings per share (EPS) and revenue. However, with a revenue decline of 4% year over year, the quarter underscores Apple's challenges in a shifting economic landscape.
| Metric | Q2 2024 | Analyst Estimates | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| EPS (diluted) | $1.53 | $1.51 | $1.52 | +0.7% |
| Revenue | $90.8 billion | $90.37 billion | $94.8 billion | -4.3% |
| iPhone revenue | $51.3 billion | N/A | $46.0 billion | -10.5% |
| Services revenue | $23.9 billion | N/A | $20.9 billion | +14.2% |
| Net income | $23.6 billion | N/A | $24.2 billion | -2.2% |
Data source: Company results from company. Analyst estimates from FactSet. YOY = Year over year.
Company overview
Apple is a global technology leader, primarily recognized for its innovations in consumer electronics, software, and digital services. Over the years, Apple has pivoted beyond hardware, emphasizing its services segment, which includes offerings like Apple Music, iCloud, and the App Store. This shift reflects the company's strategy to diversify its revenue sources, capitalizing on the vast user base of its various devices.
Entering fiscal 2024, Apple has honed its focus on expanding this services portfolio while maintaining its core strength in product innovation, exemplified by the recent unveiling of Apple Vision Pro.
Quarter highlights
A bright spot in the fiscal 2024 second-quarter report was the record revenue performance of the services sector, with $24 billion in quarterly revenue coming in 14% higher than in Q1 2023. This signifies the strength of Apple's strategic expansion into digital services. Countering the rise in Services revenue was the 10.5% year-over-year drop in iPhone revenue.
The quarter was marked by the launch of Apple Vision Pro, indicating Apple's relentless pursuit of innovation. This product development is expected to play a pivotal role in Apple's future growth trajectory. However, the launch wasn't enough to push the Wearables segment (which include AirPods, the Apple Watch, and Vision Pro) higher year over year. Wearables revenue of $7.91 billion was down 9.6%.
On the financial front, Apple demonstrated confidence in its future, authorizing an additional $110 billion for share repurchases and increasing its quarterly per-share dividend by 4% to $0.25, marking the 12th consecutive year of dividend hikes.
The year-over-year revenue drop of 4% was attributed to broader economic pressures and competitive challenges, especially in China. Apple's Greater China revenue slid 8% year over year to $16.4 billion (but it still topped analyst estimates for $15.3 billion). This underscores potential areas of concern that need monitoring in the upcoming periods.
Looking forward
Looking ahead, Apple's management expressed optimism, underscored by the strategic product launches and the robust performance of its services division. However, the company cautiously navigates the uncertain economic climate, which has influenced its revenue trajectory. Apple did not provide any specific forward guidance.
Investors are encouraged to keep a close eye on Apple's continued innovation efforts, especially in its services division, and how it manages the evolving market and economic challenges. Any updates on forward guidance will be crucial in assessing Apple's ability to maintain its growth momentum and market leadership.
