As things stand, after-hours trading is pointing to the iPhone maker’s shares dropping into the red when Wall Street opens for business.
Apple stock price on watch following revenue decline
- Quarterly revenue of US$81.8 billion, down 1% year over year
- Gross margin of 44.5%
- Quarterly earnings per share (EPS) up 5% to US$1.26
- Operating cash flow of US$26 billion
- Quarterly dividend of 24 US cents per share
For the three months ended 1 July, Apple reported a modest 1% decline in quarterly revenue to US$81.8 billion. This was driven by softer sales across iPhones, Macs, and iPads, which offset growth in other products and services.
The latter was arguably the highlight of the result, growing 8% year on year to a record high of US$21.21 billion. This means that Apple’s services business now accounts for approximately 26% of total revenue.
This side of the business includes services such as iCloud, Apple Music, Apple Pay, Apple Fitness, and Apple Arcade.
How does this compare to expectations?
Despite the market’s lukewarm response, Apple’s result was actually slightly ahead of expectations.
For example, according to CNBC, the market was expecting revenue of US$81.69 billion and earnings per share of US$1.19.
Apple has beaten on both metrics with revenue of US$81.8 billion and earnings per share of US$1.26.
Apple’s CEO, Tim Cook, was pleased with the quarter and particularly the performance of its services business. He said:
We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone.
From education to the environment, we are continuing to advance our values, while championing innovation that enriches the lives of our customers and leaves the world better than we found it.
Apple’s CFO, Luca Maestri, adds:
Our June quarter year-over-year business performance improved from the March quarter, and our installed base of active devices reached an all-time high in every geographic segment.
During the quarter, we generated very strong operating cash flow of $26 billion, returned over $24 billion to our shareholders, and continued to invest in our long-term growth plans.
So why the weakness? Well, that could be its outlook commentary. CNBC reports that Maestri advised on Apple’s earnings call that revenue was expected to fall in the current quarter.
The Apple stock price is up 15% over the last 12 months.