The iPhone maker aims to sustain high demand for the iPhone and other hardware while increasing sales of services, including music and video subscriptions.
The iPhone maker aims to sustain high demand for the iPhone and other hardware while increasing sales of services, including music and video subscriptions.
Apple Inc. on Thursday reported record sales and profits for its fiscal second quarter, beating Wall Street estimates as it coped with chip shortages and consumers bought new iPhones.
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Sales were up 19% in the Americas and single digits in Europe and China.
Apple shares are up 2.3% in after-hours trading.
The Silicon Valley-based iPhone maker, which is the world’s largest company by market cap, aims to sustain high demand for the iPhone and other hardware while growing sales of services, including music and video subscriptions.
The latest results show that it’s gaining ground on both goals, beating sales expectations for every device except accessories.
Apple CFO Luca Maestri cited “continued strong demand for our products” and a record high in service sales in a press release.
According to data from Refinitiv, Apple’s total revenue for the second quarter was $97.3 billion, up 8.6% year over year and ahead of analysts’ median estimate of $93.89 billion .
Apple had warned of less favorable exchange rates and different product launch timings from previous quarters that would hurt revenue growth.
Quarterly worldwide phone sales were $50.6 billion, up 5.5% year-on-year and above the median estimate of $47.88 billion. Services, Apple’s second-largest segment after iPhones, grew revenue 17% to $19.8 billion, just surpassing the median estimate of $19.71 billion.
Earnings were $25 billion, or $1.52 per share, slightly beating analysts’ expectations of $23.2 billion and $1.43 per share.
Apple also announced a 5% increase in its dividend to $0.23 per share and board approval to buy back an additional $90 billion of shares.
Investors have braced themselves for falling consumer spending on tech equipment and services as the war in Ukraine and other factors drive up the cost of oil, food and other staples.
Some consumers have also poured more money into travel and entertainment away from home as COVID-19 outbreaks become less deadly and eat up home technology budgets.
Maestri said in an interview that the war in Ukraine affected revenue when Apple withdrew from Russia, but he declined to specify an amount. He said the drop in sales would be bigger in the current quarter.
When asked about rising inflation, Maestri said demand, particularly for iPhones, was higher than the company had anticipated at the beginning of the quarter. Inflation was affecting spending, he said.
Maestri noted that the App Store, Music, Cloud and Apple Care services each set records for sales.
Remote working has also reduced the need for expensive, high-end phones and upgrades as people commute less.
But remote work has benefited other businesses.
Apple said iPad sales fell 2% to $7.65 billion due to supply chain constraints. They were still above analysts’ median estimate of $7.14 billion.
Revenue from Mac computers, also facing supply chain issues, rose 14.7% to $10.4 billion, compared to an estimate of $9.25 billion.
Sales of wearables, home speakers and accessories grew 12% to $8.8 billion, compared to estimates of $9.05 billion.
Maestri said Apple’s watch and AirPods have sold well, attributing the failure to seasonal fluctuations in demand for other accessories.
But new lockdowns in China and Taiwan, where many parts and iPhones are produced, could bring fresh impediments to supply and demand in the current quarter.
The services business is vulnerable to antitrust sanctions in the United States, the Netherlands, South Korea, South Africa and many other countries weighing whether the company’s fees are too high.
Apple said it now has 825 million paid subscribers across its at least seven subscription offerings, up 40 million from 785 million last quarter. Its growth comes as rivals like Netflix Inc report subscriber losses.
Labor unrest could also hit Apple again. More than 70% of the more than 100 eligible workers at an Apple store in Atlanta last week supported a bid to vote to become the company’s first US store to unionize.
