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iPhone sales drop while revenue from Apple Services skyrockets

Alyssa Clementi

Apple has confirmed that the company is relying on Services and iPad sales for growth, according to its financial report from Q2 2019, which ended on March 30. Apple saw a Q2 revenue of $58bn (£44.6bn), a 5 per cent decrease from Q2 of 2018, while ESP went down to $2.46, 10 per cent lower than a year ago.

iPhone sales dropped from $37.56bn last year to $31.05bn this quarter, which was expected considering the company’s current sales difficulties in China (once its biggest market), and a slew of recently settled lawsuits with Qualcomm. Revenue brought in by Macs also decreased from $5.78bn last year, to $5.51bn as of March 31. However, the sale of iPads, Wearables, Homes and Accessories, and Services all jumped in sales, specifically with revenue from Services reaching all-time high of $11.5bn, up 16 per cent.

Analysts had been predicting a total revenue of $57.4bn, with $30.5bn of that coming from iPhone sales, and ESP of $2.37. Since the Q2 earnings report has been released, Apple’s stock jumped 6 per cent, most likely because of exceeding analyst expectations.

“Our March quarter results show the continued strength of our installed base of over 1.4bn 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,” said Tim Cook, Apple’s CEO. “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.”

Apple has predicted they will post a Q3 revenue between $52.5bn and $54.bn and hit a gross margin between 37 per cent and 38 per cent. The company also warns of operating expenses between $8.7bn and $8.8bn, and other income/expenses of $250m. For the forseeable future, Apple's revenue will most likley come from Services, considering the tech giant has recently announced a collection of new features, including Apple News, Apple+ TV streaming, and Apple Arcade. 

“We generated operating cash flow of $11.2bn in the March quarter and continued to make significant investments in all areas of our business,” said Luca Maestri, Apple’s CFO. “We also returned over $27bn to shareholders through share repurchases and dividends. Given our confidence in Apple’s future and the value we see in our stock, our Board has authorized an additional $75bn for share repurchases. We are also raising our quarterly dividend for the seventh time in less than seven years.”

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