Apple earnings top expectations thanks to services growth
Add Axios as your preferred source to
see more of our stories on Google.
Apple CEO Tim Cook. Photo: Nic Coury/AFP via Getty Images
Apple on Thursday reported quarterly earnings slightly ahead of expectations, lifted by stronger-than-expected revenue from its services business.
Why it matters: The earnings reports come amid concerns over how the company will be affected by trade tensions with China and just after a scathing ruling from a federal court over its App Store practices.
By the numbers: Apple reported per-share earnings of $1.65, up 8% from a year ago and ahead of analysts consensus predictions which ranged from around $1.60 to $1.62.
- Revenue of $95.4 billion was up 5% year-over-year and just ahead of analysts predictions of around $94 billion.
- iPhone sales were $46.8 billion, toward the low end of many analysts' expectations.
- Services revenue totaled $26.6 billion, up from $23.9 billion a year ago and more than analysts had expected.
- Mac sales were $7.9 billion, while iPad sales accounted for $6.4 billion in revenue, and the unit that includes wearables and accessories brought in $7.5 billion.
- On a geographic basis, sales were up in every region except Greater China.
Between the lines: Apple's earnings report comes a day after a federal judge ordered the company to remove the commission it charges on digital purchases made outside its App Store — a move that could prompt more developers to bypass the App Store, potentially eating into a highly profitable revenue stream for Apple.
- Meanwhile, Apple is trying to navigate a dicey situation as the U.S. and China impose new tariffs, with the company looking to remove itself as much as possible from the dispute and its impacts.
What they're saying: In the last quarter Apple saw "limited impact from tariffs as we were able to optimize our supply chain and inventory," CEO Tim Cook said during prepared remarks on the company's conference call with analysts.
- "For the June quarter, currently we are not able to precisely estimate the impact of tariffs.... Assuming the current global tariff rates, policies and applications do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add $900 million to our cost."
Cook told analysts on the earnings call that the company expects the majority of iPhones sold in the U.S. in the June quarter to be manufactured in India.
- Nearly all iPad, Mac, Apple Watch and AirPod products headed to the U.S. will come from Vietnam, while most Apple products sold outside the U.S. will come from China.
