Apple beats sales estimates with big jumps in iPhone sales and services

Apple chief financial officer Luca Maestri said the war in Ukraine affected revenue as Apple withdrew from Russia, but he declined to specify an amount.

Quarterly worldwide phone sales revenue was $50.6bn, a 5.5% increase from a year ago.

Apple reported record fiscal second-quarter sales and profits that beat estimates as it managed chip shortages and consumers snapped up new iPhones. Sales rose 19% in the Americas and were up by single-digits in Europe and China.

Apple shares rose by over 2% in after-hours trading.

The iPhone maker, which is the world’s largest company by market capitalisation, is aiming to maintain high demand for the iPhone and other hardware while growing sales from services, including music and video subscriptions.

The latest results show it is making ground on both goals, as it beat sales expectations for every unit beside accessories. Apple chief financial officer Luca Maestri in a release cited “continued strong demand for our products” and a record high for sales of services.

Apple’s overall fiscal second-quarter revenue was $97.3bn (€91.8bn) up 8.6% from last year and higher than analysts’ average estimate of $93.89bn. Apple had warned less favourable foreign exchange rates and different timings of product launches from past quarters would cut sales growth.

Quarterly worldwide phone sales revenue was $50.6bn, a 5.5% increase from a year ago and ahead of the average estimate of $47.88bn.

Services, Apple’s second-biggest segment after iPhones, increased sales 17% to $19.8bn, just beating the average estimate of $19.71bn.

Profit was $25bn, or $1.52 per share, and easily topped analysts’ expectations.

Apple also announced a 5% rise in its dividend to $0.23 per share and board approval to buy back an additional $90bn in shares.

Investors have been bracing for drops in consumer spending on tech gadgets and services as the war in Ukraine and other factors drive up the cost of oil, food, and other staples.

Some consumers also have put more money into travel and entertainment outside their homes as Covid-19 outbreaks become less deadly, eating into home technology budgets.

Mr Maestri said in an interview that the war in Ukraine affected revenue as Apple withdrew from Russia, but he declined to specify an amount. He said the hit to sales would be greater in the current quarter.

Asked about rising inflation, Mr Maestri said demand, particularly for iPhones, had been higher than the company had anticipated at the start of the quarter. Inflation was affecting expenses, he said. He noted that the App Store, music, cloud, and Apple Care services each set all-time records for sales.

Remote work also has cut the need for pricey, high-end phones and upgrades as people commute less. However, remote work has benefited other businesses.

Apple said iPad sales fell 2% to $7.65bn due to supply chain constraints. They were still above analysts’ average estimate of $7.14bn.

Revenue from Mac computers, also facing supply chain issues, rose 14.7% to $10.4bn.

Sales of wearables, home speakers, and accessories rose 12% to $8.8bn, compared with estimates of $9.05bn.

Mr Maestri said Apple’s watch and AirPods sold well, and attributed the miss to seasonal variability in demand for other accessories.

However, new lockdowns in China and Taiwan could bring new obstacles.

Reuters