Apple (AAPL) earnings report Q2 2023

Apple reported Second Quarter Results on Thursday, which beat Wall Street’s weak expectations, driven by stronger-than-expected iPhone sales. Apple CEO Tim Cook told CNBC that the quarter was “better than expected.”

However, Apple’s overall revenue fell for the second straight quarter. Shares of the tech giant soared nearly 2% in extended trading and continued to climb as Apple released forecast data for the current quarter.

Here’s how the company has fared compared to Wall Street expectations and Refinitiv consensus expectations:

• EPS: $1.52 per share versus $1.43 expected
• Revenue: $94.84 billion versus $92.96 billion expected
• gross margin: 44.3% vs. 44.1% expected

Apple reported net income of $24.16 billion for the quarter, compared to $25.01 billion in the same period last year. Total revenue declined 3% from $97.28 billion in the previous quarter.

Here’s how Apple’s individual product lines performed against StreetAccount’s consensus expectations:

• iPhone sales: $51.33 billion versus $48.84 billion expected
• Mac Revenue: $7.17 billion versus $7.80 billion expected
• iPad sales: $6.67 billion versus $6.69 billion expected
• Sales of other products: $8.76 billion versus $8.43 billion expected
• Income from services: $20.91 billion versus $20.97 billion expected

Apple gave no formal guidance and continued its practice dating back to 2020 and the start of the Covid-19 pandemic. Management usually provides some data points when speaking to analysts.

Luca Maestri, Apple’s chief financial officer, said the company expects overall revenue to fall about 3% in the current quarter.

“We expect our revenue performance for the June quarter compared to the year-ago quarter to be similar to the March quarter, provided that the macroeconomic outlook does not deteriorate from what we are forecasting for the current quarter today,” Maestri said in a phone call with analysts. He added that the company faces macroeconomic challenges in digital advertising and mobile games, which are part of Apple’s services business.

The highlight of Apple’s report was iPhone sales, which according to an IDC estimate rose compared to the same quarter last year, even as the overall smartphone industry shrank by almost 15% over the same period.

IPhone sales rose 2% in the quarter ended April 1, suggesting that parts shortages and supply chain issues that had plagued the product in recent years — including the iPhone factory closure in late last year – have finally subsided.

“It was a pretty good quarter from an iPhone perspective, especially compared to the market when you look at market stats,” Cook told CNBC’s Steve Kovach.

Apple’s Mac and iPad businesses didn’t fare as well. The company warned last quarter that both businesses would decline, in part due to parts shortages, but they fell more than expected.

Apple’s Mac sales fell more than 31% to just over $7.17 billion. But that’s a tough comparison to the same period last year, when Apple was still benefiting from the end of the pandemic boom in PC sales and the move to proprietary chips that offer longer laptop battery life.

“There are actually two reasons for this,” Cook said. “One is the macro situation in general. And the other is that we’re still comparing to the very difficult comparison of the M1 MacBook Pro 14 and 16-inch from the same quarter last year.”

iPad sales fell nearly 13% to $6.67 billion.

Apple’s services business includes monthly subscriptions, revenue from Apple’s App Store, warranties, and revenue from search licenses from companies like Google. Apple reported services revenue of $20.9 billion, up 5.5% year over year, in a sign that the company’s highest-margin business continues to grow.

Apple’s wearables division, which includes the Apple Watch and headphones like AirPods, fell 1% in the quarter, beating analysts’ expectations. Last fall, the company launched a more expensive Apple Watch called the Ultra.

Apple’s regional business in China, which includes the mainland, Taiwan and Hong Kong, reported revenue of $17.81 billion, compared to $18.34 billion a year earlier. Analysts had hoped China’s demand for electronics would pick up this quarter as the company exits lockdowns and other Covid-era restrictions.

While sales shrank in most of Apple’s monitored regions, Asia-Pacific saw them surge to $8.11 billion.

Cook expressed optimism about Apple’s prospects in India after visiting the country last month, where he opened Apple Stores and met with politicians.

“The switching and first-time buyer metrics are looking very good there for India,” Cook said. Apple uses the term “switcher” to refer to first-time iPhone buyers who previously had Android devices.

As expected, Apple’s board of directors approved $90 billion worth of stock buybacks and dividends. Apple said it paid $23 billion in buybacks and dividends in the March quarter. Apple also increased its dividend by 4% to 24 cents per share.

Cook also said Apple isn’t planning any layoffs like other big tech companies have begun over the past year. “I see this as a last resort and so mass layoffs is not what we are talking about right now,” he said.