Apple reveals silver lining in cloud as iPhone growth slows

1 May 2019

Apple Store, New York. Image: sepavone/Depositphotos

CEO Tim Cook hints at new hardware innovation.

Apple has reported second-quarter revenue of $58bn, down 5pc year on year as iPhone growth slows.

However, don’t be too quick to think the company is struggling in any way as iPhone revenue of $31.05bn – down from more than $37bn last year – still accounts for more than 53pc of Apple’s entire revenue.

Not only that but Services – the group that includes the company’s cloud, music and e-commerce offerings – has reached an all-time high of $11.45bn in revenue for the quarter.

The company reported that Mac sales were down but crucial gains were made in other hardware business units.

“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.”

An Apple cart of technology

screenshot of financials from Apple's earnings report q2 2019.

Click to enlarge. Image: Apple

A key factor in the iPad growth was the company’s new iPad Pro devices, which have been selling like hotcakes.

Revenues from iPad sales amounted to more than $4.8bn, up from $4bn last year, while revenues from Mac product sales were down to $5.5bn from more than $5.7bn last year.

The company saw a significant surge in revenues from its Wearables, Home and Accessories unit, which includes AirPods, Apple Watch and HomePod, growing to $5.1bn from $3.9bn.

The biggest change, however, was in Services – including iCloud and Apple Music – which saw revenues surge to $11.45bn from more than $9.8bn a year ago.

Stock jumped more than 4pc after the earnings report was released, pushing the company close to a $1trn valuation.

“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, the company’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 authorised an additional $75bn for share repurchases. We are also raising our quarterly dividend for the seventh time in less than seven years.”

Apple Store, New York. Image: sepavone/Depositphotos

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years