If it wasn’t clear from Apple’s prior promise of a second-quarter 2020 revenue projection miss, the global coronavirus pandemic has weakened the company’s strong recovery from a shaky 2019, but the hit wasn’t as bad as analysts expected. Apple reported $58.3 billion in revenue for the quarter — a modest increase compared with the $58 billion generated one year ago, when it suffered a 5% year-over-year decline compared with the second fiscal quarter of 2018. Prior to the U.S. outbreak, but with awareness of its continuing growth in China, the company originally said earnings would fall in the $63 billion to $67 billion range.
On average, analysts predicted earnings per share of $2.26 and revenues of roughly $54.5 billion — a drop of 6% to 8% for the second quarter — owing in part to closures of the company’s retail stores and COVID-19-related interruptions in its production facilities. However, Apple’s revenues were actually up roughly 1% over the year-ago quarter, even though the overall U.S. gross domestic product (GDP) contracted by 4.8% during the same period, with mounting virus death tolls and massive job losses raising the prospect of a prolonged recession or depression.
“Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” said Apple CEO Tim Cook. “In this difficult environment, our users are depending on Apple products in renewed ways to stay connected, informed, creative, and productive.”
Down in three major segments but up in two, Apple sold $28.962 billion in iPhones, $5.351 billion in Macs, $4.368 billion in iPads, $13.348 billion from services, and $6.284 billion in wearables and accessories. Year over year, those numbers contrast with prior quarterly sales of $31.05 billion in iPhones, $5.5 billion in Macs, $4.87 billion in iPads, $11.5 billion in services, and just under $5.13 billion in wearables and accessories. Except for major milestones, the company no longer discloses unit sales for any of its product lines.
International sales constituted 62% of the quarter’s revenue, and Apple saw revenues grow in two key territories while declining in three others. Year over year, revenues fell from $25.596 billion to $25.473 billion in the Americas, from $10.218 billion to $9.455 billion in Greater China, and from $5.532 billion to $5.206 billion in Japan. However, sales grew from $13.054 billion to $14.294 billion in Europe and from $3.615 billion to $3.885 billion in the Asia Pacific region.
Last quarter, Apple blew past both its projections and analysts’ expectations by posting $91.8 billion in revenue, up nearly 9% from the year-ago quarter, thanks to a strong holiday season. While sales of the Mac and iPad dipped, wearables, services, and iPhones each posted billion-plus-dollar gains, continuing the prior quarter’s record-breaking reversal of fortunes. As Cook noted, wearables and services continued to fuel revenue growth, but all other segments slowed down — though not as much as might have been expected.
Although Apple recently released the second-generation iPhone SE, 2020 iPad Pros, and iPad Pro Magic Keyboard, all with potential to help its smartphone, tablet, and accessories categories, the company is not providing guidance for the third fiscal quarter of 2020, due to continued uncertainty wrought by the pandemic. Apple plans to restart brick-and-mortar retail operations in several U.S. states following reopenings of some stores in China and South Korea, where it has limited sales-specific foot traffic but has resumed device service operations. The company delayed an earlier plan to begin some U.S. reopenings earlier in April.
Apple is issuing an atypically large cash dividend of $0.82 per share — an increase of 6% — payable on May 14, 2020 to shareholders on record as of May 11, 2020. It is also increasing its share repurchase program by another $50 billion, a measure that should drive up the value of remaining shares.