On Thursday, May 2nd, Apple Inc. announced its financial results for the second quarter of the 2024 fiscal year (corresponding to the first quarter of the 2024 calendar year). The second quarter profit slightly exceeded Wall Street’s expectations, but the overall revenue dropped by 4%, with iPhone sales declining by 10%. Apple also revealed an expanded stock buyback plan, leading to a 7% increase in the company’s stock price in after-hours trading.
The board of directors of Apple announced the authorization of a $110 billion stock buyback program, a 22% increase from the $90 billion authorization last year. Data from Birinyi Associates shows that this is the largest buyback in history.
After the pandemic, Apple has stopped providing earnings guidance. Apple’s CEO Tim Cook revealed that the overall sales for the June quarter may see a low single-digit percentage increase, with market expectations at $832.3 billion. In the second quarter of the 2023 calendar year, Apple’s revenue declined by 1% year-on-year to $81.8 billion.
Apple’s CFO Luca Maestri stated during the earnings conference call with analysts that iPad sales for this quarter are expected to achieve a double-digit percentage increase year-on-year. He also added that he anticipates Apple’s services sector to continue growing at the pace seen over the past two quarters.
In terms of the second quarter performance, Apple’s sales for the quarter reached $90.75 billion, a 4.3% decline from the same period last year. Net profit decreased by 2.2% to $23.6 billion. According to FactSet data, both of these figures slightly surpassed analysts’ average expectations.
Cook told CNBC that compared to the same period last year, Apple faced challenges with supply chain issues due to COVID-19, leading to a $5 billion delay in iPhone 14 sales.
Cook said, “If we were to exclude that $5 billion from last year’s performance, our quarterly performance would show a year-on-year growth.” “That’s how we look at it from an internal company performance standpoint.”
Apple stated that iPhone sales declined by nearly 10% to $459.6 billion, indicating weak demand for the current generation of iPhones released last September. Sales met analysts’ expectations, and Cook mentioned that without the growth in sales from last year, iPhone revenue would have remained flat.
Mac sales increased by 4% to reach $7.45 billion, but still fell below the high mark set for the segment in 2022. Cook attributed the sales boost to the new MacBook Air model powered by the upgraded M3 chip released in March.
Revenue from other products decreased by 10% year-on-year to $7.9 billion.
This quarter, Apple introduced its first new major product category in years, the Vision Pro virtual reality headphones, priced at $3,500. However, it is expected to have lower sales volume, especially compared to Apple’s main product lines.
Apple has not released a new iPad since 2022, which has weighed on sales. Revenue from this division dropped by 17% to $5.6 billion. Apple is set to announce a new iPad on May 7th.
The company’s services business was a highlight for the quarter, with a 14.2% increase in revenue, reaching $23.9 billion. The services segment includes subscription services, warranty, search engine licensing agreements, and payment revenue.
In Apple’s third largest region, Greater China, sales decreased by 8% to $16.37 billion, surpassing FactSet analysts’ expectations of $15.25 billion in sales. This may alleviate concerns among investors that Apple could lose market share to Chinese competitors.