Apple didn’t make as much as it did last year off its trademark device — and Wall Street doesn’t seem to mind one bit.
The tech giant reported iPhone revenue dropped 17% year-over-year when it shared its second quarter financials on Tuesday afternoon, but Apple’s stock still spiked in after-hours trading, after the company posted a record $11.5 billion in Services revenue.
For the three months ended March 30, Apple reported revenue of $58 billion, slightly edging analyst estimates of $57.37 billion. Its earnings of $2.46 per share also beat analyst projections of $2.36 EPS. Revenue decreased 5% year-over-year.
Apple stopped sharing how many iPhones it sold earlier this year, but the company still reports quarterly revenue from the device. The iPhone contributed $31.1 billion in Q2 revenue, down from the $37.6 billion Apple made off the device during the same period last year.
Services revenue — which includes sales of apps, movies and music, among other offerings — increased 16 percent year-over-year from the $9.8 billion Apple pulled during Q2 2018.
Apple shares increased 5% in after-hours trading to $210 per share. The company is on the verge of once again hitting a $1 trillion market cap, after becoming the first company to do so last August.
Wall Street was most likely giving a thumbs up to Apple offering Q3 guidance of $52.5 billion of $54.5 billion in revenue, higher than analysts had forecasted, as well as a $75 billion share repurchase. Apple also increased its dividend 5% to 77 cents per share.
“Our March quarter results show the continued strength of our installed base of over 1.4 billion 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,” Apple CEO Tim Cook said in a statement. “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.”
Apple’s $10.2 billion in Q2 sales in China was a clear drop from the $13 billion it made during the same period last year, but Cook, in an interview with Reuters on Tuesday, was optimistic “things are getting a bit better” in the market. Cook pointed to strong end-of-quarter iPhone sales, as well as its Wearables business continuing to gain traction, as reasons to believe Chinese revenue will bounce back.
The company’s massive cash hoard — something that seems to grab the attention of investors each quarter — was $225.4 billion at the end of Q2, a drop from the $245 billion it had at the end of the first quarter.
Apple recently unveiled several new features, including Apple TV+, its upcoming streaming service with original content from Hollywood heavy-hitters like Steven Spielberg and J.J. Abrams. At a glitzy event last month at its Cupertino, Calif. headquarters, Cook said the service will feature its slate of original shows, be available in more than 100 countries and be accessible via Apple TV. Other key details — like how much the service will cost — went noticeably unmentioned.
At the same event, Apple revealed Apple News+, a $10 per month subscription magazine service that provides access to 300 top outlets, as well as limited content from The Wall Street Journal. Apple Arcade, a gaming subscription service, was also announced.
The array of new services comes as the tech behemoth has seen iPhone sales stagnate. Apple, of course, still makes a killing on its most popular device, but customers are waiting longer than ever to upgrade their devices. Apple is likely looking at its new offerings as a way to continue growing its second-biggest source of revenue — its wide-ranging Services business.
Despite weaker-than-expected iPhone sales to begin the year, Apple shareholders have enjoyed a strong start to 2019, with its stock price increasing more than 25% since early January.