Apple's fiscal year got off to a cracking start in Q1 posting a record net income and revenue of $91.8bn and $22.2bn respectively.
Services showed another strong performance with $12.72bn of revenue, which suggested that Q2 was always going to fall short with the only real question being by how much, and whether the recent coronavirus lockdowns saw an increase in streaming services.
These concerns over a slowdown on revenues did play out in Q2 resulting in a slide to $58.3bn, which was still above expectations, and was also in line from the year before, though it was still well below initial expectations set at the beginning of the year.
iPhone sales saw further weakness with a 7% decline in revenue to $29bn, however services revenue increased by 17% to $13.3bn, and this was expected to continue in the Q3 numbers released last night as Apple looked to take advantage of the increasing popularity of streaming services, especially over the past three months.
Concern remains over iPhone sales
The biggest concern over Apple’s Q3 numbers last night was declining iPhone sales, which has been an ongoing trend for a while now, largely due to intense competition, along with high sticker prices.
As the global economic climate started to turn sour Apple’s response to this was the launch of the new iPhone SE, its cheapest ever handset at the beginning of Q3, which does appear to have prompted some switchers from Android, and helped boost sales in May and June, which in turn saw sales and revenues increase.
iPhone sales saw a rise of 1.6% over the year, with revenue rising to $26.4bn, while the sale of iPads and Mac computers also saw decent growth, largely as a result of the increase in working from home.
An exceptional Q3 for Apple
Q3 tends to be a weaker quarter for Apple in any case, however last night’s numbers proved to be the exception, despite widespread store closures which disrupted their retail businesses across the world
The Q3 numbers saw Apple post its best quarter for revenues for Q3 at $59.69bn, up from last year's $53.81bn, helped by higher sales of Mac computers and iPads.
Services revenue slipped back from the level seen in Q2 to $13.1bn, though it was still higher than the same quarter last year. It’s still a little disappointing when you consider that Apple TV+ is part of that revenue stream, when compared to how Amazon Prime Video and Netflix have done.
In terms of wearables, Apple’s Q2 numbers contributed $6.28bn towards the overall total in services, while in Q3 this figure came in at $6.4bn, another record.
There was also progress on the 5G model, with Apple saying that it has been subject to some delays, though would only be a few weeks late. This is less of an issue now, given the economic disruption taking place however it is still an area which they are behind the curve in creating a product for, with the hope it should be ready for a pre-Christmas launch.
Apple share price likely to hit record highs
Apple said it was looking to do another stock split, this time by a four to one ratio on 24 August, as existing shareholders receive three additional shares for each single share they own, with the split occurring on 31 August.
The company didn’t offer any guidance when it came to the rest of the year, however the fact that Apple once again proved its doubters wrong, is likely to see the share price trade at or close to a new record high, above $400 a share when US markets open later today.