Apple Q2 2024 Earnings

Apple Q2 2024 Earnings

Apple Surprises Market with Record $110 Billion Buyback Plan Amid Slightly Higher Performance

Apple for the second quarter of 2024 recorded revenue of $90.8 billion, marking a 4% decline compared to the previous year. The decrease was attributed to reduced sales of iPhones, iPads, and wearables over the past year.

Apple acknowledged a nearly 10% decrease in iPhone sales, totaling $45.96 billion, indicating subdued demand for the latest generation of smartphones released in September. CEO Tim Cook highlighted that excluding the boost of $5 billion in iPhone sales from increased sales in the previous year, iPhone revenue would have remained relatively unchanged.

In the fiscal second quarter, iPhone sales dropped by 10.5% to $45.96 billion, slightly below analysts' forecasts of $46 billion. Apple's executives noted that the year-ago fiscal second quarter had experienced a $5 billion increase in iPhone sales due to the company catching up from supply-chain disruptions during pandemic lockdowns.

Mac sales experienced a 4% increase, reaching $7.45 billion; however, they remained below the segment's peak established in 2022. CEO Tim Cook attributed the sales growth to the introduction of the new MacBook Air models featuring an enhanced M3 chip, launched in March.

On the other hand, revenue from Other Products, which encompasses Apple Watch and AirPods headphones, declined by 10% year over year, amounting to $7.9 billion.

During the quarter, Apple introduced its first major new product category in years, the Vision Pro virtual reality headset, priced at $3,500. However, it is anticipated to have limited sales compared to Apple's primary product lines.

"We're only scratching the surface there, so we couldn't be more excited about our opportunity," remarked CEO Tim Cook.

Apple's iPad division faced a sales decline of 17% to $5.6 billion, attributed to the absence of a new iPad release since 2022. However, anticipation is building for the announcement of new iPads on May 7, which could reignite demand for the product line.

Cook teased "big plans to announce" at both the upcoming iPad product event and the Worldwide Developers Conference in June.

The Services business emerged as a standout performer during the quarter, with sales increasing by 14.2% to $23.9 billion. This category encompasses revenue from subscription services, warranties, licensing agreements with search engines, and payments. Apple's definition of subscribers is comprehensive, including users subscribing to apps through the App Store. The company boasts over 1 billion paid subscriptions.

Excluding the one-time phenomenon, iPhone sales saw only a slight decline as Apple's flagship product contends with strong competition. Huawei Technology has notably gained market share, particularly in China.

Tim Cook highlighted that iPhone sales continued to see growth in certain markets, including China. Apple's revenue decline in China was not as sharp, with Greater China sales reaching $16.37 billion for the fiscal second quarter ending March 30, representing an 8.1% decrease.

Apple announced a net income of $23.64 billion, equivalent to $1.53 per share, marking a slight 2% decrease from the year-earlier period, which recorded $24.16 billion, or $1.52 per share.

Although the company didn't offer formal guidance for the June quarter, CEO Tim Cook indicated that overall sales would grow in the "low-single-digits."

Apart from this, Apple has unveiled plans to repurchase shares worth $110 billion, surpassing its own previous record of $100 billion announced in 2018. Impressively, six out of the top 10 buybacks in US history are attributed to Apple.

In addition to the share buyback, Apple declared a dividend of 25 cents, up one cent from the previous quarter, marking the 12th consecutive quarter of increased shareholder payout.

During the earnings call, Apple finance chief Luca Maestri mentioned that the company anticipates the upcoming quarter to deliver double-digit year-over-year percentage growth in iPad sales. They also expect the Service division of the company to continue growing at about the current high rate it’s achieved during the past two quarters.

On May 2, Apple stock jumped by 7% in the extended trading after the company reported second-quarter earnings.


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