Apple's Q2: Record high services revenue, iPhone sales decline

The tech giant topped Q2 expectations despite slower growth overall due to the global coronavirus pandemic and the closure of its retail stores.

Apple published better-than-expected second quarter financial results on Thursday despite slower growth overall due to the global coronavirus pandemic and the closure of its retail stores. Apple still saw year-over-year growth in the wearables, services and iPad categories, though revenue from the iPhone was down year-over-year.

Looking at the numbers, the Cupertino tech giant reported fiscal second quarter earnings of $2.55 a share, up 4% from a year ago, on revenue of $58.3 billion, up 1% from the same quarter last year. Wall Street was expecting earnings of $2.26 per share on revenue of $54.54 billion.

Apple said Services revenue reached an all-time high of $13.35 billion. Apple no longer breaks out product unit sales by device, but the company said revenue from iPhone sales totaled $28.96 billion, down from $31.05 billion in Q2 2019.

Mac sales totaled $5.35 billion, down from $5.51 billion a year prior. Meanwhile, iPad sales in Q2 came to $4.37 billion, down from $4.66 billion a year prior. The Wearables, Home and Accessories segment brought in $6.28 billion, down slightly from $6.52 billion a year prior. 

Apple warned in February that it would be missing its second quarter guidance due to the coronavirus outbreak in China hitting its iPhone supply chain. The company said on January 28 it had expected second quarter revenue of between $63 billion and $67 billion with a gross margin between 38% and 39%. For its first quarter of 2020, Apple reported revenue of almost $92 billion, up 9% year on year.

"We are proud of our Apple teams around the world and how resilient our business and financial performance has been during these challenging times," said Luca Maestri, Apple's CFO. "Our active installed base of devices reached an all-time high in all of our geographic segments and all major product categories. We also generated operating cash flow of $13.3 billion during the quarter, up $2.2 billion over a year ago. We are confident in our future and continue to make significant investments in all areas of our business to enrich our customers' lives and support our long-term plans — including our five-year commitment to contribute $350 billion to the United States economy."

The company's board approved a cash dividend of $0.82 per share of common stock, an increase of 6%, that is payable on May 14, 2020 to shareholders of record at the close of business on May 11, 2020. Apple is also increasing its share repurchase program by $50 billion.

Apple did not provide guidance for its third fiscal quarter.