May 4 (Reuters) – Apple Inc’s ( AAPL.O ) results beat expectations on Thursday, showing the tech giant’s resilience in the global economy, thanks to better-than-expected iPhone sales and significant growth in India and other emerging markets.
Shares of the largest U.S. company by market value rose 2% after Apple beat Wall Street’s expectations for revenue and profit in the April 1 quarter. The company’s results contrasted with disappointing figures from major chipmakers due to a slower-than-expected recovery in China’s economic growth.
Apple executives said on Thursday that gross profit margins for the current quarter will be better than forecast, despite an expected decline in revenue as supply-chain issues have improved.
Apple said sales for its fiscal second quarter ended April 1 fell 2.5% to $94.8 billion, beating expectations for a 4.4% decline, according to Refinitiv data. Profit was $1.52 per share, compared with estimates of $1.43 per share.
iPhone sales rose 1.5% to $51.3 billion, beating expectations for a 3.3% drop even as consumers and businesses tightened spending due to rising inflation. Global smartphone shipments fell 13% in the first three months of 2023, according to research firm Canalys, which said Apple gained market share against Android rivals.
Chief Financial Officer Luca Maestri said Apple’s gross margin would be 44% to 44.5%, above estimates of 43.7%, according to Refinitiv data. But he also said that Apple’s revenue will decline slightly. Analysts had expected a 2.1% increase to $84.7 billion in the company’s fiscal third quarter ending in June.
Apple’s stock has outperformed much of Wall Street in 2023, up 28% year-to-date. Investors see the company as a defensive play in times of economic uncertainty.
Apple raised its dividend to 24 cents per share, up from 23 cents per share a year ago. The board approved a $90 billion share buyback plan, the same as a year ago.
Emerging markets outperform
Apple CEO Tim Cook told Reuters on Thursday that the company posted record iPhone sales in the second quarter of the fiscal year, thanks in part to picking up new users in markets like India, where Cook recently traveled for the first launch. Apple stores.
“We were pleased with our performance in emerging markets,” Cook said. “We set records for iPhone installed base in every geographic segment, and we had very strong ‘new’ (sales) in emerging markets, particularly Brazil, India and Mexico.”
Cook also said supply-chain snarls have disappeared. “We have not had material shortages in any product in any quarter.”
Not all of Apple’s business lines are immune to the electronics downturn. Sales of Macs plummeted as iPad revenue slumped. Sales in China also fell 2.9%, a slightly larger drop than overall revenue.
“Apple still needs China on a long-term basis to drive sales and profitability,” said Tom Forte, DA Davidson. “Long-term, emerging markets are important, particularly India from a supply chain and sales standpoint.”
Other tech companies predict a rebound in the second half. Wall Street expects Apple to rebound faster and show year-over-year revenue growth in its fiscal third quarter, which ends in June.
Investors are still waiting for the company’s next big hardware product. Bloomberg reports that the iPhone maker could unveil a mixed-reality headset next month when it holds its annual software developer conference. The company recently announced new service businesses such as high-yield savings accounts.
According to Refinitiv, Mac sales fell more than 30% compared to analyst estimates of a 25% decline. Apple’s sales fared slightly better than PC unit shipments in the market, which fell 33% in the calendar first quarter, Canalys said.
Sales in Apple’s wearables business, which includes devices such as AirPods and the Apple Watch, fell less than 1% compared with estimates for a 4.4% drop.
Apple’s biggest growth segment was its services business, which includes products like iCloud and Apple Pay, which grew 5.5% to $20.9 billion. Apple now has 975 million subscribers to its platform, which includes both Apple services and third-party apps, up from 935 million last quarter and up 150 million from a year ago, Cook said.
Reporting by Stephen Nellis in San Francisco and Yuvraj Malik in Bengaluru Editing by Peter Henderson and Matthew Lewis
Our Standards: Thomson Reuters Trust Principles.
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