Apple’s Q2 2019 earnings
Apple (AAPL) is staled to release its second-quarter earnings later today. Wall Street analysts expect a 13.5% year-over-year decline in its adjusted earnings for the quarter to $2.36 per share The company’s revenue is expected to fall 6.2% year-over-year, according to Reuters. Now, let’s explore some key factors that investors should watch for in Apple’s second-quarter results.
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Sales recovery in China
In the first quarter of fiscal 2019, Apple’s Greater China sales tanked 26.7% to $13.2 billion, compared to $18.0 billion in the first quarter of fiscal 2018. Over the last few years, the company has been striving to expand its footprint in China due to the market’s huge growth potential.
An improvement in Apple’s second-quarter Chinese market sales could help it regain investor confidence.
Consistency in the services segment’s revenue
In the quarter that ended in December 2018, Apple’s services segment revenue grew 19.1% year-over-year to an all-time high of $10.9 billion. After facing weakness in its product segment revenue, investors’ expectations from the company’s services segment have risen significantly.
So, better-than-expected services segment revenue growth in the second quarter could help Apple justify its recent efforts to expand its services segment portfolio.
Actual versus guidance
In January 2019, Apple guided its second-quarter revenue between $55 billion and $59 billion, a gross margin in the range of 37%–38%, and operating expenses between $8.5 billion and $8.6 billion. Apple’s second-quarter guidance isn’t so very different from Wall Street analysts’ expectations. So, if Apple reports better-than-guided revenue and gross margins, it could boost investor confidence and drive the stock higher.
Apart from these factors, investors should also watch for the trend in iPhone sales since no other key factor could be as important at the moment. In the quarter that ended in December 2018, iPhone sales made up about 61.7% of Apple’s total sales.