Apple’s second-quarter results
On April 30 after the market closed, American tech giant Apple (AAPL) released its fiscal 2019 second-quarter earnings results. Though the company managed to beat analysts’ earnings and revenue estimates, its quarterly results were arguably far from impressive.
Let’s take a quick look at some key aspects of Apple’s earnings without considering Wall Street analysts’ estimates.
Adjusted earnings fell nearly 10% YoY
In the second quarter of fiscal 2019, Apple’s adjusted EPS stood at $2.73, down ~9.9% YoY (year-over-year) and 41.1% sequentially. Comparing the company’s second-quarter results with its first-quarter results would be unfair due to the seasonal factors that influence its sales. However, Apple’s terrible YoY growth figures provide a clear picture of a negative trend in its earnings that can’t be denied.
Over 5% YoY fall in revenue
In the second quarter of fiscal 2019, AAPL’s total revenue fell 5.1% YoY to $58.0 billion. A massive decline of 9.2% YoY in the company’s Product segment’s revenue drove its total revenue down despite a 16.2% YoY fall in its Services segment’s revenue.
During its second-quarter earnings event, Apple’s management highlighted that its Services segment’s revenue accounted for nearly 20% of its total revenue in the second quarter. If the iPhone maker’s Product segment’s revenue continues to fall at this pace, we can expect its Services segment to make up a larger portion of its total revenue in the coming quarters.
Apart from this, Apple’s iPhone sales fall intensified to 17.3% YoY in the second quarter compared to its fall of 14.9% YoY in the first quarter.
Despite these negative YoY figures in Apple’s key financials, analysts’ low estimates and the company’s hopes that its iPhone sales will recover in the coming quarters are driving Apple stock up.
We believe that investors, especially Apple bulls, shouldn’t ignore an emerging negative trend in the company’s YoY growth figures just because it’s their favorite company. These YoY declines could be the start of a negative trend in its financials.