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Why Apple’s Revenue Fell More than 5% YoY in Q2

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Apple’s second-quarter earnings

In the first quarter of fiscal 2019, Apple’s (AAPL) earnings turned negative and fell 9.9% YoY (year-over-year), but it managed to beat Wall Street analysts’ earnings estimate. The second quarter of fiscal 2019 was the 12th straight quarter during which the company beat analysts’ consensus earnings estimate.

Apple’s earnings beat was expected to help the broader market (QQQ) open on a positive note on May 1, as its stock rose more than 5% in after-hours trading on April 30. Now, let’s take a look at the company’s second-quarter revenue.

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Apple’s second-quarter revenue

In the first quarter of fiscal 2019, Apple’s revenue saw a 5.5% YoY fall and a 31.2% sequential fall to $58.0 billion. On the bright side, the company beat Wall Street analysts’ consensus revenue estimate of $57.4 billion and remained in line with its second-quarter guidance. In January, Apple guided for second-quarter revenue in the range of $55 billion–$59 billion.

The second quarter of fiscal 2019 was the second quarter during which Apple reported a YoY revenue fall after registering solid gains in the previous eight quarters.

Weakness in China and Europe

Apple’s revenue in its Greater China and Europe segments tanked sharply by 21.5% YoY and 5.7% YoY to $10.2 billion and $13.1 billion, respectively, in the second quarter. Similarly, the company’s revenue in the Asia-Pacific segment fell 8.7% YoY to $3.6 billion. Major revenue weakness in these three markets hurt Apple’s total second-quarter revenue.

On the bright side, the company reported improvements in its Japan segment’s revenue growth trend. Its second-quarter revenue in Japan rose 1.2% YoY to $5.5 billion compared to its 4.5% YoY revenue fall in the region in the previous quarter.

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