Apple met its already-lowered expectations for its first earnings report of 2019, but the outlook isn’t too rosy as the gadget maker sees a major year-over-year decline in its cash cow iPhone business.
Apple reported revenue of $84.3 billion with $4.22 in basic earnings per share, falling largely in line with Wall Street expectations of $84 billion with an EPS of $4.17. The company’s revenue shrank 5 percent year-over-year from $88.3 billion one year ago. Apple shares popped 2 percent after-hours.
While Apple’s revenue arrived closely in line with expectations, the number is a far cry from the guidance Apple offered in November. Earlier this month, Apple CEO Tim Cook issued a letter to investors, slashing Q1 guidance from a range of between $89 billion and $93 billion to $84 billion. Apple’s stock price cratered nearly 10 percent when Cook’s letter was released, a drop that represented the worst single-day plunge for the company in more than five years. Apple’s wild stock fluctuations have been a cause for a lot of uneasiness amongst the broader market.
Apple’s revenues in Greater China shrank nearly 27 percent to $13.2 billion compared to $18 billion in the quarter one year ago.
This is notably the first quarter that Apple has not included unit sales for its product lines including iPhone, iPad and Mac. iPhone revenues were down 15 percent year-over-year with $52 billion in revenue in Q1 2019 compared to $61.1 billion in Q1 2018. It wasn’t all bad news, the company saw gains across each of its other product divisions with Services up 19 percent, Mac up 9 percent, iPad up 17 percent, and the newly renamed “Wearables, Home and Accessories” vertical up 33 percent.
Last quarter, Apple’s iPhone revenue climbed 29 percent year-over-year while iPad revenue dropped 15 percent. Revenue for Mac climbed 3 percent, while Other Products revenue (Apple Watch, HomePod, AirPods, Beats) jumped 31 percent and Services saw 17 percent year-over-year gains.
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” Apple CEO Tim Cook said in a statement.
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