Apple Q2 Earnings Beat Muted Forecast On Services, Mac Strength: Installed Base At Fresh Record, Cupertino Announces Massive $110B Buyback (UPDATED)

Zinger Key Points
  • Apple shares have underperformed the broader market and its tech peers and are down sharply this year.
  • Analysts expect CEO Tim Cook to elaborate on the company's AI strategies as it plays catchup in the AI race.

Editor’s note: This story has been updated with additional details.

Apple, Inc. AAPL reported Thursday with second-quarter results that outperformed muted goals. The company announced a $110-billion stock buyback program and a one-penny-per-share increase in its quarterly dividend. The shares of the underperforming big tech stock rose about 3.5% following the earnings announcement.

Apple’s Key Q2 Numbers: As was widely expected, Cupertino, California-based Apple reported a year-over-year revenue decline after it snapped a four-quarter-long streak of falling revenue in the December quarter. Apple’s second-quarter earnings per share also fell from one year ago.

Here’s how key metrics stacked up against the consensus estimates and prior periods:

Q2’24
(Actual)
Q2’24
(Consensus*)
Q2’23Q1’24
Revenue$90.75B$90.01B$94.84B$119.6B
Non-GAAP EPS$1.53$1.50$1.52$2.18
Gross margin46.58%N/A44.26%45.88%
*Data from Benzinga Pro.

“Today Apple is reporting revenue of $90.8 billion for the March quarter, including an all-time revenue record in Services,” CEO Tim Cook said in a statement.

Commenting on the results, CFO Luca Maestri said, “Thanks to very high levels of customer satisfaction and loyalty, our active installed base of devices has reached a new all-time high across all products and all geographic segments, and our business performance drove a new EPS record for the March quarter.”

Apple’s Shareholder Returns: Apple’s board declared a quarterly cash dividend of 25 cents per share, payable on May 16 to shareholders of record as of May 13. The dividend represents a 4.17% increase from the 24 cents per share it paid in the first quarter. Citing confidence in Apple's future and the value the company sees in the stock, the company said its board has authorized an additional $110 billion for share repurchases.

See Also: Everything You Need Yo Know About Apple Stock

Apple Businesses: Weakness in iPhone was offset by continued strength in the Services and Mac product segments. Wedbush’s Daniel Ives predicted soft iPhone unit sales in China due to Huawei competition and a lackluster iPhone 15 upgrade cycle. Emerging market performance was widely expected to offset the Chinese iPhone weakness.

Ahead of the earnings report, Morgan Stanley analyst Erik Woodring projected iPhone and iPad build stability, slight Mac shipment upside and Services outperformance.

Q2’24Consensus*Y-o-Y ChangeQ-o-Q Change
iPhone$45.96B$46.42B-10.46%-34.06%
Mac$7.45B$6.88B+3.91%-4.24%
iPad$5.56B$5.94B-16.64%-20.80%
Wearable, Home &
Accessories
$7.91B$8.08B-9.70%-28.42%
Services$23.87B$23.26B+14.16%+3.24%
Source: Apple

All geographies but Europe saw both year-over-year and sequential revenue declines, while Europe reported modest year-over-year revenue growth. Mainland China, Japan and the rest of Asia-Pacific saw the steepest declines from one year ago.

Q2’24Y-o-Y ChangeQ-o-Q Change
North America$37.27B-1.35%-26.10%
Europe$24.12B+0.71%-20.66%
Mainland China$16.37B-8.09%-21.37%
Japan$6.26B-12.81%-19.43%
Rest Of AsiaPacific$6.72B-17.24%-33.86%
Source: Apple

Apple’s Forward Outlook: For the third quarter, which is seasonally weak, the Street forecasts earnings per share of $1.30 and revenue of $82.89 billion.

“We're also looking forward to an exciting product announcement next week and an incredible Worldwide Developers Conference next month,” said Cook.

Key upcoming events that could have a bearing on Apple stock include:

  • DOJ vs. GOOGL closing arguments
  • June 10 WWDC

Apple Earnings Call Focus: The focus now shifts to the earnings call, which is scheduled for 5 p.m. EDT. Cook will likely shed more light on Cupertino’s broader AI strategy. This assumes importance because rumors suggest the company is negotiating with both OpenAI and Alphabet to bring AI to its iPhones.

AAPL Stock: Apple closed Thursday’s regular session up 2.20% at $173.03 and has added an incremental 7.06% to $185.25 in after-hours trading, according to Benzinga Pro data. The stock has shed roughly 10% for the year-to-date period compared to the Invesco QQQ ETF‘s QQQ 4.38% gain and 6.58% rise by the SPDR S&P 500 ETF Trust SPY.

Read Next: ‘Not Something Steve Jobs Would Probably Do’: Gurman Says Apple Should Go Against The Grain And Lower iPhone’s Price Point

Photo courtesy of Apple.

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