Apple Earnings Report, Q1 FY 2019: Strong Margins, Weakening Revenueby Brett Howse on January 29, 2019 9:30 PM EST
Today Apple announced their first quarter earnings for their 2019 fiscal year, and with the fortunes of the company so tied to the iPhone in a stumbling smartphone market, revenues fell despite some segments outperforming estimates. Revenue for the quarter was down 5% year-over-year to $84.3 billion. Gross margin was 38%, down 0.4% from a year ago. Operating income was down 11.1% to $23.3 billion, but thanks to lower taxes, net income was down only 0.5%, coming in at $19.97 billion. Earnings per share were at an all-time high, thanks to share buybacks, with a diluted EPS of $4.18, up 7.4% from a year ago.
|Apple Q1 2019 Financial Results (GAAP)|
|Revenue (in Billions USD)||$84.310||$62.900||$88.293|
|Gross Margin (in Billions USD)||$32.031||$24.084||$33.912|
|Operating Income (in Billions USD)||$23.346||$16.118||$26.274|
|Net Income (in Billions USD)||$19.695||$14.125||$20.065|
|Earnings per Share (in USD)||$4.18||$2.91||$3.89|
iPhone sales struggled, at least by Apple standards, and due to dropping unit sales, Apple has stopped reporting individual unit sales numbers. As such, we can only look at revenue, but this doesn’t paint a great picture either, with revenue down 14.9% year-over-year, to $51.98 billion. It’s still a huge amount of revenue for a single product category of course.
Despite the drop in iPhone revenue, not all news is bad for Apple. Both Mac and iPad had revenue gains this quarter, with the Mac up 8.7% to $7.4 billion, and iPad was up almost 17% to $6.7 billion for the quarter. Those gains definitely helped out when the iPhone took such a big hit.
Apple’s wearables, home, and accessories, which includes the Apple Watch, Beats, and more, also had a good quarter, with revenue up 33.3% over the holiday quarter. Without unit sales, it’s hard to break out what segments are doing well here, and with Apple adding new products to this category it also grows in that regard, but nevertheless, this is solid growth.
Apple’s services segment has quickly become their secondary unit for revenue, with continued growth of just over 19% year-over-year to $10.9 billion.
|Apple Q1 2019 Segment Revenue (Billions USD)|
|Wearables, Home, and Accessories||$7.308||$5.481||+33.3%|
For Q2, Apple is expecting revenues between $55 and $59 billion, with a gross margin of between 37 and 38%.
Source: Apple Investor Relations