Surging iPhone Sales Ripen Apple Earnings

Apple reported its second straight quarter of declining revenue but said iPhone sales surged due to strong demand in emerging markets, a sign of resilience as the tech giant continues to face economic uncertainty.

The Wall Street Journal reports this is the third time in a decade that the iPhone maker has posted back-to-back quarters of falling revenue. The tech giant’s revenue for the three months ended April 1 was $94.8 billion, down 3% from the year-earlier period. Net income dropped 3% year-over-year to $24.2 billion. Apple exceeded analyst expectations, according to FactSet, of $92.9 billion in sales and $22.6 billion in net income for its fiscal second quarter.

Apple Chief Financial Officer Luca Maestri said in an interview that the company experienced a difficult environment for consumer demand as reflected in declining Mac and iPad sales, but the iPhone did particularly well in developing markets.

“The iPhone is truly a global product and we’re doing well in emerging markets right now,” Maestri said. “That has helped us offset some macroeconomic challenges.”

In particular, Apple logged strong iPhone growth in places such as India, Indonesia, Latin America and the Middle East, Mr. Maestri said. He noted Apple is doing well in places like India in part because of its recent investments in the country, with new retail stores and focus on building up the app-developer community there. Apple’s installment plans and trade-in programs are making its products more accessible in these countries.

IPhone sales grew about 1.5% to $51.3 billion, well ahead of the $48.7 billion analysts were expecting. Sales for Apple’s flagship product have surged as consumer demand continues to gravitate toward the company’s most-expensive phone, the iPhone 14 Pro Max, accounting for 24% of all iPhone sales, according to Consumer Intelligence Research Partners. The iPhone 14 Pro followed closely behind, with 22% of all sales for the quarter, the research firm found.

Premium iPhone Pro sales are crucial to Apple’s strategy in recent years of driving revenue growth while shipment growth has slowed. Demand for Pro models has helped elevate the average selling price of the iPhone to $988 in the January-through-March quarter from $802 in the same 2019 quarter, according to Consumer Intelligence Research Partners.

Even amid Maestri’s warning on consumer demand, some Apple investors took the results as a positive sign about broad economic sentiment.

The company’s shares rose about 2% in after-market trading. Apple said it boosted the dividend by 4% and that its board authorized an additional $90 billion in buybacks. Apple repurchased $89.4 billion in stock in the fiscal year that ended in September and paid investors $14.8 billion in dividends, according to FactSet.