While COVID-19 certainly overshadowed Apple’s most recent financial quarter, the company actually saw an annual increase in revenue, with the growth primarily coming from services and wearables.
Looking ahead, the company predicts that Mac and iPad sales will be strong. And CEO Tim Cook remains confidant about Apple’s future.
1. Total revenue was better than expected
Apple warned in February that the coronavirus would seriously impact supply and demand for its products this quarter. And then it turned around announced in a year-over-year growth in revenue on Thursday.
Specifically, it took in $58.3 billion during the January-through-March period, an increase of under 1%, but still growth.
In a conference call with investors after the announcement, Cook pointed out that the company was headed for a very strong quarter until COVID-19 struck. It experienced weak sales in China first because the virus started there. But these were initially offset by strong sales in the U.S. and Europe where store closures and shelter-in-place orders didn’t begin until the final weeks of March.
Note that Apple‘s financial year isn’t the same as the calendar year. Today came the results from Apple for its Q2 2020, though to everyone else it was Q1 2020. Just look at the numbers in red on this and the following charts to see the most relevant figures.
The company’s net income did not increase, but earnings per share were up 4%.
2. Services and wearables bring in the bucks
A significant part of the increase in company revenue came from growth in services like the App Store, Apple Music, Apple TV+, Apple Arcade and others. “Our long-running investment in our services strategy is succeeding,” said CEO Tim Cook. “This business is growing and is a reflection of our enduring, large and growing installed base.”
The company did not break out how its new video and gaming services are doing from the general increase in revenue.
Plus, Apple saw year-over-year growth in sales of wearables, including Apple Watch and AirPods.
3. A strong quarter for iPad and Mac predicted
We’re already a month into Apple’s current financial quarter, and Apple is apparently seeing an uptick in demand for tablets and traditional computers. “On iPad and Mac, we expect the year-over-year revenue performance to improve in the June quarter,” said Luca Maestri, Chief Financial Officer.
But the prediction isn’t so good for some other traditionally popular devices. “On iPhone and wearables, we expect the year-over-year revenue performance to worsen in the June quarter, relative to the March quarter.”
Other than these general statements, company executives declined to give guidance on the current quarter.
4. Contributing to the fight against COVID-19
Apple is actively participating in efforts to fight against the COVID-19 pandemic. While also building the new iPad Pro and iPhone SE, “our worldwide network of supply chain partners, logistics and operations folks in every part of the company were also sourcing more than 30 million masks for frontline medical workers,” noted Cook. “They were also working with our suppliers to design, test manufacture and distribute more than 7.5 million face shields.”
At the same time, the company is building a coronavirus contact-tracing system in cooperation with Google.
5. Still planning for the long term
Despite dealing with the ongoing global medical crisis, Apple isn’t fixated on it. “We have always run Apple for the long term,” said the company CEO.
“It’s in these moments that we set ourselves apart. We’ve always managed through difficult moments by doubling down and investing in the next generation of innovation. And that’s our strategy today,” said Tim Cook. “And so while we can’t say for sure how many chapters are in this book, we can have confidence that the ending will be a good one.”