Apple’s Q2 Earnings Surpass Estimates Despite Decline in iPhone Sales and 18% YoY Growth in Services Revenue

Apple has finally released its much-awaited earnings report for the second fiscal quarter of 2017. This anticipated reveal brought some unexpected figures, providing a comprehensive financial picture of the tech giant’s standing. Let’s break down the most significant numbers reported by CNBC:

– Adjusted EPS: Apple’s fiscal Q2 earnings per share outshined the $2.02 predicted by a Thomson Reuters consensus estimate, coming in at a higher $2.10.
– Revenue: Revenue reported was just off the mark at $52.9 billion, compared to the $53.02 billion expectation voiced by a Thomson Reuters consensus estimate.
– iPhone Shipments: A slight drop in unit sales was noted, as 50.8 million iPhones were shipped instead of the projected 52 million from FactSet.
– Revenue Guidance for Fiscal Q3: Projected revenue for the third fiscal quarter is between $43.5 billion and $45.5 billion, slightly lower than the $45.6 billion anticipated by a Thomson Reuters consensus estimate.
– Gross Margin Guidance: For next quarter, the gross margin is predicted to sit between 37.5 percent and 38.5 percent, according to Apple’s forecasts.

In the same period last year, Apple had earnings per share of $1.90 with revenue reaching $50.56 billion.

What surprised many was the dip in Apple’s iPhone sales as reported. The company sold 50.7 million iPhones in the last three months, down from 51.1 million sales in the same quarter the year prior. However, as with recent earnings reports, Apple’s services emerged as the financial lifeboat again, maintaining market capitalization around $775 billion yesterday.

During the period ending on March 31st, there was a slight decline in sales of Apple’s other devices too. The company sold 8.9 million iPads and 4.1 million Macs, compared to 10.2 million iPads and 4 million Macs during the same quarter of last year.

In regards to the report, CEO Tim Cook stated, “We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus…We’ve seen excellent customer response to both models of the new iPhone 7 (PRODUCT)RED Special Edition and are thrilled with the strong momentum of our Services business, with our highest revenue ever for a 13-week quarter.”

Despite the 1 percent decline in iPhone sales, Apple appears to be withstanding against projections. The burgeoning success of Apple’s Services business was evident as it recorded an 18 percent YoY increase. Cook revealed to CNBC that “the App Store was up 40 percent and our developer community is growing by over 20 percent. There is a lot of momentum.”

In line with its technological innovations and growth, Apple also increased its R&D expenditures to $2.78 billion during the quarter, a significant rise from $2.51 billion last year. This surge highlights Apple’s commitment to further cultivate its product offerings. Revenue from services, meanwhile, amounted to an impressive $2.8 billion.