Though impacted by COVID-19 like other companies, Apple finished its second quarter for fiscal year 2020, for the period ended March 28, 2020, strong, reporting services revenue of $13.3 billion. This was an all-time high for the technology company, and a 16.6% increase year-over-year. Products revenue for the second quarter was $45.0 billion, a 3.4% decline year-over-year. Total revenue for the quarter was $58.3 billion, a 1% increase year-over-year. Services revenue comprises 22.9% of total revenue, while Products revenue represents the remaining 77.1%.
“…Before we dive more deeply into the numbers, I want to speak just for a bit on COVID-19. This is something Apple has been contending with since January. And I think that how we have responded, what we have been inspired to do, tells an important story about Apple’s great durability as a business, and the enduring importance of our products in our customers’ lives. It also speaks to Apple’s unmatched capacity to be creative, to think always in terms of the long term and to forge ahead when others may feel an instinct to pull back,” said Apple CEO Tim Cook on the April 30 earnings call.
“Before COVID-19 was on the horizon, we anticipated that Q2 was going to be a prolific and energetic period for Apple. And when the pandemic did strike, our teams not only succeeded in growing the business in introducing powerful new products, and in meeting our customers’ needs, but they also rose to the occasion in terms of meeting our broader obligations to the communities in which we live and work,” added Cook.
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Other business highlights for the quarter include:
- Apple reports $9.5 billion in total operating expenses, compared to $8.4 billion in the second quarter of fiscal year 2019.
- The company reports operating income of $12.9 billion.
- Apple reports net income of $11.2 billion, or $2.55 diluted earnings per share, a 4% increase.
- Net sales were highest in the Americas at $24.5 billion.
- In net sales by category, Apple saw decreases in iPhone, Mac and iPad sales.
- The Wearables, Home and Accessories category saw an increase in sales at $6.3 billion, compared to $5.1 billion year-over-year. This represents a quarterly record.
- Apple News grew to 125 million monthly active users.
During the earnings call, Cook shared some of the ways Apple is trying to help address the coronavirus pandemic.
- Apple allowed Apple Card users to skip payments without interest during March and April.
- Apple partnered with the Centers for Disease Control to develop a COVID-19 symptom checking website and app. The app has been installed nearly 2 million times and the web tool has had more than 3 million unique visits.
- Apple is partnering with Google to use Bluetooth Technology to help governments and health agencies reduce the spread of the virus through contact tracing, while also factoring in user privacy and security.
- Cook said doctors and other medical professionals are using their Apple Watch and other health features to communicate with patients and to treat them from a safe distance when possible. They also using apps on their iPads and iPhones to support communication and video conferences.
- Apple employees in the company’s Cupertino, California headquarters will not return to work until sometime in early June at the earliest, according to Bloomberg. At that time, they anticipate doing a phased approach that will include additional health safeguards.
“We paired these programmatic efforts with a broader strategy to get back where it’s needed most. We’ve made major corporate donations to response efforts around the world to support global citizens as well as a new fund for Americans experiencing food insecurity as a result of the crisis. When you tally these things up and consider our ongoing 2 to 1 match for employee donations, Apple’s contributions to the global response are significant, diverse, and a great source of pride for the whole chain,” said Cook.
“Now, when you step back and tally all this up, when you consider all the ways COVID-19 has touched Apple, our customers and the way we work, this may not have been the quarter it could have been absent this pandemic, but I don’t think I can recall a quarter where I’ve been prouder of what we do or how we do it,” Cook added.
In terms of Apple’s Services business, which includes subscription services like Apple Music, Apple Arcade, Apple News+ and Apple TV+, Apple has a goal of doubling fiscal 2016 services revenue in fiscal year 2020. Services gross margin for the quarter was 65.4%. App Store revenue, which is part of Services revenue, grew in the double digits including in-app purchases and subscriptions. The company’s third-party subscription business grew in several categories and increased 30% year-over-year, hitting an all-time high. Apple also said that Apple Music and its cloud services both set all-time revenue records.
On April 29, the day before the earnings report, Apple stock (NASDAQ: AAPL) was valued at $287.73. It jumped slightly to $293.80 on April 30 and dropped back to $289.07 on May 1.
Similar to Netflix and Microsoft, much of Apple’s quarterly earnings report was focused on COVID-19 impacts, including impacts to employees, sales and services. Apple also shared information about how the technology company’s products, services, innovation and donations are contributing to solutions to the COVID-19 pandemic. Whether you are an Apple fan or not, they deserve credit for trying to make a difference to overcome the coronavirus when it has hurt their business too. Their time, technology and innovation will help contribute to fighting this global war.