Apple on Tuesday announced financial results for the first fiscal quarter of 2020, which lines up with the busy holiday shopping season (Q4 2019). In a nutshell, Apple did better than anyone expected.
The company’s Q1 2020 quarter was its best ever, and many of Apple’s product categories set new records. Continue reading to learn 6+ key takeaways and highlights from Apple’s latest earnings call on Tuesday.
Apple posted total revenue of $91.8 billion for Q1 2020, up 9% year-over-year, and net quarter profit of $22.2 billion. That marks the quarter as Apple’s best ever, surpassing the first fiscal quarter of 2018, which was the previous record-holder. Here’s how the numbers break down by category.
- iPhone: $55 billion
- Mac: $7.1 billion
- iPad: $5.9 billion
- Wearables, Home and Accessories: $10 billion
- Services: $12.7 billion
The company also notes that international sales made up a majority, 61%, of the company’s revenue last quarter.
The iPhone May Have Bounced Back
Despite no shortage of headlines proclaiming that Apple’s days as an iPhone company were over, the Cupertino tech giant’s flagship product doesn’t seem done quite yet. Apple reported iPhone revenues of $56 billion during the holiday quarter, up 8% year-over-year.
Importantly, that makes this the second-best quarter in history for iPhone revenue. (The first best was $61.6 billion in the same quarter two years ago.) And, as Apple notes, the difference was more than made up by strong growth in both Wearables and Services.
Apple’s Future May Still Be Wearable
Apple’s Wearables, Home and Accessories category has seen some of the strongest growth in recent years, and the sector shows no signs of slowing down. In Q4 2019, Apple’s wearables — which includes Apple Watch and AirPods — brought in $10 billion in revenue, which equals 37% year-over-year.
That, of course, sets an all-time record for the category, which Apple says is now the size of a Fortune 150 company. Interestingly, Apple even points out that AirPods and Apple Watch drove growth for the company even though supply was constrained during the busy holiday shopping season. And, as we’ve covered previously, most new Apple Watch owners are first-time buyers (Apple says it’s about 75% first-time).
Services Continue to Dominate
As you might expect from a company in the middle of a slow transition to the services sector, Apple’s Services category showed some strong numbers during the holiday quarter. Apple says it now has 480 million paid services subscribers, up 120 million compared to the same quarter last year.
It also readjusted its subscription target from 500 million to 600 millions by the end of this fiscal year. As far as individual services, Apple reported that Apple Music and iCloud set new all-time records, and AppleCare also managed to set a December record due to new rates and expanded distribution.
Mac and iPad Lagged Behind (Somewhat)
While Apple reported strong performance for both the Mac and iPad category, the numbers show growth that’s largely lagged behind other sectors like the iPhone, Wearables and Services. Apple said the year-over-year comparisons are “difficult” due to product launch timelines and channel fill.
Still, the Cupertino tech giant notes that they’ve seen a strong response to recent devices, like the Mac Pro and the 16-inch MacBook Pro. It added that about half of iPad and Mac customers were new to the platforms, and customer satisfaction for iPads is about 93% for consumers and 92% for businesses.
Apple also revealed a few other tidbits about its current situation and future plans during its earnings call. Here are some highlights.
- Apple is limiting travel to business-critical areas in light of the coronavirus outbreak in China. While it has some supply partners in Wuhan, Apple says it has alternate suppliers lined up.
- Apple’s Services are helping out its hardware. The company attributed some of its strong iPhone numbers to the Apple Card’s monthly payment plans.
- Apple says it’s measuring Apple TV+ success on number of subscribers. On the other hand, it added that the “product” largely comes down to storytelling, which isn’t defined by subscribers but by critical acclaim.
- While Tim Cook wouldn’t comment on Apple’s future products or plans for 5G, he did note that Apple is “excited” about the company’s pipeline.