Apple's Q2 2023 Results: iPhone Sales Drive Better-Than-Expected Quarter

Highlights

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• Apple beat analysts' expectations for Q2 2023 with $94.8 billion in quarterly revenue, a 3% YoY decrease, and earnings per diluted share of $1.52, a 4% YoY decrease.

• Strong demand for iPhones, including the new iPhone 14 launched in March, drove 2% YoY growth in iPhone sales to $51.3 billion, outpacing a contracting global smartphone market.

• Other product categories performed well, including a record $20.9 billion in services revenue, up 7% YoY, and $8.8 billion in other products revenue, up 8% YoY, with the only decline coming from Mac revenue, down 8% YoY to $7.2 billion.

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Apple, the world's most valuable company, has announced its financial results for the second quarter of fiscal year 2023, which ended on April 1. The tech giant beat analysts' expectations on both revenue and earnings per share, thanks to strong demand for its flagship product, the iPhone.

According to Apple's press release, the company posted quarterly revenue of $94.8 billion, a decrease of 3 percent from the year-ago quarter, and quarterly earnings per diluted share of $1.52, a decrease of 4 percent. International sales accounted for 64 percent of the quarter's revenue.

The highlight of Apple's report was iPhone sales, which grew 2 percent year-over-year to $51.3 billion, despite a challenging global smartphone market that contracted nearly 15 percent during the same period, according to an IDC estimate. Apple attributed the iPhone growth to customer satisfaction, loyalty and retention rates, as well as the successful launch of the iPhone 14 in March, which features a new design, a faster processor and improved cameras.

Apple CEO Tim Cook said in an interview with CNBC that he was "very pleased" with the iPhone performance and that the company saw "very strong demand" for the new model. He also noted that Apple gained market share in most regions where it operates and that the iPhone user base reached a new all-time high.

Apple's other product categories also performed well in the quarter, with services revenue reaching a record $20.9 billion, up 7 percent year-over-year, driven by growth in App Store, Apple Music, iCloud, Apple Pay and Apple TV+. Other products revenue, which includes AirPods, Apple Watch, HomePod and accessories, increased 8 percent year-over-year to $8.8 billion, reflecting strong customer interest in wearable devices and smart home products.

The only product category that saw a decline in revenue was Mac, which dropped 8 percent year-over-year to $7.2 billion, due to supply constraints and lower demand from education customers. iPad revenue was flat year-over-year at $6.7 billion. Here are the highlights from the result:

Metric	Q2 FY2023 Results
Quarterly revenue	$94.8 billion
Quarterly earnings per diluted share	$1.52
iPhone sales	$51.3 billion
Services revenue	$20.9 billion
Other products revenue	$8.8 billion
Mac revenue	$7.2 billion
iPad revenue	$6.7 billion
Year-over-year change in iPhone sales	+2%
Year-over-year change in services revenue	+7%
Year-over-year change in other products revenue	+8%
Year-over-year change in Mac revenue	-8%
Year-over-year change in iPad revenue	0%

Apple did not provide formal guidance for the third quarter of fiscal year 2023, citing ongoing uncertainty and volatility related to the COVID-19 pandemic. However, Apple CFO Luca Maestri said on a conference call with analysts that the company expects its June quarter revenue performance to be similar to the March quarter, assuming no significant deterioration in macroeconomic conditions.

Maestri also warned that Apple faces some headwinds in the coming months, such as unfavorable foreign exchange rates, higher commodity costs, lower services growth due to tougher comparisons and reduced stimulus spending, and lower gaming revenue due to regulatory changes in China.

Despite these challenges, Apple remains confident in its long-term prospects and continues to invest in innovation and growth opportunities across its products and services. The company also announced a $90 billion increase in its share repurchase authorization and a 7 percent increase in its quarterly dividend.

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