iPhone sales drop, services segment thrives in Apple’s better-than-expected Q2 2024 results

Apple’s fiscal second-quarter earnings report for 2024 presented a mixed picture. While overall revenue dipped slightly and iPhone sales declined, the company’s services segment continued its impressive growth trajectory.

One of the key highlights of Apple’s quarterly report was the decline in iPhone sales, a cornerstone of its business. Despite high anticipation surrounding the release of new models, iPhone sales experienced a notable drop of 10.5% to $45.96 billion. This decline has been attributed to various factors including market saturation and stiff competition, as well as a “tough comparison” with the previous year. To provide a reminder, in the second quarter of 2023, Apple had witnessed increased demand for the iPhone 14 Pro and Pro Max. With this surge normalized in the current year, iPhone sales appear to have settled at a lower baseline.

While the iPhone faced headwinds, other hardware segments presented a mixed picture. Mac sales enjoyed a modest 4% year-over-year increase to $7.5 billion, fueled by the recent launch of the M3-powered MacBook Air. This suggests a continued appeal for Apple’s premium laptops amongst creative professionals and students. Conversely, iPad sales experienced a steeper decline of 17% to $5.6 billion. This can be attributed to the absence of a recent refresh cycle for the iPad lineup.

Apple’s Greater China sales, encompassing regions like Hong Kong and Taiwan, witnessed an 8.1% decline to $16.37 billion. This development is unsurprising, given the troubles faced by the Cupertino-headquartered tech behemoth in the Asian country. Still, the company’s global footprint remains strong, and revenue records were achieved in various countries and regions, including Latin America, the Middle East, Canada, India, Spain, and Turkey.

Another star of the show for Apple was its services segment. Encompassing offerings like Apple Music, iCloud storage, Apple TV+, and App Store revenue, this segment registered a stellar 14.2% year-over-year growth to reach a staggering $23.9 billion. With over 1 billion paid subscriptions across its services, Apple has successfully built a loyal customer base that consistently generates recurring revenue. This growth trajectory is expected to continue, with Apple forecasting similar double-digit growth rates for services in the upcoming quarter. This is in contrast to Apple’s revenue for the quarter, which dropped by 4% annually to reach $90.8 billion. Its net income for the same period amounted to $23.6 billion (an annual decrease of 2.47%), while its EPS clocked a YoY growth to reach $1.53. Last but not the least, Apple also announced a $110 billion share buyback – the largest in the company’s history.

“Today Apple is reporting revenue of $90.8 billion for the March quarter, including an all-time revenue record in Services,” Tim Cook, Apple CEO, commented on the matter. “During the quarter, we were thrilled to launch Apple Vision Pro and to show the world the potential that spatial computing unlocks. We’re also looking forward to an exciting product announcement next week and an incredible Worldwide Developers Conference (WWDC) next month. As always, we are focused on providing the very best products and services for our customers, and doing so while living up to the core values that drive us.”