Apple has posted impressive second quarter results that have allayed market fears that its principle cash cow, namely the iPhone, was slowing down.
There had been concern that Apple would be negatively impacted by slow sales of its iPhone X, but the firm sold 52.2 million iPhones in the three months to March, up from 51 million a year earlier – only just missing Wall Street expectations of 52.3 million.
The expensive iPhone X had analysts worried about long term demand amid a global smartphone slowdown, especially considering its initial lukewarm reviews. But Apple said that the iPhone X was the best-selling model in every week of the quarter – despite costing almost $1,000 or £1,000.
For the quarter ending 31 March, Apple posted a net profit of $13.8bn (£10.1bn), up from last year’s $11bn (£8.1bn).
Revenue also rose 16 percent to $61.1bn (£44.7bn) from $53bn ($38.9bn) a year earlier, ahead of market expectations.
The iPhone continues to account for the bulk of Apple’s revenues at just over 62 percent of the total. Sales of iPads rose 2 percent to 9.1 million units compared with the same period last year, while Macbook sales slipped 3 percent to 4.07 million.
The stock climbed 3.6 percent in after-hours trading.
“We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, Services and Wearables,” said Tim Cook, Apple’s CEO. “Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20 percent growth in Greater China and Japan.”
Apple is also spending heavily as its R&D costs rose in the quarter, and it is giving away huge amounts of money back to investors.
The company said it would complete the previous $210bn (£154bn) share buy-back programme during the current quarter.
And it has approved a new $100bn (£73bn) share repurchase authorisation and a 16 percent increase in its quarterly dividend.
Apple’s results are perhaps surprising considering analysts had warned that the fallout after Apple’s admission that it intentionally slows down older iPhone handsets was likely to have a significant financial impact on the company.
That warning came after Apple issued a rare public apology, and pledged to reduce the price of an out-of-warranty iPhone battery replacement by $50 – from $79 to $29 – for anyone with an iPhone 6 or later.
Apple’s battery-gate issue first came to light just before Christmas after a iPhone user shared performance tests on Reddit that suggested that their iPhone 6S had slowed down considerably as it had aged.
However the handset suddenly sped up again after the battery was replaced.