Apple's fiscal second quarter revenue fell as expected, but the drop was less than feared. The results highlight how Apple has been able to weather a weakening economy.

The company reported second-quarter revenue of $94.8 billion, down 3% from a year ago. Apple reported second quarter earnings of $1.52 a share.

Wall Street was expecting second quarter earnings of $1.43 a share on revenue of $92.96 billion. For the June quarter, Apple is expected to deliver earnings of $1.21 a share and revenue of $84.5 billion.

Constellation Research analyst Holger Mueller's take:

"Apple’s product and service portfolio is not recession proof. CEO Tim Cook and team managed to keep selling, general and administrative costs constant year over year, while R&D investment is up by $1B. 

Once more Apple is becoming even more the iPhone company, with the iPhone the only product category growing. After 6 months into the fiscal year, we see that Apples is more the iPhone company than ever. The pressure on strong iPhone launch in 2023 is rising."

Here's a look at the key takeaways:

Apple is a cash cow.

Apple is a cash machine and its dividend and stock buyback reinforce the company's image as a safe haven for investors in what Cook called a "challenging macroeconomic environment." Apple generated operating cash flow of $26.8 billion in the March quarter and authorized $90 billion to repurchase common stock.

Apple is a cash cow because it's increasingly a services company.

For the three months ended April 1, Apple services revenue was $20.9 billion, up from $19.8 billion. Apple's installed base enables the company to sell you more services.

Apple CFO Luca Maestri said:

"The continued growth in Services is the reflection of our ecosystem strength and the positive momentum we are seeing across several key metrics. First, our growing installed base of over 2 billion active devices represents a great foundation for future expansion of our ecosystem."  

Hardware has taken a hit.

Product revenue for Apple checked in at $73.93 billion, down from $77.46 billion. Apple's revenue decline isn't completely unexpected given that IDC said first quarter global smartphone shipments fell 14.6% from a year ago. However, Apple's first quarter shipments were down 2.3% from a year ago, according to IDC. That tally was better than Samsung's first quarter decline of 18.9%.

PC sales fell 29% in the first quarter compared to a year ago, said IDC. Apple's shipments fell 40.5% in the first quarter compared to a year ago. That decline was worse than other global vendors such as Lenovo, HP and Dell, which saw declines between 24% to 31%.

But it's still all about the iPhone.

Apple's iPhone sales were $51.33 billion in the second quarter, up from $50.6 billion a year ago. 

Mac sales tanked and iPad didn't do much better.

Apple's second quarter Mac revenue was $7.17 billion, down from $10.43 billion a year ago. Like most PC vendors, Apple has a hangover from pandemic era laptop purchases.

Cook said:

"Mac faced a very difficult compare because of the incredibly successful rollout of our M1 chip throughout the Mac lineup last year. And like our other product lines, Mac is facing some macroeconomic and foreign exchange headwinds as well."

Ditto for the iPad, which saw sales of $6.67 billion, down from $7.65 billion a year ago.

Apple Watch keeps wearables and accessories steady.

Apple's wearables business held the revenue line with second quarter sales of $8.76 billion, down from $8.8 billion a year ago.

Apple sales steady in Europe.

Apple's regional results are worth noting. Americas second quarter revenue was $37.78 billion, down from $40.9 billion a year ago. Europe had a slight gain with sales of $23.94 billion. China sales in the second quarter were $17.8 billion, down from $18.34 billion.

Japan second quarter revenue was $7.2 billion, down from $7.72 billion a year ago. Rest of Asia Pacific sales were $8.12 billion, up from $7.04 billion a year ago.  

Bonus: Is Apple an enterprise company?

Cook was asked whether Apple's enterprise sales were large enough to worry about IT spending trends. Apple doesn't break out corporate vs. consumer sales. He said:

"Internally, we have our estimates for how much is enterprise versus consumer. And the enterprise business is growing. We have been focusing a lot on BYOD programs and there's more and more companies that are leaning into those and given employees the ability to select which is plays to our benefit, I believe, because I think a lot of people want to use a Mac at work or an iPad at work."

But we're certainly primarily a consumer company in terms of our revenues, obviously.

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