Californian tech giant Apple assuaged investor concerns tonight, having narrowly beaten analyst predictions for its first fiscal quarter of 2019.
Reporting for the three months to 31 December, Apple said it took in revenue of $84.3bn (£64.1bn), slightly above consensus estimates of $84bn as collated by S&P Global Market Intelligence. Sales were down five per cent year-on-year.
Chief executive Tim Cook spooked investors earlier this month when he revised down Apple’s revenue guidance from $93bn to $84bn. It was the firm’s first warning in more than 15 years.
Apple’s share price rose more than four per cent in after-hours trading, giving the stock a much-needed boost after the iPhone maker shed 10 per cent on the day of the downgrade.
Earnings per share, which indicate Apple's profits for the quarter, reached an all-time high of $4.18, topping estimates of $4.17.
Revenue of its mainstay iPhone fell 15 per cent year-on-year, as Apple’s three new models struggled under the higher prices and suffered weakened demand in China. Macs, iPad and wearables sales all rose to record highs.
Apple's services division – which includes Apple Music, iCloud and the App Store – was the standout star of the night, reaching $10.8bn in line with Wall Street estimates and hitting a gross margin of 63 per cent.
"It’d be wrong to lay the blame for Apple’s recent slowdown squarely on China," said Hargreaves Lansdown equity analyst George Salmon. "Longer replacement cycles, higher prices and limited innovation are all factors.
"Faced with this cocktail of headwinds, it’s at best unfortunate timing that Apple has chosen now to omit the number of iPhones sold in the last quarter from its results – previously one of its most important metrics."
Apple made the change to its reporting model after publishing last quarter, arguing that its overall revenue is too varied across the different verticals for specific unit sales to be a valuable metric.
Investing.com senior analyst Haris Anwar noted the lack of any major negative surprises from Apple this quarter, adding: "This outcome supports an argument that growing services sales can help the company and its share price when iPhone sales are declining. Apple’s gross margin in its services segment, released for the first time, is too strong to ignore."
Cook continued to downplay Apple’s future success in the results, saying revenue for its second quarter would also likely miss current estimates.
Apple now expects revenue between $55bn and $59bn for the quarter ending in March, largely below the average estimate of $58.8bn.
It is the first of several big tech firms to report results this week. Facebook, Microsoft and Tesla are all scheduled to disclose earnings tomorrow night, and Amazon will close out the week on Thursday evening.