Apple Inc. AAPL shares are solidly higher after the tech giant announced fiscal-year 2021 second-quarter results that exceeded expectations, thanks to better-than-expected iPhone revenues, record contribution by the Services segment and strong showing by the key Greater China region.
The company's board authorized a dividend increase and increased share repurchase authorization.
Apple's Key Q2 Numbers: Apple reported second-quarter earnings per share of $1.40, up from the year-ago 64 cents. Revenues climbed 54% year-over-year from $58.3 billion to $89.6 billion.
The consensus estimates had called for EPS of 99 cents on revenues of $77.35 billion.
In the previous quarter that encompassed the key holiday selling season, Apple reported EPS of $1.68 and revenues of $111.4 billion.
International sales accounted for 67% of the total revenues in the second quarter compared to 64% in the previous quarter.
Gross margin came in at 42.5%, up from 39.8% in the previous quarter.
Operating cash flow was at $24 billion.
"We are proud of our March quarter performance, which included revenue records in each of our geographic segments and strong double-digit growth in each of our product categories, driving our installed base of active devices to an all-time high," said Luca Maestri, Apple's CFO.
Apple's Q2 Segmental Revenues: Apple's flagship product - iPhone - generated $47.94 billion, or 53.5% of the total revenues. iPhone revenue rose 65% year-over-year but was down 26.9% from the seasonally strong first quarter.
"5G enthusiasm will grow in the back half of the year, starting a two to three-year iPhone upgrade cycle," Loup Ventures' Gene Munster said in a recent note. He had modeled iPhone revenues of $41.2 billion for the quarter.
- Mac revenues were $9.10 billion, up 70% year-over-year. It accounted for 10.2% of the total revenues.
- iPad and wearable, home and accessories revenues came in at $ 7.81 billion and $7.84 billion, respectively.
- Services revenues rose 26.6% to $16.90 billion, contributing 18.9% to the topline.
Geographically, revenues from Americas were at $34.31 billion, or 38.3% of the total revenues. This segment saw year-over-year revenue growth of roughly 35%. Europe and Greater China contributed $ 22.26 billion and $17.73 billion, respectively to total revenues. These regions witnessed year-over-year revenue growth of 55.8% and 87.5%, respectively.
Japan and the rest of Asia chipped in with revenues of $ 7.74 billion and $7.75 billion, respectively.
Apple Dividend, Buyback: Apple's board announced a 7% increase in cash dividend to 22 cents per share, with the dividend payable on May 13, to shareholders of record as of May 10.
The board also authorized a $90 billion increase to the company's existing share repurchase program.
Apple's Outlook: Analysts, on average, expect Apple to report third-quarter EPS and revenues of 82 cents and $68.94 billion, respectively.
For the fiscal year 2021, the Street is modeling EPS of $4.46 and revenues of $334.29 billion.
Apple Stock: Apple shares ran up to a record high of $145.09 on Jan. 25 ahead of the company's first-quarter results. The stock pulled back subsequently, dropping to a low of $116.21 in early March amid the tech sell-off.
The stock has recovered since and is marginally higher for the year-to-date period.
Munster expects accelerating digital transformation to continue to be a tailwind for Apple's revenue growth for the next several years.
"We expect this summer the company will preview its mixed reality goggles and, over the next couple of years, offer hardware subscription offerings that build toward a 360° bundle, along with eventually addressing the massive opportunity around autonomy with Apple Car, the analyst said.
Reacting to the quarterly results, Apple shares were up 3% at $137.59.
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