Apple Beats 2019 Q2 Earnings by One Percent

By Chand Bellur

May 2, 2020 at 3:25 p.m. PT

  • Apple boosted 2020 Q2 revenues by one percent compared to the same quarter last year.
  • Despite the novel coronavirus pandemic, Apple has grown revenues.
  • Foreign markets accounted for 62% of Apple’s Q2 revenues.

Apple Grows 2020 Q2 Revenues Despite Global Pandemic

According to the head of the World Bank, David Malpass, the COVID-19 pandemic is the greatest shock to the global economy since the Great Depression, almost 100 years ago. According to Malpass:

“This is a huge problem. The world recession will be deep, and that especially impacts poorer countries.”

Despite this sudden, massive economic downturn, Apple managed to grow revenues by a meager 1%. Although this is a slight increase, it takes place during the most challenging economic times in a century.

Services are key to Apple’s profitability. As the Cupertino tech giant experienced declining iPhone sales, they entered into businesses previously ignored. Music and video streaming services were around for a decade before Apple entered the fray.

They correctly assessed that consumers don’t care about originality and which company created the first streaming service. Instead, consumers will go with the most convenient option — whatever pops up on their iPhone. Apple’s one billion users view incessant appeals to subscribe to Apple Music, Apple TV+, and other services. Competitors like Spotify can’t even get a foot in the door in the Apple ecosystem.

Stay-At-Home Orders Boost Apple Subscription Services

Apple has a captive audience. They can offer services to device owners before competitors even have a chance. Additionally, with stay-at-home orders, people have nothing to do but watch TV and listen to music. Apple’s pivot to services came at an opportune time. If the company relied solely on iPhone revenues, their stock would have taken a nose-dive long ago.

According to the earnings conference call, Apple News grew to include 125 million monthly active users. This gain coincides with a 3% decline in product revenues. According to Luca Maestri, Apple’s services revenues grew by 17% compared to Q2 2019, bringing in $13.3 billion in total revenues for the quarter. Services accounted for 65.4% of total earnings for Q2 2020.

Expanding Services to More Nations Boosts Revenues

Global expansion is key to Apple’s revenue growth. Just recently, Apple expanded Apple Music, Apple Arcade, the App Store, and other services to more nations in Africa, Asia, Europe, and other continents.

This expansion doesn’t account for Apple’s Q2 2020 revenue increase. Apple expanded into these nations after the second fiscal quarter came to a close. If anything, it should augment Apple’s service revenues in Q3.

The fact remains, however, that international sales accounted for 62% of Apple’s quarterly revenues. After all, most of the world’s population is outside of the United States. As Apple expands into more nations, expect to see both device sales and services flourish.

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