UPDATED throughout with details from the earnings call: Apple handily beat Wall Street’s expectations in its fiscal second quarter, thanks to double-digit gains in its services business, wearables and iPhone revenue.
The company reported quarterly earnings per share of $2.73, up 30% from a year ago and exceeding consensus analyst estimates of $2.67. Quarterly revenue rose 16% to $61.1 billion, topping projections of $60.82 billion.
Investors have worried about soft sales of the flagship iPhone X, which was the first smartphone to break the $1,000 barrier, and sales in the company’s third-largest market, China.
Apple CEO Tim Cook sought to allay those concerns in a statement ahead of the company’s investor call.
“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,” Cook said. “We also grew revenue in all of our geographic segments, with over 20% growth in Greater China and Japan.”
Apple CFO Luca Maestri announced a $100 billion share repurchase authorization and a 16% increase in quarterly dividend. This is the largest increase in dividend since the company re-introduced a dividend in August 2012, Maestri said.
Investors reacted positively to the report, driving Apple’s stock up nearly 4% to $175.42 in after-hours trading.
Apple said it sold 52.2 million iPhones, up a slight 3% from a year ago and just shy of projected sales of 52.4 million units in the quarter. Revenue rose 14% year over year, suggesting consumers are buying the pricier 10th anniversary iPhone.
“This is the first cycle in which the top-line iPhone model has also been the most popular,” Cook told investors.
As if emphasize consumers really, really like the iPhone X, Cook described the device as “beloved,” even if its appeal is under-appreciated. “It’s one of those things, like the team wins the Super Bowl, maybe you’d want them to win by a few more points, but it’s a Super Bowl winner.”
The services segment, which includes iTunes and the mobile payment service Apple Pay, rose to $9.1 billion, a surge of 31% from a year ago. Cook said the company posted record revenue from the App Store and saw the number of Apple Pay users double, while transactions tripled.
Paid subscriptions rose to 270 million, a gain of 100 million from a year ago.
Sales of products in the “other” category of products, which includes the Apple Watch, AirPods, the HomePod and Beats products, grew 38% in the quarter to nearly $4 billion.
Cook said the wearables category has been particularly strong, with revenue surging 50% from year earlier. He said AirPods are particularly popular, and the company is scrambling to keep up with “the incredible demand.”
Sales of iPads were up 6% from a year ago and Mac sales were essentially flat.
Apple said it will complete the execution of the previous $210 billion share repurchase program in its third fiscal quarter.