Apple Earnings Beat in Q1 as iPhone Growth Returns

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© Reuters. Apple Earnings, Revenue Beat in Q1© Reuters. Apple Earnings, Revenue Beat in Q1

By Yasin Ebrahim – Apple (NASDAQ:) reported earnings that topped analyst expectations as a new slate of phones led to a revival in iPhone sales during the fiscal first quarter.

Shares rose a little more than 1% after hours.

The company reported earnings per share of $4.99 on revenue of $91.82 billion. Analysts polled by forecast EPS of $4.54 on revenue of $88.38 billion.

That was in comparison with EPS of $4.18 on revenue of $84.31 billion in the same quarter a year before. Apple had announced EPS of $3.03 on revenue of $64.04 billion in the prior quarter.

The earnings beat comes as iPhone sales returned to growth, while services grew slower than expected in the quarter.

IPhone revenue rose 7.6% to $55.96 billion from a year earlier, topping estimates of $51.2 billion.

“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for services and wearables,” said Tim Cook, Apple’s CEO. “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”

Revenue for the company’s fast-growing services segment, which includes Apple (NASDAQ:) Music, Apple Pay and iCloud storage – rose 17% to $12.7 billion from a year earlier, compared with estimates of $12.8 billion.

“With growth for iPhones reviving and Apple’s services business showing strong expansion, investors have become confident about the company’s prospects. For the first time since 2011, shares of the iPhone maker have been trading at a higher price-earnings ratio than the ,” analyst Haris Anwar said.

Apple’s wearables, home and accessories category – previously called other products – grew revenue 37% to $10 billion from the year-ago period, above estimates of $9.7 billion.

Revenue for the iPad grew 17% and revenue for the Mac grew 9%.

Looking ahead, the company guided fiscal second-quarter revenue in the range of $64 billion and $67 billion, compared with Wall Street estimates of $58.83 billion.

Gross margin was guided within a range of 38% to 39% compared with estimates of 38.2%.

“Apple’s push to expand its sales from services is clearly succeeding, while growth from iPhones is coming back,” Anwar said. “This powerful combination justifies the stock’s current valuation and its future growth potential. Any post earnings weakness, in our view, should be taken as a buying opportunity.”

Apple is up 8.19% from the beginning of the year, still down 1.74% from its 52-week high of $323.32 set on January 24.

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