Apple's Record Services Revenue and $90 Billion Stock Buyback Lead to Profit Increase

On May 05, 2023, Apple (AAPL) released its first-quarter earnings report, which revealed an all-time high for services revenue and iPhone sales, exceeding analyst expectations. The company's services segment, which includes the App Store and Apple Music, generated $17.5 billion in revenue, up from $16.9 billion in the previous quarter.

In addition, Apple announced a $90 billion stock buyback program, which boosted investor confidence and sent the stock up by 0.72% in after-hours trading. The buyback program is the largest in Apple's history and is part of the company's plan to return cash to shareholders.

Apple's strong earnings report comes at a time when the company is facing increasing competition in the smartphone market from rivals such as Samsung and Huawei. However, the company's strong brand and loyal customer base have helped it maintain its position as one of the world's most valuable companies.

Key TakeAways 

• Quarterly revenue came in at $94.8 billion, which was down 3% year-on-year.

• IPhones sales and services revenue set records.

• Apple's $90 billion share repurchase was in line with analyst expectations. {alertSuccess}

The most valuable company in the US reported its second quarter earnings with quarterly revenue of $94.8 billion, down 3% year over year. Earnings per share, unchanged from a year ago, came in at $1.52. Net income of $24.16 billion beat forecasts of $22.62 billion, while analysts had expected $1.43 per share.

Apple's services segment reported sales of $20.9 billion, up from $19.8 billion a year ago. This helped offset some of the decline in product revenue, which was down about $4.5 billion. Record iPhone sales of $51.3 billion were among the highlights in a difficult macroeconomic environment.

Apple's cash flow statement showed a gain of $874 million in its investing activities, after a loss of $25.3 billion in the same quarter last year. This boosted the company's second-quarter results because, unlike other tech firms, Apple isn't cutting costs, with operating expenses around $1 billion lower than in the same quarter last year. Apple has also bucked the trend of other tech giants, which have downsized workforces.

"We generated strong operating cash flow of $28.6 billion during the quarter, returning more than $23 billion to shareholders," said Apple CFO Luca Maestri. He also announced a 4% increase in the company's dividend to $0.24 per share, along with an additional $90 billion in share repurchases. The "buyback king" has repurchased $572 billion of its shares since 2012, compared to its closest rival, Alphabet, which spent $178.5 billion on stock buybacks.