Why did revenue decline if Services grew so strongly?

Products revenue fell about $7.0B year over year, driven by lower iPhone, iPad, and Wearables sales. Services growth of about $3.0B only partially offset that decline, so total net sales fell 4% to $90.8B.

Is the dividend increase sustainable?

The dividend rose 4% to $0.25 per quarter. Six-month dividend payments of $7.5B are small relative to $62.6B of operating cash flow, suggesting ample coverage, though the payout depends on continued cash generation from the product business.

What does the new $110B buyback mean for shareholders?

The authorization is additive to existing programs and signals management's view that the shares are attractively valued. Repurchases of $43.3B in the first half show the pace at which Apple has been retiring shares, which supports per-share earnings even when total net income is flat.

Why was net income down while EPS held steady?

Net income fell to $23.6B from $24.2B, but the share count dropped about 2.4% year over year from ongoing buybacks. That reduction in shares outstanding kept diluted EPS at $1.53.

What are the main risks highlighted in the release?

The forward-looking statements cite macroeconomic and geopolitical conditions, competition and reliance on third-party suppliers, information security and system failures, and legal or regulatory actions. Greater China weakness and the hardware slowdown are the most concrete near-term concerns in these results.

AAPL 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 2, 2024. Cited figures are marked; the original filing is the authoritative source.

Apple's fiscal Q2 2024 results (quarter ended March 30, 2024) showed total net sales of $90.8 billion^a, down 4% year over year from $94.8 billion, and diluted EPS of $1.53, flat with the prior year's $1.52 rounded up from $1.52 to $1.53 on a per-share basis.

The headline strength was Services, which reached a new all-time quarterly record of $23.9 billion^b, up roughly 14% year over year, and now offsets much of the softness in hardware. Products revenue fell about 10% to $66.9 billion, led by a roughly 10% decline in iPhone sales to $46.0 billion and a sharper drop in iPad (down about 17%). Gross margin dollars rose to $42.3 billion from $42.0 billion, and operating income was roughly flat at $27.9 billion, as the mix shift toward higher-margin Services helped offset lower product volumes.

Capital return remained a central part of the story. Management authorized an additional $110 billion^c share repurchase program and raised the quarterly dividend 4% to $0.25 per share, payable May 16, 2024, marking the twelfth consecutive year of dividend increases. Six-month repurchases totaled $43.3 billion and dividends paid were $7.5 billion, both funded comfortably by $62.6 billion of operating cash flow.

The balance sheet strengthened, with shareholders' equity rising to $74.2 billion^d from $62.1 billion and total cash plus marketable securities of roughly $162 billion against total debt of about $104 billion, though commercial paper and term debt both declined. Investors should weigh the Services growth and disciplined capital return against continued hardware revenue pressure, particularly in Greater China (down about 8%) and iPhone.

The company launched Apple Vision Pro during the quarter and previewed an upcoming product announcement and WWDC, which management presented as future growth catalysts. Note that the filing itself is a press release furnished under Item 2.02, and the results are unaudited.

02—Key points

Key Highlights

Total net sales of $90.8B, down 4% YoY; diluted EPS of $1.53 versus $1.52 a year earlier
Services revenue hit an all-time record of $23.9B, up about 14% YoY, now a major earnings stabilizer
Products revenue declined about 10% to $66.9B, with iPhone down about 10% and iPad down about 17%
Greater China revenue fell about 8% to $16.4B, a notable regional weak spot
Board authorized an additional $110B share repurchase program and raised the quarterly dividend 4% to $0.25 per share
Six-month operating cash flow of $62.6B comfortably covered $43.3B of buybacks and $7.5B of dividends
Shareholders' equity rose to $74.2B; cash and marketable securities of about $162B exceed total debt of about $104B

03—Questions

Frequently Asked Questions

Why did revenue decline if Services grew so strongly?
Products revenue fell about $7.0B year over year, driven by lower iPhone, iPad, and Wearables sales. Services growth of about $3.0B only partially offset that decline, so total net sales fell 4% to $90.8B.
Is the dividend increase sustainable?
The dividend rose 4% to $0.25 per quarter. Six-month dividend payments of $7.5B are small relative to $62.6B of operating cash flow, suggesting ample coverage, though the payout depends on continued cash generation from the product business.
What does the new $110B buyback mean for shareholders?
The authorization is additive to existing programs and signals management's view that the shares are attractively valued. Repurchases of $43.3B in the first half show the pace at which Apple has been retiring shares, which supports per-share earnings even when total net income is flat.
Why was net income down while EPS held steady?
Net income fell to $23.6B from $24.2B, but the share count dropped about 2.4% year over year from ongoing buybacks. That reduction in shares outstanding kept diluted EPS at $1.53.
What are the main risks highlighted in the release?
The forward-looking statements cite macroeconomic and geopolitical conditions, competition and reliance on third-party suppliers, information security and system failures, and legal or regulatory actions. Greater China weakness and the hardware slowdown are the most concrete near-term concerns in these results.

04—Continue

← View all 8-K filings