This afternoon, Apple announced their earnings for the second quarter of their 2017 fiscal year. Revenue was up 5% year-over-year to $52.896 billion. Operating income for the quarter was up 6.6% to $14.097 billion, and net income was up just under 5% to $11.029 billion. This resulted in diluted earnings per share of $2.10.

Apple is also announcing they are expanding their capital return program, and the board has increased the capital return to shareholders another $50 billion, making the total program worth $300 billion in dividends and share repurchases by the time it wraps up in March 2019.

Apple Q2 2017 Financial Results (GAAP)
  Q2'2017 Q1'2017 Q2'2016
Revenue (in Billions USD) $52.896 $78.351 $50.557
Gross Margin (in Billions USD) $20.591 $30.176 $19.921
Operating Income (in Billions USD) $14.097 $23.359 $13.987
Net Income (in Billions USD) $11.029 $17.891 $10.516
Margins 38.9% 38.5% 39.4%
Earnings per Share (in USD) $2.10 $3.36 $1.90

iPhone is still far and away the biggest part of Apple, but sales for this quarter were relatively flat compared to the same period a year ago. For the quarter, Apple sold 50.763 million iPhones, down 1% from a year ago, but with higher average selling prices, revenue was up 1% to $33.249 billion for the quarter. Of course, last quarter was the iPhone refresh, and they sold 78.29 million iPhones last quarter, so the business isn’t exactly doing poorly, but iPhone is the device that has transformed Apple, so we’ll have to see how sales go over this calendar year.

Mac sales were strong though, considering the PC market. Mac had an increase in device sales of 4%, to 4.199 million units. With a new Mac Pro refresh, this is perhaps not as strong as expected, but revenue for the unit was up 14% to $5.844 billion, so they are making more per Mac sale.

Services seem to be the next big growth area for Apple, and with an install base of iPhones as high as it is, this is arguably a good way to capitalize on that base. Apple’s services segment, which includes revenue for digital content, AppleCare Apple Pay, licensing, and other services, had revenue growth of 18% to $7.041 billion. The difference with services compared to iPhone sales is that there isn’t the massive swing quarter to quarter either, with services only dropping 2% from Q1, compared to iPhone which dropped 39% from the holiday quarter.

The iPad continues its drop, and nothing Apple has done yet seems to have had any impact on this trend. iPad was down 12% in revenue year-over-year to $3.889 billion, and of course that’s still a huge amount of revenue, but when it has to compete against the iPhone it seems poorer than it is. In terms of device sales, Apple sold 8.922 million iPads this quarter, down 13% from a year ago where they sold 10.251 million.

Apple Q2 2017 Device Sales (thousands)
  Q2'2017 Q1'2017 Q2'2016 Seq Change Year/Year Change
iPhone 50,763 78,290 51,983 -35% -1%
iPad 8,922 13,081 10,251 -32% -13%
Mac 4,199 5,374 4,034 -22% +4%

Other products, which is where Apple puts Apple TV, Apple Watch, Beats, iPod, and accessories, actually had a solid quarter, with revenue up 31% to $2.873 billion. Apple never breaks down the individual parts of this though, which is understandable, but unfortunate.

Apple is forecasting revenue for Q3 to be between $43.5 and $45.5 billion, with a gross margin of 38% plus or minus 0.5%.

Source: Apple Investor Relations

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  • osxandwindows - Tuesday, May 2, 2017 - link

    What a fail. Wall street told me so.

    Jokes aside, it is good that they're starting to depend less and less on the iPhone for driving revenue.

    I wunder if mac revenue had anything to do with the surface's decline.
  • goatfajitas - Wednesday, May 3, 2017 - link

    Amazing piles o cash... but am I the only one that notices tech sites like this tend to gush an odd amount over Apple's earnings? Could it be that for the past 5+ years their earning are fare more interesting than their products?
  • A5 - Wednesday, May 3, 2017 - link

    The earnings of the world's largest company are an interesting thing to analyze, and Apple only does 2-3 product launches a year for them to cover.
  • goatfajitas - Wednesday, May 3, 2017 - link

    If you say you find it interesting I cant disagree, but they definitely aren't the worlds largest company. Not even remotely close to it. They aren't even close to being the largest tech company. Most profitable yes, but not large at all. They make toys.
  • A5 - Wednesday, May 3, 2017 - link

    You're using a non-standard definition of "largest" then.

    Their market cap as of yesterday night was $774B, which is more than double Exxon Mobil (who is #7). They're $130B ahead of Alphabet, who is #2.
  • goatfajitas - Wednesday, May 3, 2017 - link

    Pretty sure "large" is a term used to measure size or volume, not profit. Apple isnt large, they are highly profitable.
  • vanilla_gorilla - Wednesday, May 3, 2017 - link

    "Largest company by market cap" is a pretty standard term, try Googling it. Market cap determines the value of a business (number of shares * share price) which makes Apple far and away the most valuable (or "largest") business on the planet.
  • goatfajitas - Wednesday, May 3, 2017 - link

    "Largest company by market cap" was not the term used, but okeedokee, however you want to slice it... Anyhow my point above is that I find it odd on tech sites that financial reports alone are a news item.
  • Torrijos - Wednesday, May 3, 2017 - link

    Reporting on the leanest and Tech company with the best ROI?

    Should they be speaking about Larger companies that despite their size haven't achieved as much? If we believe in market forces and the power of money Apple has to be covered, then maybe you should also wonder how a smaller firm, with less investments seems to be able to outperform others? Again, lean and performant.

    I'll give you a reason to follow it...
    When such big pockets pursue a technology, or abandon it their influence can be decisive.

    Let's say that tomorrow Apple invest that cash to buy and keep for themselves a memory chip company.
    You will still have an SSD to buy, unfortunately the company developing that part will have billions of dollars less to invest and research the next steps, Apple keeping whatever advances they would be making (by financing them) for themselves.

    Chances are this is going to happen for memory, mobile GPU etc.
  • goatfajitas - Wednesday, May 3, 2017 - link

    "Should they be speaking about Larger companies that despite their size haven't achieved as much? "
    They should be speaking about products. Or tech advances, or even in the terms of your post above, that memory chip or SSD that may come. Actual tech.

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