In an unusual investor call, Apple reports flat quarterly earnings amid COVID-19

CEO Tim Cook talked at least as much about COVID-19 efforts as the business itself.

Samuel Axon – Apr 30, 2020 10:49 PM | 132

Despite disruptions to both supply and demand caused by the global COVID-19 pandemic, Apple posted $58.3 billion in revenue in its second quarter, eking out 1 percent growth over last year's second quarter.

This beat some recent expectations by investors, but it falls well behind the $63-67 billion guidance for the quarter the company initially gave before the coronavirus's effects were fully felt. Apple's retail stores have been closed around much of the world, and for a period of time earlier this year, its ability to assemble iPhones and other products was hampered as the virus first spread in China.

CEO Tim Cook spoke optimistically about the company's long-term prospects on a call with investors today, but in a break with common practice, Apple did not provide guidance for the next quarter, citing the inability to predict the pandemic's future impact. "We have great confidence in the long term of our business," Cook said. "In the short term, it's hard to see out the windshield to know what the next 60 days look like, and so we're not giving guidance because of that lack of visibility and uncertainty." The next quarter includes the month of April, so the it's possible some of the pandemic's effects will be felt more strongly then.

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The tentpole achievement of this quarter was $13.3 billion in services revenue, up $2.2 billion compared to the same quarter a year ago. Services include things like Apple Music, the App Store, iCloud, AppleCare, Apple TV+, Apple Arcade, and Apple News. Along with wearables, services have been the company's primary focus in a strategy to make up for slowing iPhone revenue growth.

iPhone revenue was $28.96 billion, wearables pulled in $10.01 billion, Mac $5.35 billion, and iPad $4.36 billion. Apple executives noted that a significant portion of Mac buyers are new to the platform and that the company's overall global install base has reached a new high.

Speaking of the company's financials amidst the pandemic, Cook said, "There was a significant, very steep fall-off in February. That began to recover some in March, and we've seen further recovery in April. So, it leaves us room for optimism."

It felt as if he spent at least as much time on the call talking about efforts by the company to combat the pandemic directly as he did discussing the business. That included the design and mass-production of face shields, the sourcing of protective masks, 2:1 donation matching for employees, and other initiatives. He spoke briefly about Apple's commitment to contribute $350 billion to developing the US economy. Also, Apple is proceeding with plans to buy back more of its stock from investors with its considerable cash reserves.

It was an unusual earnings call for an unusual time. Cook seemed to think so, too. "It was a very unique quarter," he said. "I've never had anything quite like this. I hope to never have it again, but I'm incredibly proud of the company and what was achieved during that period of time."

Apple's stock was down several points in after-hours trading following the call.