Apple reported holiday-quarter revenue that beat Wall Street expectations on rebounding iPhone demand and surging sales of wearable devices. The results marked a remarkable comeback from a year ago, when the most valuable technology company missed its own targets.
A sales forecast for the current quarter also exceeded analysts’ projections, sending Apple shares up more than 2% in extended trading.
The Cupertino, Calif.-based company reported $91.8 billion in revenue for the fiscal first quarter, up 9% from a year earlier. Wall Street was looking for $88.4 billion, according to data compiled by Bloomberg. Profit was $4.99 a share, also beating analysts’ expectations.
For the fiscal second quarter, Apple said sales will be between $63 billion and $67 billion. Analysts estimated $62.3 billion, on average.
“The strength is coming from the iPhone and continued really strong growth in wearables and the App Store,” said Shannon Cross of Cross Research. “The iPhone was very strong.”
Apple shares have marched higher in recent months on increasingly bullish expectations for new iPhones, AirPods and revenue from iCloud storage, the App Store and other services. That elevated the stock’s valuation to the highest level in at least a decade, raising the bar for Tuesday’s results.
After years of rapid growth, Apple’s expansion has slowed as demand for smartphones waned and competition from Chinese rivals intensified. Under CEO Tim Cook, the company’s strategy has evolved. It now aims to sell new handsets to customers every three to five years, and then offer as many services and accessories as possible in the intervening years.
Analysts have been particularly excited about wearable accessories, such as the Apple Watch and AirPods.
However, the iPhone still generates the majority of Apple’s revenue. And this crucial business has improved from a dire performance in last year’s holiday period. The iPhone 11 and 11 Pro models were well received in their debut in the fall and demand in China has been particularly strong, outselling 2018’s releases in a market that has otherwise been shrinking.
Apple generated $56 billion in revenue from the iPhone in the fiscal first quarter, up 8% from a year earlier. That was a lot better than the 2018 holiday period, when sales of the handset dropped about 15%. Apple cut the price of its entry-level flagship iPhone by $50, luring buyers. There are also millions of older iPhones that are losing software support from the company, spurring new purchases.
Wearables and other accessories generated $10 billion in revenue in the holiday quarter, up 37% from a year ago.