(Bloomberg)—Apple Inc. reported quarterly revenue that grew 0.5% but didn’t provide a forecast for the first time in more than a decade, sparking concern that performance will suffer later this year.
CEO Tim Cook said Apple experienced a “very depressed” period in late March and early April, in the depths of the COVID-19 pandemic, but it saw a “pickup” in the second half of this month. Total sales for the second fiscal quarter ending March 28 hit $58.31 billion, compared to $58.02 billion the prior year. For the first half of the fiscal year, sales reached $150.13 billion, up 5.5% from $142.33 billion during the same period the prior year. While Apple didn’t disclose ecommerce revenue, Cook said the company was able to maintain growth because of strong online demand.
iPhone revenue was $28.96 billion, down 7%, but also topping analysts’ expectations. Services sales jumped 17% to $13.35 billion, while the wearables and accessories business climbed 23% to $6.28 billion.
“The last part of March and the first part of April were very depressed and then we’ve seen a pickup relative to that period of time in the second half of April,” Cook said in an interview with Bloomberg News. “I would attribute that partially to the new products that we were able to launch at end of March and early April, the economic stimulus and probably some level of people getting a bit more used to that this is going to last a little while.”
The Cupertino, California-based technology giant did not provide guidance for its June quarter due to the ongoing complications from COVID-19.
“It just spooks people about just how bad the second quarter is going to be,” said Mike Walkley, an analyst at Canaccord Genuity.
During a conference call, chief financial officer Luca Maestri suggested that challenges continue in the current quarter.
“On iPhone and wearables, we expect the year-over-year revenue performance to worsen in the June quarter relative to the March quarter,” he said. “On iPad and Mac, we expect the year-over-year revenue performance to improve.”
Apple has been uniquely impacted by the coronavirus pandemic. In late January, many of its Asia-based suppliers and manufacturers ground to a halt as part of efforts to curb the spread of COVID-19. That resulted in shipping delays for devices and supply constraints. Around that time, it closed all 42 retail stores in China, a key source of revenue for the company, then shut its other retail locations. It’s still waiting to reopen most of them.
In January, the company had projected fiscal second-quarter sales of between $63 and $67 billion, but it pulled the guidance in February as the pandemic starting spreading outside of China.
On Thursday, Maestri said digital content services, such as Apple TV+ and Music, will remain strong, but that the AppleCare warranty business and revenue from advertising deals would again dip. App Store revenue grew double digits in the fiscal second quarter, with paid subscriptions topping 550 million, he noted.
“Our active installed base of devices reached an all-time high in all of our geographic segments and all major product categories,” the CFO said. “We are confident in our future and continue to make significant investments in all areas of our business.”
Apple is also sticking to its merger and acquisition strategy, Maestri said, while reiterating a pledge to invest $350 billion in the U.S. economy in coming years.
Apple’s sales in China during the quarter dipped by about $760 million, with increases reported in Europe and Asia Pacific outside of China. The company reported slight annual sales declines in the U.S. and Japan. It launched some new products in the quarter, including the new iPad Pro and a pair of Macs, but the iPhone SE’s debut was delayed about a month into the current quarter.
Cook said Apple’s China-centric supply chain showed strength, but that the company would still investigate tweaks to its processes after the pandemic.
The virus is also impacting efforts to build future products. The company’s four upcoming redesigned iPhones with 5G will launch multiple weeks later than usual, but still by November, Bloomberg News has reported.
Cook said some parts of Apple are more productive when employees work from home, while some are less productive.
Apple, No. 2 in the 2020 Digital Commerce 360 Top 1000, did not break out ecommerce sales.
In other earnings news:
- 1-800-Flowers.com Inc. (No. 66) reported a 13.5% increase in ecommerce revenue for the third fiscal quarter ending March 29, up to $231.9 million from $204.4 million during the same period last year. For the first nine months of the fiscal year, ecommerce revenue hit $848.0 million, up 8.6% from $780.9 million last year. On a call with investors, chief financial officer William Shea said ecommerce strength will help the flower and gift retailer weather reductions in wholesale revenue that result from the COVID-19 pandemic. Total revenue for the quarter grew 12.2% to $278.8 million from $248.4 million.
- Overstock.com Inc. (No. 43) reported a 6.3% decline in its retail sales, which all take place online. Revenue from its retail division dropped to $339.6 million from $362.6 million for its first fiscal quarter ended March 31. Total revenue declined 4.4% to $351.6 million from $367.7 million the prior year. However, buying related to COVID-19 helped push April retail sales up 120% over the previous year.
- Blue Apron (No. 122) reported shrinking sales for the first fiscal quarter ending March 31. Revenue declined 28.2% to $101.9 million from $141.9 million during the same period last year. The quarterly loss widened to $20.1 million compared with $5.3 million a year earlier. While orders are up 8.7% from Dec. 31, they were 29.0% below the levels seen in the period ended March 31, 2019.