Apple's earnings report surprises investors

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Credit: REUTERS/Mike Segar

Apple yesterday released its earnings report for the June quarter, and investors were left pleasantly surprised. Even though overall revenue and iPhone sales were down year over year, the decline wasn't nearly as bad as many analysts and investors were anticipating. As a result, shares of Apple jumped up nearly 7 percent in after-hours trading on Tuesday.

As for the nitty-gritty details, Apple during the June quarter generated $42.4 billion in revenue while enjoying a quarterly profit of $7.8 billion. By way of contrast, Apple in the same quarter a year ago posted revenue of $49.6 billion and a profit of $10.7 billion.

"We are pleased to report third-quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” Apple CEO Tim Cook said in a press release. “We had a very successful launch of iPhone SE, and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”

Looking out across Apple's product line, here's how Apple's quarter shaped up: iPhone sales checked in at 40.3 million units, representing a 15 percent year-over-year decline. Mac sales came in at 4.2 million units, representing a 11 percent year-over-year decline. And the iPad registered 9.95 million unit sales, a figure that surprised analysts but still came in 9 percent lower than it did during the company's June 2015 quarter.

That aside, Apple's services category performed remarkably well.

“Our Services business grew 19 percent year over year," Apple CFO Luca Maestri said, "and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record."

Driving the point home, Cook added during Apple's earnings conference call that Apple's services category was poised to become more lucrative than some Fortune 100 companies by next year.

Lastly, one of the more interesting talking points from Apple's earnings conference call is that the number of iPhone switchers coming over from Android and other platforms reached an all-time high last quarter.

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