Where better to get a little 'color' on Apple's earnings than from a full transcript of the company's earnings call with Wall Street analysts published by Six Colors? As in the past, Jason Snell has transcribed Apple's presentation to Wall Street analysts along with the question and answer session at the end of the call. Here are a few of the highlights:
The iPad made a strong showing in China with Cook reporting that:
For iPad, we were very happy to return to growth in Greater China, while generating strong double-digit growth in each of our other geographic segments. Our great iPad results were driven primarily by strong customer response to iPad Pro.
Apple reported strong wearables sales with $5.1 billion in sales. Regarding the new AirPods Tim Cook said:
Last month we introduced new AirPods, the second generation of the world’s most popular wireless headphones, and demand has been incredible. This is nothing less than a cultural phenomenon.
On the Apple Watch Cook commented that:
Apple Watch is the best selling and most loved smartwatch in the world, and produced its best results ever for a non-holiday quarter. It’s reaching many new customers, with three-quarters of purchases going to customers who have never owned an Apple Watch before.
CFO Luca Maestri added about the AirPods that:
Interest in AirPods has been off the charts and we're working hard to catch up with the incredible customer demand.
Services were a focus of Apple's presentation too. Cook highlighted the forthcoming Apple Arcade, Apple TV+, and News+ services in his remarks:
As you know, gaming is the top category on the App Store. And so the Apple Arcade will serve some of that market, and it serves it with a different kind of game, which we think will be great for developers and great for users. The TV+ product plays in a market where there’s a huge move from the cable bundle to over-the-top. We think that most users are going to get multiple over-the-top products and we’re going to do our best to convince them that the Apple TV+ product should be one of them. And then we’re working very hard to get everyone to give Apple News+ a look because we think it’s a very unique product, and I love magazines, and we have really wanted to support the publishers.
Cook also said that Mac sales would have been better but were held back by processor supply constraints:
For our Mac business overall, we faced some processor constraints in the March quarter, leading to a 5 percent revenue decline compared to last year. But we believe that our Mac revenue would have been up compared to last year without those constraints, and don’t believe this challenge will have a significant impact on our Q3 results.
Asked about the recent settlement of litigation between Apple and Qualcomm, Cook said:
We’re glad to put the litigation behind us and all the litigation around the world has been dismissed and it’s settled. We’re very happy to have a multi-year supply agreement and we’re happy that we have a direct license arrangement with Qualcomm which was I know important for both companies, and so we feel good about the resolution.
Coming off of Apple's surprisingly poor showing in Q1 2019, Wall Street seems to be initially pleased with Q2's results based on the stock's 5% jump in after-hours trading.