Apple Excels Amid COVID-19... Wearables and Services Sales Reach All-Time High

iPhone, Mac, and iPad Sales Decline Year-on-Year
Wearables and Services Sales Provide Defense, Achieving Record Highs
No Q2 Earnings Forecast Reflecting COVID-19 Impact

Tim Cook Apple CEO

[Asia Economy Reporter Han Jinju] Despite the spread of the novel coronavirus infection (COVID-19), Apple posted solid results that belied market concerns. Although production facilities in China were shut down and sales of flagship products such as iPhone, iPad, and Mac declined, sales of services and wearables reached record highs.

On the 1st (local time), Apple's Q1 revenue was $58.3 billion (approximately 71 trillion KRW), operating profit was $12.9 billion (approximately 15.7251 trillion KRW), and net profit was $11.2 billion (1.36528 trillion KRW). Revenue increased by $300 million compared to the same period last year and exceeded Wall Street expectations ($54.7 billion). Net profit decreased by 2% compared to last year. iPhone sales were $28.96 billion, down 6.7% year-over-year. iPad ($4.4 billion) and Mac ($5.4 billion) sales decreased by 10% and 2.9%, respectively.

CEO Tim Cook explained, "In China, demand sharply declined in February, slightly improved from March, and got better in April. Globally, sales hit their lowest point in March, but demand for devices needed for employees and students to learn and work from home has increased, leading to a gradual recovery."

Although hardware sales declined, Apple's wearables and services sales reached record highs. Service sales, including the App Store and Apple TV, increased by 17% from last year to $13.3 billion. As COVID-19 spread, people spending time at home purchased games from the App Store and opened their wallets for content consumption such as Apple TV Plus.

Accessory sales, including Apple Watch, AirPods, and HomePod, also rose 23% year-over-year to $6.3 billion. Apple's accessory sales surpassed Mac and iPad sales. The Apple Watch continues to show popularity among users who did not previously own one. Among Q1 Apple Watch buyers, 75% were first-time Apple Watch owners.

Tim Cook stated, "Despite the unprecedented impact of COVID-19, we are proud that Apple's wearables and services sales have reached an all-time high." Apple expects that in the June quarter, when the impact of COVID-19 fully materializes, iPhone and wearable product sales will decline year-over-year, but iPad and Mac sales are expected to improve.

Concerns remain about Q2 results, which fully reflect the impact of COVID-19. Apple did not provide Q2 earnings guidance, and it is difficult to gauge how far COVID-19 will affect results. Although Chinese factories have resumed operations, the launch of the iPhone 12 series, scheduled for the second half of the year, is expected to be delayed by more than a month.

CEO Tim Cook said, "Production facilities temporarily stopped in February but returned to normal in March. Due to quarantine and lockdown measures implemented worldwide over the past three weeks, demand has decreased, so we will not announce revenue forecasts for the next quarter."

This content was produced with the assistance of AI translation services.