Despite Declining Smartphone Demand, iPhone Performs Well... Apple Surprises with Strong 2Q Results

by Jeong Hyunjin

Published 29 Jul.2022 08:24(KST)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Apple, the iPhone manufacturer, exceeded Wall Street expectations in performance from April to June this year. Despite concerns about an economic recession causing the smartphone market to freeze, Apple's flagship product, the iPhone, sold unexpectedly well, leading to results that surpassed expectations.

According to CNBC and others on the 28th (local time), Apple announced in its earnings report that its revenue for the third quarter of fiscal year 2022 (April to June) was $83 billion (approximately 108 trillion won), a 2% increase compared to the same period last year, while net profit was $19.4 billion, down 10.6% year-over-year. Both revenue and net profit exceeded market expectations.

iPhone-related revenue in the second quarter was recorded at $40.67 billion, significantly surpassing market forecasts of $38.33 billion. Initially, analysts expected iPhone sales to decline by 2.5%, but instead, they increased by 2.8%. Apple CEO Tim Cook said, "Our data shows no evidence that macroeconomic factors are affecting iPhone sales."

Luna Bogorad, an analyst at Canalys Research, said that Apple has many brand-loyal consumers, allowing it to better handle reduced consumer spending due to the recession compared to other brands, adding, "Apple has resilience that is less affected compared to other competitors."

Looking at other products, iPad sales also exceeded market expectations, recording $7.22 billion in the second quarter. However, Mac computer sales in the second quarter were $7.38 billion, significantly below market expectations of $8.7 billion, and down 10% compared to the same period last year. Additionally, sales of wearables and digital services fell short of market expectations.

Apple did not provide earnings guidance for the fourth quarter of fiscal year 2022 (July to September) citing economic uncertainty. According to The Wall Street Journal (WSJ), while the market expects Apple to post record-breaking results surpassing last year, attention has been focused on whether factors such as the strong US dollar, inflation fears, chip shortages, and China's COVID-19 prevention measures will impact performance.

CEO Cook said that while there are some signs of economic slowdown overall, revenue growth is expected to accelerate in the September quarter (July to September).