Apple has guided for sales to increase 14% to 17% in the period, which runs through June.
That range trounced the 9.1% that analysts had anticipated on average, helping send the shares up nearly 4% in late trading.
The outlook bodes well for incoming Chief Executive Officer John Ternus, who takes the reins from Tim Cook on Sept. 1. Ternus appeared briefly on the conference call, saying he would maintain Cook’s “thoughtfulness, deliberateness and discipline” as CEO.
“We have an incredible road map ahead,” Ternus said. “This is the most exciting time in my 25-year career at Apple to be building products and services.”
Cook, who has run the Cupertino, California-based company for 15 years, will remain as executive chairman.
Apple has benefited from a series of new products launched in March, including the MacBook Neo, iPhone 17e, updated iPad Air models and a fresh MacBook Pro. The $599 Neo — Apple’s first major push into low-cost laptops — has been particularly popular and remains sold out at several retailers.
Total sales gained 17% to $111.2 billion during the fiscal second quarter, which ended March 28. Analysts had anticipated $109.7 billion on average. Apple itself had projected sales growth of 13% to 16%.
Apple signaled that it’s mostly coping with shortages and memory costs, but things will worsen over time. A memory crunch has rippled through the tech industry, forcing companies to boost prices and reduce output.
On the call, Cook said memory expenses would climb “significantly higher” this quarter, compared with more subdued increases in the March period. In the fourth quarter and beyond, he said, there would be an “increasing impact on the business.” He declined to disclose if Apple would raise prices.
Apple’s main supply constraints involve processors rather than memory chips. The impact has primarily hit the Mac mini and Mac Studio, two desktop Macs that have become popular for running artificial intelligence models.
Cook said the company “under-called” demand on those Macs. It also underestimated the appetite for the MacBook Neo, which also remains hard to find. Apple’s online store quotes several-week wait times for all three products and sellouts for some configurations.
“We’re not at the point where we’re saying this is going to end anytime soon,” Cook said, adding that the constraints will likely last “several months.” He characterized the iPhone shortages as being less significant than the ones affecting the Mac.
Investors had taken a wait-and-see approach to Apple this year. The shares were down less than 1% this year heading into the report, trailing a 5.3% gain by the S&P 500 index.
Sales of the iPhone rose 22% to $57 billion during the quarter, in line with estimates. The Mac also increased, growing to $8.4 billion. The iPad rose to $6.9 billion, while Wearables, Home and Accessories brought in $7.9 billion.
As part of its second-quarter earnings report, Apple said it would buy back as much as $100 billion in shares and boosted its dividend. The company also said it would be winding down its net cash strategy as it begins to look at cash and debt independently.
Earnings rose to $2.01 a share, beating the projection of $1.96. The China market — where Apple has struggled in recent years — was a highlight last quarter. Revenue there soared 28% to $20.5 billion. Wall Street had projected $18.9 billion.
Services — a segment that includes TV and music streaming, the App Store, iCloud subscriptions, and other digital offerings — generated revenue of $31 billion last quarter, up 16% from a year earlier. That topped the Wall Street prediction of $30.4 billion, according to data compiled by Bloomberg.
The latest numbers extend a sales resurgence that broke records during the holiday quarter, when revenue increased 16%.
Beyond dealing with supply-chain challenges, Ternus is tasked with turning around Apple’s fortunes in artificial intelligence. The tech giant is struggling to keep up with its Silicon Valley rivals in this area and has delayed key features, including a revamped Siri voice assistant.
The company faces “pressure to define the next consumer device for the AI era,” Emarketer analyst Jacob Bourne said in a note.
For now, the iPhone remains Apple’s biggest moneymaker. Cook said the iPhone 17 line has become the company’s most popular smartphone ever, based on sales through the March quarter. Apple will celebrate the 20-year anniversary of the iPhone next year.
“We’re seeing a strong response — not only from customers upgrading from previous generations — but also from people choosing iPhone for the very first time,” Cook said.
With inputs from Bloomberg
