Apple Stock Jumps As iPhones, Emerging Markets Power Q2 Earnings Beat, Dividend Boost

“The iPhone is truly a global product and we’re doing well in emerging markets right now,” said CFO Luca Maestri.

Apple  (AAPL) - Get Free Report shares moved firmly higher Friday after the tech giant posted a surprise jump in iPhone sales, as well impressive sales in a host of emerging markets, both of which powered a stronger-than-expected second quarter earnings report.

iPhone revenues rose 1.5% from last year to $51.33 billion, linked in part to the sale of high-end iPhone Pro models that were jammed-up over the holiday period. 

That gain offset declines in Mac and iPad sales, as well as a 3% decline in revenues from China, and helped boost earnings for the three months ending in March to $1.52 a share, a tally that topped Street forecasts by 9 cents.

Group revenues were still down 2.5% from last year at $94.84 billion, marking the second consecutive sequential decline, a rate CFO Luca Maestri said would likely carry over into the June quarter, although he noted that gross margins would likely improve to between 44% and 44.5%.

“The iPhone is truly a global product and we’re doing well in emerging markets right now,” Maestri told investors on a conference call late Thursday. “That has helped us offset some macroeconomic challenges.”

Apple's recent push into India, which includes the opening of its first retail stores in the Android-dominated market last month, resulted in record March quarter revenues -- estimated at $6 billion -- while markets in Mexico, Indonesia and the Philippines all tallied record high sales figures as Apple's installed base of devices topped 2 billion worldwide.

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"With records being set on the installed base of active devices across all geographies and all product categories, we believe investors are likely to continue to look past the noise of quarterly results as Apple is likely more resilient to macro than it has ever been," said KeyBanc Capital Markets analyst Brandon Nispel, who carries an 'overweight' rating with a $180 price target on Apple stock. 

Apple shares were marked 2.4% higher in pre-market trading to indicate an opening bell price of $169.74 each.

Revenues from Apple's key services business -- which includes Apple Pay, iCloud and Apple TV --- rose 5.5% to $20.91 billion.

Hardware sales, as expected were soft: Mac sales fell 31% from last year to $7.17 billion, Apple said, although iPad sales were down 13% to $6.67 billion. Wearables sales, which includes the AppleWatch, slipped 0.6% to $8.76 billion.

"Services revenues missed the consensus forecast, but the App Store, Apple Music, iCloud and payment services all set quarterly revenue records and the company has nearly a billion paid subscriptions," said Scott Kessler, Global Sector Lead for Technology Media and Telecommunications at Third Bridge. "We have continued to hear from experts that payment services and financial services can be a growth driver for Apple for years to come."

China sales, while still slowing, improved from the 7% slump recorded over the December quarter, as the country accelerates from its Covid-era restrictions. 

Apple also authorized a new $90 billion share buyback, and said it will will boost its dividend by a penny, to 24 cents per share, marking the eleventh consecutive annual increase. The dividend will be available to shareholders of record on May 15, with a payout date of May 18.