You will be redirected back to your article in seconds

Apple Fiscal Q2 Preview: Services in the Spotlight

Apple Fiscal Q2 Preview: Services the
Yinchen Niu/VIP

There will be a handful of key questions headed into Apple’s fiscal second-quarter results due out Wednesday after market close. Among them will be whether the tech titan was able to keep up the steady Services segment growth as the COVID crisis improved somewhat during the quarter. 

Apple is coming off a record-breaking holiday quarter when overall sales surged 21% and surpassed $100 billion for the first time ever. It was the most profitable quarter ever for the company thanks to its first 5G compatible iPhone released last fall. Services, which houses Apple TV+, saw revenue rise 24% to $15.76 billion during Apple’s fiscal Q1.  

Though Apple didn’t provide its own guidance, it is expected to have had another record-breaking quarter. Wall Street analysts are estimating Apple’s revenue jumped an additional 32% during its fiscal Q2 to $76.7 billion.  

While Apple is still having some trouble shaking its identity as an iPhone maker, its Services business is also raking in cash thanks to the Apple Store. According to CNBC, Apple’s App Store generated roughly $64 billion in sales last year. That’s up from $50 billion in 2019 and $48.5 billion in 2018.  

Then there’s Apple TV+, which Apple hardly ever talks about. The streaming service launched Nov. 1, 2019 right around the time rival Disney+ hit the market. Since then, it is estimated that about 42.6 million consumers have access to the service according to media research firm Ampere. As with every quarter since Apple TV+’s launch, investors will be keen to hear any management updates on the growth trajectory of the service.  

Apple’s Services certainly benefited from COVID. Those benefits likely continued through Apple’s latest quarter, but the world is slowly reopening and the so-called “stay-at-home” trades are starting to feel the pressure. Thus, analysts project Services growth may not be as robust in the second half of 2021. 

From the tech wreck in the beginning of this year to the semiconductor shortage, Apple stock has had a hard time seeing meaningful upside this year. Over the past month, Apple shares rallied 11% and have outpaced the broader market’s 5% gain and the tech sector’s 8% increase during the same time period. And Wednesday will be another major test for the stock.  

This is part of a series of Variety Intelligence Platform’s Q1 2021 earnings previews for the biggest tech and media companies. For a complete list of the companies VIP has analyzed in advance of the Q1 earnings season, read our most recently published special report, “Q1 Preview: 2021 Financial Outlook for Key Media & Tech Companies.” 

Read the full special report