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Apple posts earnings decline, but sees strong take-up of iOS

Company experiences shortfall in emerging markets and lower Mac sales, but sees the iPad Pro as a PC killer

Apple has posted a 5% decline in its quarterly earnings for the second quarter of 2019.

In a transcript of the earnings call posted on the Seeking Alpha financial blogging site, Apple CEO Tim Cook said: “It was our best quarter ever for services, with revenue reaching $11.5bn. We had a blockbuster quarter for iPad, with revenue up 22% from a year ago. This is our highest iPad revenue growth rate in six years. And it was another sensational quarter for wearables, with growth near 50%.”

But Cook noted that the company did experience a revenue decline in emerging markets.

Apple also suffered lower sales of Macs, which Cook put down to “processor constraints”, saying: “For our Mac business overall, we faced some processor constraints in the March quarter, leading to a 5% revenue decline compared to last year, but we believe our Mac revenue would have been up compared to last year without those constraints and don’t believe this challenge will have a significant impact on our Q3 results.”

However, Apple regards its iPad Pro tablet, paired with its smart keyboard and Apple Pencil, as the primary alternative for PC users.

The company has also been actively growing its services business, and will introduce new Apple TV, News+ and Arcade streaming services.

“Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for services, and the strong momentum of our wearables, home and accessories category, which set a new March quarter record,” said Cook.

“We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services. We are looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June.”

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The company’s payment service, Apple Pay, is now available in 30 markets, and Cook said: “We expect to be live in 40 markets by the end of the year. More and more transit systems are accepting Apple Pay and New York’s MTA system will begin the roll-out in early summer.”

During the earnings call, Apple CFO Luca Maestri outlined how third-party enterprise software providers were using the iOS software developer's kit (SDK).

“We see great momentum through the growing number of iOS SDKs being delivered by the world’s largest enterprise platforms,” he said. “For instance, SAP’s SDK for iOS continues to gain strong traction with its customers, growing by more than 40% in the last six months. And this past quarter, Salesforce released its SDK, enabling developers to build native iOS applications directly on top of the Salesforce platform.”

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