There is some irony to the fact that Apple chose May Day to remind the world that it remains among the most astute of capitalists.
It proved savvy enough to continue charging record prices for its iPhone lineup more than a decade after launching the iconic device. The company posted fiscal second-quarter results Tuesday that showed only a 3% increase year over year in iPhone unit sales, which totaled 52.2 million.
But iPhone revenue topped $38 billion, up 14% year over year. That reflects the launch of the high-price iPhone X late last year, which has helped lift the average selling price for Apple’s smartphone lineup above the $700 mark after averaging about $640 over the two years prior to the recent launch.
Higher iPhone prices helped the company’s overall revenue match Wall Street’s estimates for the quarter despite unit sales falling a bit short of even recently lowered estimates. Also helpful was Apple’s growing services business, which grew 31% year over year to reach revenue of $9.2 billion for the quarter. Because this business reflects the content and apps that Apple’s users purchase for their devices, it is a hopeful sign about the company’s ability to expand its business even as the markets for its largest devices show signs of maturing.
The results will provide some relief to worried shareholders. Apple also projected a total revenue gain of 13% to 18% for the June quarter, at the high side of what Wall Street had been projecting. That helps to counter at least some of the more downbeat rumors of late about weakening iPhone demand.
It also doesn’t hurt that Apple’s huge offshore cash hoard—unlocked by last year’s tax reform—is being plowed into a new $100 billion buyback plan and a 16% boost to the company’s quarterly dividend.
The iPhone may be a slowing business, but it remains an awfully lucrative one.
— Dan Gallagher
Write to Dan Gallagher at dan.gallagher@wsj.com
Corrections & Amplifications
Apple’s service revenue grew 31% year over year in the company’s fiscal second quarter. An earlier version of this article incorrectly stated that this was a record.
Appeared in the May 2, 2018, print edition as 'Apple Still Charges Up With iPhone.'