190920 iphone
The level of demand for iPhone 11 was the major factor in Apple's bullish results. Image Credit: Gulf News Archive

Los Angeles (Bloomberg): Apple Inc. reported holiday-quarter revenue that beat expectations on rebounding iPhone demand and surging sales of wearable devices. The results are a remarkable comeback from a year ago, when the most valuable technology company missed its own targets.

The company reported $91.8 billion in revenue for the quarter, up 9 per cent from a year earlier. Wall Street was looking for $88.4 billion, (Profit was $4.99 a share, also beating analysts’ expectations.)

“The strength is coming from the iPhone and continued really strong growth in wearables and the App Store,” said Shannon Cross of Cross Research. “The iPhone was very strong.” For the next quarter, Apple said sales will be between $63 billion and $67 billion.

Apple generated $56 billion in revenue from the iPhone in the fiscal first quarter, up 8 per cent from a year earlier. That was a lot better than the 2018 holiday period, when sales of the handset dropped about 15 per cent.

Apple cut the price of its entry-level flagship iPhone by $50, luring buyers. There are also millions of older iPhones that are losing software support from the company, spurring new purchases.

Wearables come to the party

Apple wearables too picked up traction during end-of-year sales; but the news subscription service and web TV have proved less so.

Wearables, including AirPods, and other accessories generated $10 billion in revenue in the holiday quarter, up 37 per cent from a year ago. The company reported Services revenue of $12.7 billion, up 17 per cent from the same period last year. This business still mostly relies on older offerings such as the App Store, iCloud storage and Apple Music.

It’s unclear how well Apple TV+, the Apple Card and the Apple Arcade gaming subscription are performing, but there have been signs of weak demand for Apple News+, the company’s digital magazine subscription.

“One note of caution in an otherwise strong report was that Services, which included Apple TV+, grew slightly below expectations,” said EMarketer principal analyst Yoram Wurmser. “This miss could be attributed to the competition from Disney+, which launched at roughly the same time.”

iPhone provides the heft in Apple numbers
The iPhone still generates the majority of Apple’s revenue. And this crucial business has improved from a dire performance in last year’s holiday period. The iPhone 11 and 11 Pro models were well received in their debut and demand in China has been particularly strong, outselling 2018’s releases in a market that has otherwise been shrinking.