Apple Inc. on Jan. 31 reported a quarterly earnings beat, citing growth in its Services segment, retail stores and iPhone sales in countries around the world.
For its 2017 fiscal first quarter, the company reported revenue of $78.35 billion, up from $75.87 billion in the year-ago period.
Net income for the quarter was $17.89 billion, or $3.36 a share, down from $18.36 billion year over year, or $3.28 per share, reported in the prior-year quarter. The S&P Capital IQ consensus estimates for the fiscal 2017 first quarter were $3.22 on a normalized and a GAAP basis.
The company's iPhone sales came to 78.3 million units, up from 74.8 million units in the prior-year period. iPhone revenues also saw an upward swing, up 5% to $54.38 billion from $51.64 billion in the prior-year period.
"We did have an exceptional quarter with iPhone, and that was with the backdrop of not predicting the demand well of the iPhone 7 Plus," CEO Tim Cook said on a Jan. 31 earnings call, which included more upgraders than expected as well as record customers switching to iPhone from different devices.
Revenues for its Services, which includes its App Store and mobile payment service Apple Pay, increased to $7.17 billion, from $6.06 billion in the prior-year period, an 18% year over year increase. On the earnings call, Cook noted the company's goal is to double its services unit in the next four years, saying Apple expects Services to be the size of a Fortune 100 company in 2017.
CFO Luca Maestri said he expected growth for Services to come particularly from developing markets. "If we look at the number of people transacting, we think that the App Store is going to be significant driver of growth," he said. "We're opening up several new markets because we're accepting new forms of payment, and so it's easier for customers to take advantage of our services."
Apple's iPad revenues, however, fell in the quarter, to $5.53 billion from $7.08 billion, a 22% year over year drop. Maestri said the company expected non-consumer uses for the iPad, such as in retail stores and for enterprise clients, to continue to increase.
Analysts on the call particularly focused on the company's global revenues, while also asking Cook about future plans for further M&A activity.
Apple's revenues in greater China fell to $16.23 billion, 12% year over year. Revenues in the remaining Asia-Pacific region, excluding Japan, increased 8% year over year to $5.86 billion in the 2017 fiscal first quarter. Meanwhile, Japan revenues jumped 20% to 5.77 billion.
Cook also noted that he was "optimistic" about the possibility of tax reform in the new Trump administration, citing bipartisan cooperation that could include repatriation of overseas income, a point Cook has repeatedly focused on when asked about the company's overseas corporate taxes. He also dropped vague hints about the company's plans for content beyond its Apple Music service, which Cook said would expand further in 2017.
"We have put our toe in the water in doing original content with Apple Music. The way that we participate in the changes that are going on the media industry, I fully expect that to accelerate with the cable bundle starting to break down," he said.
Looking forward, the company projects fiscal second 2017 quarter revenue of between $51.5 billion and $53.5 billion.