KEY POINTS 

  • Apple's fiscal Q1 2019 represents the first time in over a decade the company saw declines in both revenue and profit during a holiday season. This was driven primarily by lower than expected iPhone upgrades; iPhone revenue fell a striking 15% year-over-year (YoY) to $52 billion.
  • Apple’s peripheral segments — 'Services' and 'Wearables, Home, and Accessories' — were two bright spots for the company. Revenue outside of the iPhone grew 19% YoY. These segments will be integral to Apple’s bottom line as smartphone revenue declines. 
  • The Services segment expanded its lead as the second-largest contributor to Apple’s revenue in the quarter. Services accounted for 13% of all revenue in Q1, up from 10% the prior year. Apple can continue this momentum by expanding the offerings on the segment's most notable contributor, the App Store, with a focus on AR and gaming subscriptions. 
  • Apple's Wearables, Home, and Accessories segment is also gaining traction, as it saw the biggest growth in Q1 of all of Apple's segments. The segment reached record-breaking revenue of $7.3 billion, marking 33% annual growth, with the Apple Watch as a chief driving force. The company can continue developing tech products in emerging categories like AR and self-driving cars to keep up the pace of revenue growth in this segment.

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