Apple says Apple Care and ads will take the biggest hits this coming quarter

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Apple says Apple Care and ads will take the biggest hits this coming quarter
Apple CFO Luca Maestri.Marco Cantile/LightRocket via Getty Images
  • Apple expects that Apple Care and its ad business will take a hit during its next quarter.
  • That's according to the tech giant's CFO, Luca Maestri, who was speaking during the company's fiscal second-quarter earnings call to investors Thursday.
  • Maestri said "the overall economic weakness and the uncertainty on when businesses will reopen" would be the culprit for any underperformance.
  • The tech giant reported revenue of $58.3 billion for its fiscal second quarter, including $13.34 billion from services.
  • Visit Business Insider's homepage for more stories.
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Apple says two planks of its services arm will take a hit next quarter.

According to the tech giant's chief financial officer Luca Maestri – speaking during an earnings call with investors Thursday – two of Apple's services-related offerings are going to be impacted by "overall economic weakness" and "uncertainty" during its fiscal third quarter for 2020, which runs from April to June.

"One of them is AppleCare," Maestri said. "AppleCare is essentially comprised of our product repair business and the warranty agreements that we signed with our customers when they purchase our devices.

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"Both these businesses have been affected obviously by the store closures. And not only our retail stores, but also our partners points of sale, and obviously, the reduced level of customer traffic because of the social distancing measures."

The other business, he said, will be advertising.

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As Maestri noted in the call, Apple's ad business is essentially made up of Apple's advertising business on the App Store; its advertising business on Apple News; and the various other third-party advertising agreements the company maintains.

The tech giant reported revenue of $58.3 billion for its fiscal second quarter of 2020, up 1% year-on-year, and earnings per share of $2.55.

Its fiscal second quarter for 2020 ran from late December 2019 to late March 2020, meaning it spanned the global coronavirus outbreak. The spread of COVID-19 across the world caused it to withdraw its revenue guidance in February.

In its fiscal first quarter for 2020, before the outbreak happened, Apple's reported revenue was a record $91.8 billion.

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