Apple’s fiscal Q1 revenue and profits fell, marking the first time the company had to report such dismal numbers for this particular quarter in more than 10 years.

The culprits behind the declines were slowing iPhone sales and China’s economic downturn.

Apple CEO Tim Cook talking about China on the company earnings call moments ago. Here's what he said: pic.twitter.com/Vt5GSABwB4 — CNBC's Fast Money (@CNBCFastMoney) January 29, 2019

The tech giant’s earnings per share and revenue did beat analyst estimates. This was despite iPhone sales coming in lower than estimates.

Apple had warned investors about the expected lower sales at the beginning of January. Its stock plunged on that news.

Breaking Down Apple’s Fails And Beats

The tech giant reported earnings per share of $4.18, and revenues of $84.31 billion for the quarter that ended Dec. 29. Analysts’ estimates were $4.17, and $83.97 billion, respectively.

Its flagship iPhone saw its revenue fall 15% from the prior year. iPhones brought in $51.98 billion in sales, but analysts were looking for $52.67 billion.

Apple’s profits fell to $19.97 billion.

While iPhone sales were lower than expected, total revenue from all other products and services grew 19% to $10.9 billion. Apple had warned at the beginning of the month that emerging markets and the economic slowdown in China were presenting challenges to iPhone sales.

Mac revenues also missed estimates, but just slightly. Analysts estimated revenues from the machines would be $7.42 billion, but they were $7.416 billion instead.

Revenues from iPad sales, however, handily beat estimates. The street was looking for $5.9 billion, and Apple reported $6.729 billion.

Apple Continues To Guide Lower

The street expects the number of iPhones sold over the next three months through the end of March will continue to decline at the steepest level in the company’s history.

Apple set Q2 2019 guidance lower than the street’s estimates. It set it at between $55 billion and $59 billion, while analysts were looking for $59.98 billion.

Here’s a breakdown of its guidance for its fiscal 2019 second quarter:

gross margin between 37 % and 38%

operating expenses between $8.5 billion and $8.6 billion

other income/(expense) of $300 million

tax rate of approximately 17%

About the guidance, Cook told CNBC:

Well, we don’t attach our guidance to what the street is looking for, we attach it to what we can do. And so we think we can do $55 to $59 [billion]. Considering the currency situation, etc. it’s a strong guidance.

He went on to say that revenue was down five percent during Q1, but only down three percent at constant currency. The effect will be more this quarter on currency than it was in the last quarter, Cook added.

As we got into January, things have improved from where they ended in December, and that gives us some optimism. Of course that you don’t know what will continue, but I would also point out that seems to map to trade tension as well, that there is a bit more optimism in the air in January, or certainly I feel that anyways. I’m encouraged by the comments coming out of both countries.

Optimistic In The Face Of It All

Cook said that while it was disappointing to miss its revenue guidance, he was confident about Apple’s outlook. He said the quarter’s results demonstrate that the “underlying strength of our business runs deep and wide.”

In the earnings release statement, he said:

Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.

Despite the revenue and profit slips, Apple’s stock rose in after-market trading. At the time of writing, after the conference call, the stock was up 5.6% to $163.30.

Featured Image from Drew Angerer / Getty Images / AFP