The past year has been a roller-coaster ride for investors in Apple (AAPL -0.81%). After becoming the first publicly traded company in U.S. history to achieve a market cap of $1 trillion, things became a little less certain for the company -- and investors.

A combination of slowing iPhone sales, an economic downturn in China, and an ongoing trade war between Beijing and Washington, D.C., conspired to stifle Apple's revenue growth and send its shares tumbling.

Expectations were muted going into the company's fiscal second-quarter earnings report, but things weren't as bad as many had feared, sending Apple's shares climbing about 5% Wednesday morning. Let's look at some of the key takeaways that gave investors a jolt of enthusiasm.

Apple CEO Tim Cook with the Apple logo in the background.

Apple CEO Tim Cook at the company's keynote event in March. Image source: Apple.

1. Revenue declined, but not as much as expected

Apple reported revenue of $58 billion, down 5% year over year. While that might not seem like anything to write home about, it was just below the high end of Apple's guidance, and ahead of analysts' consensus estimates of $57.4 billion. The biggest contributor to the deterioration was iPhone sales, which suffered their steepest decline in Apple's history, falling 17% year over year. 

There was some good news on the iPhone and China fronts. In an interview, Apple CEO Tim Cook addressed the issue (emphasis mine): "As we look at the iPhone results through Q2, the results were stronger on a year-on-year basis for the last few weeks of the quarter. We also saw a similar result in China."  

These developments gave investors hope that iPhone sales were stabilizing and the price cuts Apple introduced last quarter in China were helping boost sales in the Middle Kingdom.

2. Services revenue is soaring

Over the past year, Apple has been increasingly counting on its services business to pick up the slack for the sluggish growth of its iPhone sales. That plan appears to be taking hold. Services revenue grew to a new all-time high of $11.45 billion for the quarter, up 25% year over year, with a run rate now approaching $46 billion.

Apple plans to launch several new services in the coming months, including Apple Card, a credit card that's an extension of Apple Pay; Apple Arcade, a mobile gaming subscription service; and the company's long-awaited streaming service, Apple TV+. These are in addition to its news aggregation service, Apple News+, which launched late last month, attracting more than 200,000 subscribers in its first 48 hours.

Investors should expect growth in services revenue to further accelerate once these additional products launch in the coming months.

3. Wearables sales are strong

Even in the midst of slowing iPhone sales, Apple's wearables business continues to see significant growth. The wearables, home, and accessories segment produced revenue of $5.1 billion, up 31% year over year.

On the conference call, Cook said the wearables business was the size of a Fortune 200 company, which he said was "amazing" considering the Apple Watch, the segment's biggest seller, was introduced just four years ago. To put that into perspective, the annual revenue necessary to make the list was $14.6 billion in 2018.

4. Shareholder returns are increasing

Apple has a long history of updating its capital allocation plan when the company reports the results of the quarter that ends in March, and this year was no different. Apple announced that the board has authorized an additional $75 billion in share repurchases.

In addition, Apple raised its dividend for the seventh time in as many years, increasing the quarterly payout to $0.77 per share, up from its recent level of $0.73, a 5% increase. The dividend will be payable on May 16 to shareholders of record as of the close of business on May 13. This would bring Apple's yield to about 1.5%.

Investor takeaway

While the slowdown in iPhone sales both here and abroad is troubling, the recent sales uptick at the end of the quarter may be a sign that the worst is over. The strength in both the wearables and services segments are helping to fill the void while Apple gets its iPhone sales back on track.

It's important to remember that Apple generated revenue of $58 billion during the quarter and operating cash flow of $11.2 billion during the quarter. While declining iPhone sales remain a concern, this is by no means a company in dire straits.