Apple reports strong quarter but expects sales slump

28 Oct 2022

Apple CEO Tim Cook. Image: Stuart Isett/Fortune (CC BY-NC-ND 2.0)

Forecast for the holiday season was less promising, as Apple expects revenue growth to fall below 8pc in the December quarter.

While other Big Tech companies report bleak earnings amid ongoing economic uncertainty, Apple has had a great quarter with its active installed base of devices reaching a record high for all major product categories.

The iPhone-maker posted a September quarter record revenue of $90.1bn, up 8pc year-on-year and above Refinitiv estimates of $88.9bn. Annual revenue was also up 8pc to a whopping $394.3bn.

“This quarter’s results reflect Apple’s commitment to our customers, to the pursuit of innovation, and to leaving the world better than we found it,” CEO Tim Cook said in an earnings call yesterday (27 October).

“As we head into the holiday season with our most powerful line-up ever, we are leading with our values in every action we take and every decision we make.”

While growth in this last quarter was strong, the forecast for the holiday season was less promising. CFO Luca Maestri told investors he expects revenue growth to fall below 8pc in the December quarter.

Apple’s unmatched devices business

In a quarter where global smartphone shipments fell 12pc and reached its lowest point for this quarter since 2014, according to Counterpoint Research, Apple was the only top-five brand to see its shipments rise year-on-year.

Sales of the iPhone, including the latest iPhone 14, brought in $42.63bn – which is below analyst expectations but up nearly 10pc year-on-year and a record high for the quarter.

Mac revenue for this quarter was $11.51bn, more than $2bn higher than predicted and up more than 25pc year-on-year. This is despite an ongoing global slump in PC sales.

“Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop,” said Maestri.

Maestri said Apple generated more than $24bn in operating cash flow and returned upwards of $29bn to shareholders this quarter. “The strength of our ecosystem, unmatched customer loyalty and record sales spurred our active installed base of devices to a new all-time high.”

Apple’s iPad business, however, was down 13pc year-on-year to a little more than $7bn. A new line of M2-powered iPads that hit shelves earlier this week might be able to turn this around in the next quarter.

Meanwhile, Apple’s services division brought in nearly more than $19bn in revenue this quarter, lower than expectations but 5pc up over last year. Just a few days ago, Apple raised the prices of its Music and TV+ subscriptions, along with the Apple One bundle service.

10 things you need to know direct to your inbox every weekday. Sign up for the Daily Brief, Silicon Republic’s digest of essential sci-tech news.

Apple CEO Tim Cook speaking in June 2018. Image: Stuart Isett/Fortune (CC BY-NC-ND 2.0)

Vish Gain is a journalist with Silicon Republic