Apple posts record services sales ahead of Vision Pro launch

2 Feb 2024

Image: Apple

But is was not all good news for the world’s biggest company, as sales in one of its key markets, China, dropped significantly in the latest fiscal quarter.

Apple has beaten Wall Street estimates in its first fiscal quarter earnings report of the year after raking in $119.6bn and seeing services revenue reach an all-time high.

Fuelled by iPhone sales, according to CEO Tim Cook, quarterly revenue was up 2pc year over year and investors were left happy with a 16pc year-over-year rise in earnings per share, which chief financial officer Luca Maestri said is also an all-time high.

“We are pleased to announce that our installed base of active devices has now surpassed 2.2bn, reaching an all-time high across all products and geographic segments,” Cook said in an earnings call yesterday (1 February).

“And as customers begin to experience the incredible Apple Vision Pro tomorrow, we are committed as ever to the pursuit of groundbreaking innovation – in line with our values and on behalf of our customers.”

Revenue from most major segments – including iPhones, Macs and other products – beat expectations, with the notable exception of iPads. Weak iPad sales is not the biggest threat to Apple, however. What’s concerned investors more is the drop in performance in one of the company’s largest markets, China. Earnings from the country have plunged 13pc in the latest quarter, signalling future trouble.

Some of this has to do with effects of tensions between China and the West, leading the country to impose stricter bans on the use of foreign technologies at workplaces. Domestic companies such as Huawei have, meanwhile, released new smartphones touted as iPhone competitors.

Cook said on the earnings call that he is also excited to share details of “ongoing work” in artificial intelligence development later this year, particularly in the increasingly competitive field of generative AI.

“Looking forward, the biggest question mark is Apple’s ability to leverage AI and generative AI in differentiating experiences,” said Thomas Husson, principal analyst at Forrester.

“Following the buzz of Samsung’s Galaxy AI launch, Apple is no doubt actively working behind the scenes and will share announcements at its WWDC’s developer conference in June.”

The latest earnings report came a day ahead of the launch of its highly anticipated Apple Vision Pro headset today, which has the potential to further boost sales in coming quarters. The extent to which it will add to Apple’s coffers remains to be seen, however, considering its high price point.

But initial reviews have only served to inflate the hype around the new device, which Apple hopes will constitute the future of computing.

“I would say my experience was religious,” director James Cameron told Vanity Fair in a recent interview. “I was sceptical at first. I don’t bow down before the great god of Apple, but I was really, really blown away.”

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Vish Gain is a journalist with Silicon Republic