Apple reports $76bn Q1: as iPhone growth slows, services come to rescue

26 Jan 2016

Services helped drive the biggest Q1 in Apple history

Driven by sales of its iPhone device and record new revenues from services, Californian tech giant Apple reported its biggest first quarter yet with revenues of $75.9bn.

However, it was also the slowest quarter for iPhone growth since the device launched in 2007.

This figure is up by more than $1.3bn on last year’s record performance for revenue during the critical holiday sales season.

The strong performance yielded a profit of $18.4bn, up from $18bn a year ago.

“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO.

“The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of 1bn active devices.”

Apple also reached the magic number of 1bn active devices that would have interacted with its services in the last 90 days.

The company reported that it sold 74.8m iPhone devices during the quarter, up just 1pc on the 74.5m iPhones it sold last year.

This is the slowest year-over-year growth for iPhones since the smartphone was launched in 2007.

iPad unit sales were 16.1m, down 21pc year over year.

Mac unit sales were 5.3m devices, down from 6.7m Macs sold a year ago.

The company has still not revealed exact figures for sales of the Apple Watch, which were bundled in among other products that sold around 4.3m during the quarter.

Either way, the tech giant is still enormously rich, with a cash pile totaling $216bn.

As iPhone growth slows, services matter more than ever


During the last quarter, Apple launched its iPhone 6s and 6s Plus smartphone in most markets around the world, as well as its 12.9-inch iPad Pro tablet computer. It is also almost a year since Apple launched its first wearable device, Apple Watch.

In recent weeks, Apple also revealed that its Apple Music streaming service had notched up 10m users after just six months, quite a milestone when you consider rival Spotify has 20m paid subscribers.

Apple reported that some $31bn of the $75.9bn in revenue came from services revenue from its installed base.

This was up 23pc year-on-year or by almost $9bn on $25.3bn a year ago.

Looking ahead to Q2, Apple is anticipating revenues of between $50bn and $53bn.

“Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment,” said Luca Maestri, Apple’s CFO.

“We generated operating cash flow of $27.5bn during the quarter, and returned over $9bn to investors through share repurchases and dividends. We have now completed $153bn of our $200bn capital return program,” Maestri said.

Apple Music image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years