Apple sales fall again, but its services are having a moment

4 Aug 2023

Apple CEO Tim Cook speaking at the Fortune CEO Initiative 2018 Annual Meeting in June 2018. Image: Fortune Photo/Flickr (CC BY-NC-ND 2.0)

Revenue from the iPhone is down 2pc, Mac down 7pc and the iPad down 20pc. But sales from Apple services such as iCloud and Music paint a less gloomy picture.

Apple has seen its overall revenue drop for the third consecutive quarter as iPhone sales miss analyst expectations.

In its latest quarterly earnings posted yesterday (3 August), Apple reported a quarterly revenue of $81.8bn, which is slightly higher than analyst expectations of $81.69bn, but lower than last year’s $83bn. Last year’s Q3 was marked by record sales despite ongoing supply chain issues.

Revenue from the iPhone – which accounts for nearly half of Apple’s sales – was down 2pc at $39.67bn. The Mac and iPad product categories saw sales drop 7pc and 20pc respectively, while other products, such as the Apple Watch and AirPods, saw a combined increase in sales of 2pc.

This is in contrast to Apple’s second fiscal quarter this year, when it exceeded Wall Street expectations as the iPhone saw record sales despite a “challenging macroeconomic environment”.

Where the tech giants really shone this quarter is in its services revenue, which is at an all-time-high for the second quarter. The company has more than 1bn paid subscriptions across its services, including Apple TV, Music, iCloud, Arcade and others.

CEO Tim Cook said that Apple has also had great success in selling the iPhone in emerging markets, where the flagship device has seen “robust sales”. CFO Luca Maestri added that Apple’s installed base of active devices reached an all-time high in “every geographic segment”.

Particularly in China, net sales have jumped more than 7pc year-on-year, while performance in Europe has also strengthened relative to last year.

“During the quarter, we generated very strong operating cash flow of $26bn, returned over $24bn to our shareholders, and continued to invest in our long-term growth plans,” Maestri went on, even though CNBC suggests Apple shares fell more than 2pc in extended trading.

Maestri said investors can expect similar results in the next quarter sales, with overall revenue falling around 1pc year-on-year. In its fourth quarter last year, Apple reported $90.15bn in sales.

Earlier this week, Apple’s savings account offering, which launched in the US four months ago, reached a milestone of $10bn in deposits as more users sign up to the high-yield savings scheme offered by Goldman Sachs.

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: Fortune Photo/Flickr (CC BY-NC-ND 2.0)

Vish Gain is a journalist with Silicon Republic