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Apple ekes out revenue growth on iPhone sales and services

Apple’s revenue grew slightly on iPhone sales and its services division despite headwinds from supply chain shortages and factory shutdowns in China.

The iPhone maker said revenue rose 2 percent from a year ago to $83 billion, slightly ahead of analysts’ forecasts of $82.8 billion, according to Refinitiv.

Apple In April, they warned of up to $8 billion in failures related to supply and production issues in the quarter. But finance chief Luca Mastri told the Financial Times they ended up being less than $4bn, and should improve in the current quarter.

“The supply situation is improving,” he said. “The big question mark, as always, is potential Covid restrictions, but in the current environment, if nothing changes, we expect supply restrictions to be less than what we saw in June.”

Earnings per share in the quarter fell by 8% to $1.20, beating forecasts to $1.15. Net income fell 10% to $19.4 billion, above forecasts of $19 billion.

Apple shares, which have fallen by about 13.6% so far today on the back of a broader profit. technology The sale recovered by 3% in after-hours trading.

“You have to give credit to [chief executive Tim] Cook for the way he has led this company in the last two years,” said Paolo Pescoura, an analyst at PP Foresight. “The company is well positioned to withstand any storm, in stark contrast to others.”

Apple’s most important product is thriving, executives said. Its iPhone sales, which accounted for 49% of total revenue, rose 3% to $40.7 billion. Cook said the June quarter saw a “record” number of people switching to iPhone from Android.

“On the iPhone, we haven’t seen any sign of weakness in demand from the macro environment other than foreign exchange,” Mastri said. “We believe that demand continues to be very strong but we don’t have enough supply to satisfy that demand.”

Maestri noted that Apple generated nearly $23 billion in operating cash flow and returned more than $28 billion to shareholders through dividends and share buybacks.

Apple’s “installed device base” — which includes iPhones, iPads and other hardware — reached an all-time high for “all major product categories,” Mastri said, though he declined to provide a specific number. In January, the figure amounted to 1.8 billion.

That helped boost revenue at Apple Services — a high-margin division that houses the App Store and digital media purchases — by 12 percent to $19.6 billion, slightly below expectations for $19.7 billion. The number of people who pay recurring subscription fees to Apple across its range of services is 860 million, Apple reported, an increase of 160 million over the past 12 months.

Mac revenue fell 10% to $7.4 billion compared to last year. iPad sales also fell 2% to $7.2 billion and wearables, such as the Apple Watch and AirPods, fell 8% to $8 billion.

Cook lamented a “cocktail of headwinds” holding the wearables, including a stronger dollar, to provide Constraints and Apple’s decision to withdraw from Russia.

Apple also cited a “slowdown” in its advertising business, days after Meta, Snap, Twitter and YouTube disappointed investors.

Analysts at Bernstein previously warned that revenue estimates for fiscal 2023 could be too high if the broader economy continues to falter.

“Apple is focused on consumers, and is very transactional, with less than 10% of its revenues and profits recurring – meaning it could be vulnerable to a downturn,” they wrote.

Apple ekes out revenue growth on iPhone sales and services Source link Apple ekes out revenue growth on iPhone sales and services

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