Apple reported a slight decline in revenue for the third quarter of 2023, but still beat analysts’ expectations as its services business grew to more than 1 billion users for the first time.
Services revenue hits record high
The tech giant’s services segment, which includes the App Store, Apple Music, iCloud, Apple TV+ and Apple Pay, generated $21.7 billion in revenue, up 25% year-on-year and a new record for the company. Apple said it now has over 1 billion paying subscribers across its various platforms, a milestone that reflects its successful transition from a hardware-centric to a services-oriented business model.
Apple CEO Tim Cook said the company was “thrilled” with the performance of its services business, which he attributed to the “loyalty and satisfaction” of its customers. He also highlighted the growth of Apple TV+, which launched in November 2022 and has already won several awards and nominations for its original shows and movies.
iPhone sales dip amid supply chain challenges
Apple’s flagship product, the iPhone, saw a 9% drop in revenue to $33.4 billion, as the company faced supply chain challenges due to the ongoing chip shortage and geopolitical tensions. Cook said the iPhone 13, which was released in September 2023, was “very well received” by customers, but admitted that the demand exceeded the supply and that the company was “working very hard” to overcome the production constraints.
The iPhone still accounted for 41% of Apple’s total revenue, which fell 1% to $81.8 billion for the quarter. This was the third consecutive quarter of decline for the company, but it still beat Wall Street’s estimates of $80.6 billion. Apple’s earnings per share also came in higher than expected at $1.24, down from $1.25 a year ago.
Other products show mixed results
Apple’s other products also showed mixed results for the quarter. The iPad revenue grew 12% to $8.4 billion, driven by strong demand from education and enterprise customers. The Mac revenue declined 2% to $9.2 billion, as the company faced component shortages and lower sales in China. The wearables, home and accessories segment, which includes the Apple Watch, AirPods and HomePod, increased 6% to $8.8 billion.
Cook said he was “very pleased” with the performance of the iPad and the Mac, which he said were “essential tools” for remote work and learning. He also praised the innovation and popularity of the Apple Watch and AirPods, which he said were “changing the way people live their lives”. He added that the HomePod mini, which was launched in October 2022, was “off to a great start” and that the company was “excited” about its potential in the smart home market.
Outlook remains uncertain amid pandemic
Apple did not provide any guidance for the next quarter, citing the uncertainty caused by the Covid-19 pandemic and its impact on the global economy and consumer behavior. Cook said the company was “optimistic” about its future prospects, but also “mindful” of the challenges and risks ahead.
He said the company was “committed” to investing in its long-term growth and innovation, as well as supporting its employees, customers and communities during this difficult time. He also reiterated Apple’s environmental and social goals, such as achieving carbon neutrality by 2030 and advancing racial equity and justice.
