Apple Earnings: iPhone, Services Boost Sales In Otherwise Down Quarter
Joseph F. Kovar
‘Revenue was down 3 percent year-over-year as a result, while on a constant currency bases we grew in total, and in the vast majority of the markets we track. Despite these challenges, we continue to manage for the long term, and to push the limits of what’s possible, always on behalf of the customers who depend on our products,’ says Apple CEO Tim Cook.
Apple’s sales of a record amount of iPads and setting of an all-time record for services revenue helped the company beat expectations in a fiscal second quarter 2023 that otherwise saw sales of much of its technology slip in part due to macroeconomic headwinds.
Apple CEO Tim Cook, in his prepared remarks to financial advisors on Thursday’s fiscal second quarter 2023 financial conference call, said the company’s total revenue for the quarter of $94.8 billion, while down 3 percent year-over-year, was better than the company’s expectations.
“We set an all time record for services and a March quarter record for iPhone,” Cook said.
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During the quarter, Cook said, Apple continued to face foreign exchange headwinds, which had an impact of over 500 basis points, as well as ongoing challenges related to the macro economic environment.
“Revenue was down 3 percent year-over-year as a result, while on a constant currency bases we grew in total, and in the vast majority of the markets we track,” he said. “Despite these challenges, we continue to manage for the long term, and to push the limits of what’s possible, always on behalf of the customers who depend on our products.
Product-wise, fiscal second quarter 2023 featured a second quarter iPhone record revenue of $51.3 billion, Cook said.
“This March, we were excited to expand Emergency SOS via satellite to six new countries, bringing this important safety feature to even more users,” he said. “We now offer this vital service in 12 countries.”
Apple Mac sales dipped year-over-year to $7.2 billion, but were in line with the company’s expectations, Cook said. He said the drop came from a tough comparison with last year when the company rolled out its M1 chips throughout the Mac lineup.
“And like our other product lines, Mac is facing some macroeconomic and foreign exchange headwinds as well,” he said.
iPad revenue for the quarter at $6.7 billion was also in line with Apple’s expectations, Cook said.
“Similar to Mac, iPad revenue performance was impacted by macroeconomic challenges, foreign exchange headwinds, and a difficult compare with last year when we launched the M1-powered iPad Air,” he said.
Across wearables, home, and accessories, revenue was $8.8 billion, Cook said. This category included the company’s popular Apple Watch and Apple AirPods.
Apple however did report an all-time record quarter for its services revenue at $20.9 billion, Cook said. This includes such services as Apple’s App Store, Apple Music, iCloud, and payment services, all of which recorded record revenue, as well as Apple TV, Apple Music Classical, and Apple Pay Later.
Cook also used the quarterly financial conference call to highlight Apple’s investment in education and environmental issues.
“We’re constantly striving to make a positive difference in people’s lives and be a force for progress,” he said. “We’re investing in education to give students the skills they need to shape the future. We’re helping to create pathways of opportunity for communities of color through our racial equity and justice initiative. And every day, we’re building an even more inclusive and diverse Apple rooted in our culture of belonging.”
For instance, Cook said, Apple celebrated Earth Day in April.
“During that month, Apple announced that its global manufacturing partners now support over 13 gigawatts of renewable energy, a nearly 30 percent increase in just the last year,” he said. “This translates to 17.4 million metric tons of avoided carbon emissions, the equivalent of removing nearly 3.8 million cars from road.”
Apple is also investing up to an additional $200 million in its Restore Fund aimed at supporting innovative, scalable, nature-based carbon removal projects with the goal of removing 1 million metric tons of carbon every year,” Cook said.
“These are just the latest steps on our journey toward our 2030 goal to be carbon-neutral across our supply chain and lifecycle of our devices,” he said.
Apple is also advancing renewable energy across its supply chain and sourcing more recycled materials for its products, and last month unveiled plans to have all Apple-designed batteries include 100 percent, certified recycled cobalt by 2025, Cook said.
“And we remain committed to one day using only recycled and renewable materials in our products,” he said.