Apple’s revenue rose slightly thanks to iPhone sales and its services division despite headwinds from supply chain shortages and factory closures in China.
The iPhone maker said revenue rose 2 percent from a year earlier to $83 billion, slightly ahead of analysts’ forecasts of $82.8 billion, according to Refinitiv.
Apple in April it warned of up to $8 billion in downtime related to procurement and production issues for the quarter. But finance chief Luca Maestri told the Financial Times that those costs ended up being less than $4 billion and should improve in the current quarter.
“The supply situation is improving,” he said. “The big question mark, as always, is potential Covid constraints, but in the current environment, if nothing changes, we expect supply constraints to be less than what we saw in June.”
Earnings per share for the quarter fell 8 percent to $1.20, beating forecasts for $1.15. Net profit fell 10 percent to $19.4 billion, beating forecasts of $19 billion.
Apple shares, which are down about 13.6 percent year-to-date amid a wider sale of technologyrebounded 3 percent in after-hours trading.
“You should give credit [chief executive Tim] Cook because of the way he has run this company over the last few years,” said Paolo Pescatore, an analyst at PP Foresight. “The company is in a very good position to weather any storm, in stark contrast to the others.”
Apple’s most important product is moving forward, executives said. Sales of its iPhone, which accounted for 49 percent of total revenue, rose 3 percent 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 signs of weakening demand from the macro environment other than foreign exchange,” Maestri said. “We believe demand is still very strong, but we don’t have enough supply to meet 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,” Maestri said, though he declined to give a specific number. In January, that figure was 1.8 billion.
That helped boost revenue in Apple’s services — the 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 subscriptions to Apple for its full range of services is 860 million, Apple reported, an increase of 160 million over the past 12 months.
Mac revenue fell 10 percent to $7.4 billion from a year ago. iPad sales also fell 2 percent to $7.2 billion, and wearable devices like the Apple Watch and AirPods fell 8 percent to $8 billion.
Cook lamented the “cocktail of headwinds” holding back wearables, incl stronger dollarsupply constraints and Apple’s decision to withdraw from Russia.
Apple also cited a “slowdown” in its advertising business, days after Met, Snap, Twitter and YouTube all disappointed investors.
Bernstein analysts previously warned that revenue estimates for fiscal 2023 could be too high if the broader economy continues to falter.
“Apple is consumer-focused and highly transactional, with less than 10 percent of its revenues and profits recurring — meaning it could be vulnerable to a downturn,” they wrote.