Tech giant Apple reported its financials for the second fiscal quarter of the year. For the quarter ended April 1, 2023, the Cupertino-headquartered tech giant surpassed Wall Street expectations and clocked $94.8 billion in revenue, which marks an annual decrease of 3%, hit hard by the slump in PC sales in recent quarters.

The tech titan’s performance for the quarter was driven by a better performance of the iPhone – its flagship product for several years now – during the period. In fact, the performance of the iPhone helped Apple set a new March quarter record for iPhone revenue and surpass expectations on both revenue and earnings per share (EPS), which comes amidst an economic downturn in the market.

“We are pleased to report an all-time record in Services and a March quarter record for iPhone despite the challenging macroeconomic environment, and to have our installed base of active devices reach an all-time high,” said Tim Cook, Apple’s CEO. “We continue to invest for the long term and lead with our values, including making major progress toward building carbon-neutral products and supply chains by 2030.” He added that laying off yet another batch of employees was not Apple’s current plans and that they are a “last resort.”

It was estimated that Apple would report $92.96 billion in revenue and $1.43 per share in EPS. Apple’s EPS for the quarter came to $1.52 per share, while its gross margin beat the estimated 44.1% to reach 44.3%. Apple’s net income for the same period amounted to $24.16 billion. “Our year-over-year business performance improved compared to the December quarter, and we generated strong operating cash flow of $28.6 billion while returning over $23 billion to shareholders during the quarter,” said Luca Maestri, Apple’s CFO. “Given our confidence in Apple’s future and the value we see in our stock, our Board has authorized an additional $90 billion for share repurchases. We are also raising our quarterly dividend for the eleventh year in a row.”

Despite this, however, Apple’s overall sales fell for the second quarter in a row, while its Mac and iPad failed to clock strong growth amidst a slump in sales and demand for PCs. Worldwide PC shipments fell by 30% in the first quarter of 2023 when compared to the corresponding quarter in the previous year.

The demand for the iPhone (more specifically, the iPhone 14 lineup) continued to remain strong for the quarter and remains one of two major highlights of Apple’s report for the quarter (the Services business being the other one). In fact, it made up the majority of Apple’s revenue for the quarter by bringing in $51.33 billion in revenue (a rise of 2% and beating the estimate of $48.84 billion). There are currently over 1 billion active iPhone devices, Apple noted.

The tech titan has been shifting its production of iPhones away from China in recent times and bringing it to countries like Taiwan and India. Its deeper penetration into overseas markets (as well as overcoming supply chain issues that had hampered the product for the last few years) helped it clock better-than-expected sales for the flagship smartphone series. Apple also recently opened its first-ever retail stores in India, while sales in China dropped by 2.9% for the same period as well.

The same, however, cannot be said of Apple’s Mac and iPad businesses, which is why the rise in revenue from smartphones is particularly impressive. While the Mac brought in $7.17 billion in revenue for the quarter, it declined more than 31% YoY. The revenue from iPads fell by nearly 13% to $6.67 billion. But to be fair, this comes as the PC market clocked a global decline in shipments during the same period, and paints a steep contrast to the days of the pandemic when the demand for PCs skyrocketed amidst an unprecedented shift to remote working and learning.

Revenue from its Services unit amounted to a record $20.91 billion for the quarter, marking an annual increase of 5.5%. The business includes monthly subscriptions and revenue from Apple’s App Store, amongst others. Maestri informed on a call with analysts that Apple expects its performance in the current quarter to be similar to the March one, “assuming that the macroeconomic outlook does not worsen from what we are projecting today for the current quarter.”