Apple reported better-than-expected financial results for its fiscal third quarter, ending June 29. The tech behemoth announced that its revenue climbed 4.9% year-over-year to $85.78 billion, surpassing analyst estimates of $84.53 billion, while earnings per share surged to $1.40, marking an 11% increase compared to the previous year.
The firm’s net income for the quarter stood at $21.45 billion, up from $19.88 billion in the same period last year. This financial performance was achieved despite a modest year-over-year decline in iPhone sales, which fell 0.9% to $39.30 billion, a smaller drop than the 2.2% analysts had expected. Looking forward, Apple CFO Luca Maestri indicated that the company expects similar revenue growth in the current quarter.
One of the most significant challenges Apple faces is its performance in China, the company’s third-largest market. Revenue in China fell 6.5% to $14.73 billion, a sharper decline than the 2.4% analysts had predicted. This decline is attributed to intense competition from local brands like vivo, OPPO, and Huawei, who have collectively pushed Apple out of the top five smartphone providers in the region. CEO Tim Cook attributed part of the decline to fluctuating exchange rates, noting that on a constant currency basis, the decline was less severe, around 3%.
“Today Apple is reporting a new June quarter revenue record of $85.8 billion, up 5 percent from a year ago,” Cook commented on the matter. “During the quarter, we were excited to announce incredible updates to our software platforms at our Worldwide Developers Conference, including Apple Intelligence, a breakthrough personal intelligence system that puts powerful, private generative AI models at the core of iPhone, iPad, and Mac. We very much look forward to sharing these tools with our users, and we continue to invest significantly in the innovations that will enrich our customers’ lives, while leading with the values that drive our work.”
A key driver of Apple’s performance was the growth of its services segment, which reached a record high. This division includes revenue from the App Store, Apple Music, iCloud, AppleCare, Apple TV+, Apple Arcade, and Apple News+. The segment’s revenue surged 14% to $24.21 billion, aligning with Apple’s forecast. And while the iPhone remains the company’s flagship product, accounting for approximately 46% of total sales, its performance was mixed. Sales dipped 0.9% year-over-year to $39.3 billion, a smaller decline than anticipated. This is attributed in part to growing anticipation for the upcoming iPhone models, which are expected to feature advanced AI capabilities and features, including Apple Intelligence.
While iPhone sales saw a slight decline, other product segments performed well to balance that decline. iPad segment experienced significant growth, with sales increasing by 23.7% to $7.16 billion, driven by the launch of new AI-focused iPad Pro models and a larger iPad Air in May. This growth was well above analyst expectations of $6.61 billion. Similarly, revenue from its Mac lineup rose by 2% during the quarter. In contrast, the wearables segment, including Apple Watches and AirPods, saw a 2.3% decline in sales to $8.10 billion, though this still exceeded the analyst estimate of $7.79 billion. Maestri also noted that the Cupertino-headquartered Apple set a new record for its quarterly revenue in multiple markets, including India (which is one of Apple’s key markets).
Another factor contributing to Apple’s better-than-expected performance is its strategic focus on AI (something that both Apple and other tech companies have been doing over the past year). At the annual Worldwide Developers Conference (WWDC) in June, Apple unveiled a suite of AI features integrated into its operating systems, including a partnership with OpenAI to enhance Siri’s capabilities. These AI tools will be available on the iPhone 15 Pro models and later versions.
