Apple Notches 2% Revenue Increase to New Record as iPhone, Services Sales Slow Down

·2-min read

Apple’s cash register kept ringing in the June quarter, as the tech giant posted a new quarterly revenue record of $83.0 billion, helping the company knock out a Wall Street earnings beat. But iPhone sales slowed down dramatically, and Apple’s services revenue fell versus the prior quarter.

For the June quarter, sales of iPhones — by far Apple’s biggest business segment — were $40.67 billion, up 2.8% year over year. Analysts had anticipated a decline in the iPhone segment after Apple had previously warned investors that the June 2022 quarter results would be affected by COVID-related supply-chain constraints and restrictions in China.

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Apple’s Services segment, which includes the App Store, Apple Music, Apple TV+, iCloud and other subscription businesses, generated $19.6 billion in sales for the quarter, up 12.1%. However, the services revenue was down about $200 million sequentially compared with a record $19.8 billion in the first three months of 2022.

The company ended the June quarter with more than 860 million paid subscribers for digital services, up more than 160 million in the last 12 months, CFO Luca Maestri said on the earnings call. The figure comprises both Apple-branded offerings like Apple Music and services via third-party apps.

Apple CEO Tim Cook, asked whether the company was looking at any acquisitions to augment its services biz, said it would have to be a good strategic fit. To date, Apple has concentrated M&A on smaller companies and intellectual property, Cook said, “but I wouldn’t rule anything out and obviously we are constantly surveilling the market.”

Overall, Apple reported revenue of $83.0 billion, up 2% year over year, and quarterly earnings per diluted share of $1.20 for the three months ended June 25, which is its third quarter of fiscal 2022. Net income was $19.4 billion, down 10.6%. On average, Wall Street analysts expected $82.81 billion in revenue and earnings of $1.16 per share.

In his opening remarks on the call, Cook touted Apple TV+’s burgeoning slate of originals, noting that Apple TV+ series earned 52 Primetime Emmy Award nominations this year across 13 titles. Since its November 2019 launch, Apple TV+ has now earned 250 awards wins and more than 1,100 award nominations.

“We’re proud of how Apple TV+ productions like ‘Severance’ and ‘Black Bird’ have captured the popular imagination, and we’re looking forward to more exceptional content developed by extraordinary creators throughout the year,” Cook told analysts.

Cook also highlighted Apple’s 10-year deal to stream Major League soccer matches worldwide on Apple TV+, adding to its MLB pact for “Friday Night Baseball” games on the service.

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