Apple on Thursday posted its fourth consecutive quarter of year-over-year sales declines as the iPhone maker continues to struggle with slower device sales amid an uncertain economic environment.
The company reported $89.5 billion in sales for the three months ended September 30, down 1% from the same period in the prior year and essentially in line with the $84.3 billion Wall Street analysts had expected. Despite the sales dip, Apple’s net income from the quarter grew nearly 11% year-over-year to $22.96 billion, beating analysts’ projections.
Apple (AAPL) shares fell more than 1% in after-hours trading following the report.
“During the September quarter, we continue to face an uneven macroeconomic environment,” Apple CEO Tim Cook said in an analyst call Thursday. “We’ve continued to invest in the future … We’ve adapted continuously to circumstances beyond our control, while being thoughtful and deliberate on spending.”
Revenue from Apple’s products segment dipped more than 5% year-over-year during the September quarter, driven in particular by declines in Mac and iPad sales. (CFO Luca Maestri noted on the analyst call that the product segment faced a difficult comparison with the year-ago quarter, when the company fulfilled a large number of orders that had been backed up due to an earlier supply disruption.)
iPhone revenue, however, ticked up by 3% from the year-ago quarter to $43.8 billion, marking a September quarter iPhone sales record.
Apple also hit a record number of installed devices actively in use across all of its products and geographic segments, Maestri said on the analyst call.
The sales numbers may provide an early indication of the performance of the iPhone 15, following concerns from analysts that consumers would have fewer incentives to upgrade because the new lineup featured only minimal improvements. However, the iPhone 15 lineup went on sale only eight days before the end of the September quarter, so its real impact likely won’t be felt until Apple reports for the crucial holiday quarter. The company also announced upgrades to its laptops and desktop computers earlier this week.
“We believe this precarious macro [economic] environment, combined with a mature market, will lead to an uninspiring iPhone 15 cycle,” Brian White, an analyst at Monness Crespi Hardt said in a research note ahead of Apple’s Thursday earnings report.
Cook said Thursday that “it’s really too early to call the iPhone  cycle … it’s really too early to tell what the upgrade rates will be and what the switcher rates will be.”
Analysts also pointed to the 2.5% year-over-year dip in Apple’s China sales during the September quarter as a sign that the iPhone maker could be losing ground in that crucial market.
“Apple’s worrying China sales figures indicate demand for its high-end iPhones is slowing more than expected in the face of rising competition from local companies, including Huawei,” Investing.com senior analyst Jesse Cohen said in an emailed statement following Thursday’s report.
Cook, however, told analysts that Apple faced a difficult foreign exchange rate in China, and that iPhone sales in fact hit a September quarter record in mainland China. He said the sales dip in the region was largely caused by declines in Mac and iPad revenue, similar to the company’s overall results.
Sales growth in Apple’s services segment, however, continues to partially offset the declines in device revenue growth. Revenue from the services unit, which includes Apple’s subscription products like Apple TV+, notched more than 14% year-over-year gains in the September quarter, hitting an all-time quarterly record of more than $22 billion.
And the company could see an additional boost from the services business in the December quarter after Apple last month hiked the prices of its Apple TV+, Apple Arcade and Apple News subscriptions by $2 or $3 per month each.
Apple expects total company revenue in the December quarter to be essentially flat from the prior year, Maestri said, adding that the 2023 December quarter is a week shorter than it was a year ago.
Cook on Thursday also teased the launch of its Vision Pro mixed reality headset, which is expected to be available to consumers early next year. He said developers have been working with the product in select developer labs Apple set up around the world to build apps, and “there’s some real blow away kinds of things that are coming out.” Cook added that the Vision Pro will initially be sold only in Apple stores, so the company can educate consumers about how to use them.