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Apple’s record service revenue couldn’t make up for falling hardware sales

Not even a new iPhone could save the company from the economic downturn

Cherlynn Low / Engadget

As many Apple watchers have predicted, the company's financial results this quarter are a break from the last few years of nonstop growth. The iPhone maker reported a revenue of $117.2 billion for its first fiscal quarter (ended December 2022), which is five percent down year over year, marking the first time Apple's revenue is down since 2019.

There are a couple of bright spots in the company's performance, namely in its setting a revenue record of $20.8 billion in its Services business and hitting more than 2 billion active devices in its installed base. All-time revenue records were also set in markets like Canada, Indonesia, Mexico, Spain, Turkey and Vietnam.

In a statement, CEO Tim Cook said "As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do."

On its earnings call, Cook said there were three main things that impacted revenue: the "challenging macroeconomic environment", foreign exchange issues and COVID-related supply constraints that led to delays in the ship times of iPhone 14 Pro and Pro Max models. "Production is now back to where we want it to be," he added.

Apple's decline in revenue is in line with a general slump in the tech industry, with Meta having just reported revenues that are 4 percent down from the previous year. Alphabet is also seeing a slowdown in growth this quarter, and while Microsoft saw its revenue climb, its earnings missed expectations and profits fell by 12 percent. Amid the economic downturn, tech companies have been laying off significant portions of their workforce, though Apple doesn't appear to have made similar moves at the moment.