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

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.

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