Apple Reports Record Revenue

• Apple reported fiscal fourth-quarter earnings on Thursday that beat Wall Street expectations on revenue and earnings per share. 
• Apple came up short versus revenue expectations in core product categories including the company’s iPhone business and services. 

Apple Inc. reported record revenue in the September quarter, continuing a pandemic-fueled streak that investors have watched closely as demand for certain consumer goods has been sluggish, reports The Wall Street Journal.

The Cupertino, Calif., company announced its full-year earnings on Thursday after markets closed. To date, Apple’s business has largely proved resilient as broader smartphone-sales slowdowns and global economic challenges have dragged down peers.

“This is better than what we anticipated at the beginning of the quarter,” Apple Chief Financial Officer Luca Maestri said in an interview. Currency fluctuations had a negative impact on the company, he said. The dollar’s value has risen with respect to other currencies this year, a development that has weighed on the results of multinational corporations.

Growth slowed in Apple’s services business, an area some analysts say can point to slowing demand that may affect iPhone sales. Sales from services, which includes revenue from the App Store and Apple TV+, was $19.2 billion, up about 5% from the prior year but lower than year-over-year increases in previous quarters. Maestri said the services deceleration was due to effects of foreign exchange as well as slowdowns in digital advertising and gaming.

Investors have grown concerned about slowdowns in its services business because it is an important area for Apple’s business diversification as the iPhone becomes a more mature product. Earlier this week, Apple raised the price of its Apple Music and Apple TV+ streaming services, which could give a boost to services revenue for the current quarter.

Apple said in a call with investors that year-over-year sales growth in the December quarter will be lower than the 8% revenue increase in the three-month period that ended in September.

Sales from the iPhone, which continue to account for around half the company’s total revenue, were $42.6 billion, advancing 9.7% from the previous year.

Overall sales were up 8% from the prior year at $90.1 billion, a record for the July-to-September period. Net income for the quarter was $20.7 billion, also a record. Total revenue, iPhone sales and net income surpassed analyst estimates.

For the fiscal year, Apple services grew just over 14% to $78.13 billion, a slower rate of growth than 2021′s 16% annual increase, and much slower than 2020′s 27% services growth.  

The business includes several different lines, including Apple’s online services like Apple Music and Apple TV+, revenue from the App Store, hardware warranties, and search deals with companies like Google. Apple said it had 900 million total subscriptions, which includes subscriptions to apps through Apple’s App Store.

Apple recently increased prices for Apple Music and Apple TV+, but the increases started during the December quarter.