Apple delivered solid financial results for the June 2023 quarter that beat Wall Street estimates, even as top-line revenue dipped 1.4% on lower-than-expected iPhone sales.
CEO Tim Cook boasted of a new milestone for the world’s biggest tech company: It now has more than 1 billion paid subscriptions across all apps and services, up 150 million year over year. During the quarter, sales in Apple’s services unit grew 8.2%, to $21.21 billion. The services segment includes the App Store, Apple Pay, Apple Card and subscription services such as Apple TV+, Apple Music and iCloud.
On the earnings call, Cook said Apple TV+ also set a quarterly revenue record (but the company doesn’t break out results for individual services) and called out the streamer’s 54 nominations for the 2023 Emmy Awards.
Overall, the company reported quarterly revenue of $81.8 billion, down 1.4% year over year, and net income of $19.9 billion or earnings per diluted share of $1.26, up 5%, for the three months ended July 1 (its fiscal third quarter of 2023). While Apple exceeded analyst expectations on services revenue, sales of iPhones — its largest segment — undershot estimates at $39.7 billion (down 2.4% year over year). Overall, Wall Street pegged revenue of $81.64 billion and EPS of $1.19, according to Refinitiv.
Apple’s tally of paid subscriptions includes both Apple-branded offerings like Apple Music and Apple TV+ and services via third-party apps. The company reported 975 million paid subscriptions in the previous quarter. “We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” Cook said in announcing the results.
For the September quarter, Apple expects sales growth in services and iPhone businesses to accelerate compared with the most recent period, CFO Luca Maestri said on the call. “The subscriptions businesses is very healthy,” he said, noting the 1 billion number is nearly a doubling from three years ago.
Meanwhile, Mac sales fell 7.3% in the June quarter and iPad revenue was down 19.8%. Sales in Apple’s Wearables, Home and Accessories segment, which includes Apple Watch, rose 2.5% to $8.28 billion.
In June, Apple unveiled Vision Pro, an augmented-reality/VR headset to be priced at a steep $3,500 a pop when it first goes on sale in early 2024, with partners including Disney+. It marks the company’s first entry into a new product category since the Apple Watch launched in 2015. “I believe that augmented reality is a profound technology,” Cook said at the time, predicting it would establish “spatial computing” in the same way the iPhone introduced smartphones to millions of people. On the call Thursday, he said Apple is now shipping Vision Pro units to developer partners, adding, “I’m using the product daily.”
