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Apple’s Q1 2023 earnings report was far from stellar for investors with record services revenue.
Overall revenue was down more than 5% from a year ago as Apple failed to match last year’s sales across all of its hardware categories. iPhone revenue was $65.78 billion for the quarter, down 8.17% year-on-year. Its “Other Products” category, which includes the Apple Watch and AirPods, also fell 8.3% year-on-year to $13.48 billion. Mac hardware sales fell 30% year-over-year to $7.74 billion.
Where Apple has seen growth is its services division, which includes Apple Music, TV+, iCloud and Apple Care. Revenue from its services rose 6.4% year-on-year to $20.77 billion, while iPad grew 29.66% year-on-year to $9.4 billion.
Apple CEO Tim Cook told investors on the earnings call that his company’s lackluster earnings report was due to a “challenging macroeconomic environment.” Production and supply issues in China continue to plague the company, with shipments several weeks behind supply. According to Apple, there are two billion active Apple devices in the hands of users around the world. Apple also declined to provide guidance for the second quarter, continuing the trend of not offering guidance since the pandemic began in 2020.
Apple doesn’t break down its service subscriptions, so it’s impossible to know how many Apple Music subscribers there are without direct reporting. But the company revealed it now has more than 935 million paid subscriptions, up from 150 million in the past 12 months. Tim Cook says his company continues to remain excited about the wearables category, despite slowing sales.
Apple CFO Luca Maestri suggests that year-over-year revenue for the next quarter should be similar to December. US manufacturing of silicon at new factories in Arizona is unlikely to raise iPhone manufacturing prices, according to Tim Cook. He also thinks people are willing to pay an above-average retail price for Apple and iPhone devices. “I think people are ready to really stretch to get the best they can afford in this category,” he told one investor.
