Apple warned investors on Thursday not to expect revenue growth in the December quarter, the busiest and most critical time of year for the company.
Apple surpassed analyst estimates in its fiscal fourth-quarter earnings report on Thursday, and CEO Tim Cook said the iPhone 15 was performing better in its early days than the iPhone 14 did last year at this time.
Nonetheless, revenue declined around 1% year on year to $89.5 billion, marking the fourth consecutive quarter of decline. This is the longest period of time for Apple since before the iPhone debuted in 2007.
Despite a somewhat upbeat prognosis for iPhone sales, CFO Luca Maestri’s comments on Thursday alluded to persistent deterioration in Apple’s Mac, iPad, and Wearables divisions.
Apple has not provided official hard number estimates since 2020. Instead, Maestri stated that revenue for the current quarter will be “similar” to last year, implying that the corporation will encounter some difficulty during the crucial holiday season.
During extended trading, the stock dropped 3.4%.
According to Maestri, Apple’s CFO, the final quarter of the calendar year “will last the usual 13 weeks, whereas the December quarter a year ago spanned 14 weeks.”
According to Maestri, the extra week last year increased total revenue by around 7%.
“Despite having one less week this year, we expect our December quarter total company revenue to be similar to last year,” Maestri said in a statement.
Wall Street had higher hopes. The previous year’s revenue was $117.15 billion. Analysts predicted that sales would be at $123 billion in the December quarter, marking a 5% increase.
Maestri stated that the iPhone will expand “year over year on an absolute basis,” even if previous comparisons are adjusted to include sales lost due to supply chain interruptions.
Last year, Apple recorded $65.78 billion in iPhone sales in the December quarter.
Apple’s other hardware operations, on the other hand, do not appear to be faring as well.
According to Maestri, the Mac business will “significantly accelerate from the September quarter.” Mac revenue decreased roughly 34% year on year in the September quarter, so even a large increase signals a drop from last year.
Apple explained that the dip in Mac sales this quarter was due to difficult comparisons to 2022, when sales were moved from one period to another due to supply shortages.
Apple recorded $7.74 billion in revenue from its Mac division in the December quarter of last year.
Apple’s iPad and wearables businesses both declined year on year in the September quarter, and Apple expects even bigger decreases this quarter. Apple saw a 10% drop in iPad revenue.
According to Maestri, Apple will refresh some iPad models in October 2022, which will improve sales. This year, the business has not produced any new iPad models.
Last holiday season, a new AirPods model, a low-cost Apple Watch, and the costly Apple Watch Ultra all contributed to a full quarter of sales. This September, Apple announced AirPods with a new charger as well as an upgrade to the Apple Watch Ultra.
This holiday season, one bright light for the company will be its services division, which includes App Store sales, online cloud storage, AppleCare warranties, advertising and licensing arrangements with Google, and subscriptions such as Apple Music.
“For our Services business, we expect the average revenue per week to grow at a similar, strong double-digit rate as it did during the September quarter,” Maestri said in a prepared statement. According to the corporation, Apple services climbed 16%.