Apple’s Q1 2023 earnings report was less than stellar for investors with one bright point–record services revenue.
Overall revenue was down more than 5% compared to last year as Apple failed to match sales of last year across its hardware categories. iPhone revenue was $65.78 billion for the quarter, down 8.17% YoY. Its ‘Other Products’ category that includes the Apple Watch and AirPods was similarly down 8.3% YoY at $13.48 billion. Mac hardware sales were down 30% YoY at $7.74 billion.
Where Apple did see growth was its services division, which includes Apple Music, TV+, iCloud, and Apple Care. Its Services revenue was up 6.4% YoY at $20.77 billion, while the iPad grew 29.66% YoY to $9.4 billion.
Apple CEO Tim Cook told investors during 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 shipping running several weeks behind supply. According to Apple there are two billion active Apple devices in users’ hands across the globe. Apple also declined to give any guidance for Q2, which continues the trend of not offering guidance since the pandemic began in 2020.
Apple doesn’t break out its Services subscriptions, so it’s impossible to know how many Apple Music subscribers there are without a direct statement. But the company did reveal it now has more than 935 million paid subscriptions, up 150 million during the last 12 months. Tim Cook says his company continues to remain excited about the wearables category, despite the slowdown in sales.
Apple CFO Luca Maestri suggests that year over year, revenue for the next quarter is expected to be similar to December. U.S. manufacturing of silicon in new plants in Arizona isn’t expected to raise prices for iPhone manufacturing, according to Tim Cook. He also believes people are willing to pay a higher-than-average selling price for Apple and iPhone devices. “I think people are willing to really stretch to get the best they can afford in that category,” he told an investor.