Apple’s revenue shrinks for the fourth consecutive quarter despite iPhone 15 launch


Apple, the world’s most valuable company, reported its fourth-quarter earnings on Thursday, November 2, 2023. The results showed that Apple’s revenue declined by 1% year-over-year to $89.5 billion, marking the first time since 2007 that the company has experienced four straight quarters of shrinkage.


iPhone 15 sales boost iPhone revenue, but not enough to offset supply chain issues

The main highlight of the earnings report was the performance of the iPhone 15, which was launched in September 2023. Apple CEO Tim Cook said that the iPhone 15 was performing better in its early days than the iPhone 14 last year at this time. He also said that the demand for the iPhone 15 was “very strong” and that the customer satisfaction was “off the charts”.

However, Cook also acknowledged that the global supply chain constraints were affecting the production and delivery of the iPhone 15, as well as other Apple products. He said that the supply issues were “larger than we anticipated” and that they would “continue to be significant” in the December quarter. He estimated that the supply chain problems reduced the revenue by $6 billion in the fourth quarter and would reduce it by another $4 billion in the current quarter.

As a result, Apple’s iPhone revenue grew by only 1% year-over-year to $43.8 billion, despite the launch of the iPhone 15. This was below the analyst expectations of $43.81 billion. Apple also said that it expects the iPhone revenue to grow “year over year on an absolute basis” in the December quarter, but did not provide a specific guidance.

Mac, iPad, and Wearables revenue decline by double digits

Apple’s other hardware businesses did not fare well in the fourth quarter, as they faced both supply chain challenges and tough comparisons with the previous year. Apple’s Mac revenue declined by 16% year-over-year to $8.2 billion, while its iPad revenue declined by 12% year-over-year to $6.1 billion. Apple said that it expected both Mac and iPad revenue to decline by “double digit” percentages in the December quarter as well.

Apple’s Wearables, Home, and Accessories segment, which includes products such as the Apple Watch, the AirPods, and the HomePod, also saw a decline of 11% year-over-year to $8.8 billion. Apple said that it expected this segment to grow “slightly” in the December quarter.

Services revenue grows by 25%, but faces regulatory headwinds

The only bright spot in Apple’s earnings report was the Services segment, which includes revenue from the App Store, Apple Music, Apple TV+, iCloud, and other subscription-based offerings. Apple’s Services revenue grew by 25% year-over-year to $22.6 billion, beating the analyst expectations of $21.35 billion. Apple said that it had over 745 million paid subscriptions across its services, up 160 million from a year ago.

However, Apple’s Services business also faces some regulatory headwinds, as several countries and regions have enacted or proposed laws that would limit Apple’s control over the App Store and its commission rates. For example, South Korea recently passed a law that would allow app developers to use alternative payment methods, bypassing Apple’s 15% to 30% cut. Apple is also facing antitrust investigations and lawsuits from the US, the EU, Japan, Australia, and other markets over its App Store practices.

Apple stock dips after weak outlook for December quarter

Apple’s stock price fell by over 3% in after-hours trading, as investors were disappointed by the weak outlook for the December quarter, which is the busiest and most important time of the year for Apple’s business. Apple did not provide an official hard number guidance, as it has not done since 2020, but CFO Luca Maestri said that the revenue for the current quarter would be “similar” to where it was last year, which was $117.15 billion. Analysts were expecting a revenue of about $123 billion, representing a growth of about 5%.

Maestri also said that the gross margin for the December quarter would be between 43.5% and 44.5%, lower than the 44.8% in the fourth quarter and the 45.1% in the year-ago quarter. He attributed the lower margin to the higher costs of components, freight, and labor, as well as the unfavorable foreign exchange rates.

Apple’s lack of clear path to growth this holiday season after four straight quarters of shrinkage raises some questions about the company’s ability to sustain its market leadership and valuation, especially as it faces increasing competition and regulation in the global smartphone and digital services markets.

By Kane Wilson

Kane Wilson, founder of this news website, is a seasoned news editor renowned for his analytical skills and meticulous approach to storytelling. His journey in journalism began as a local reporter, and he quickly climbed the ranks due to his talent for unearthing compelling stories. Kane completed his Master’s degree in Media Studies from Northwestern University and spent several years in broadcast journalism prior to co-founding this platform. His dedication to delivering unbiased news and ability to present complex issues in an easily digestible format make him an influential voice in the industry.

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