iPad Sales and Strong Services Business Boost Apple’s Revenue Growth

Apple

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Company bullish on iPhone upgrades from AI products despite China slowdown and fall in smartphone purchases 

Apple’s revenue increased by 5 percent in the three months ending in June, as earnings from its services business and a surge in iPad purchases offset a decline in iPhone sales and a continued slowdown in China. Total net sales rose to $85.8 billion from $81.8 billion in the second quarter of 2023, surpassing analysts’ expectations of $84.5 billion. Net income increased by 8 percent to $21.4 billion from $19.9 billion, while earnings per share were up 11 percent year on year to $1.40, exceeding the consensus estimate of $1.35. Shares fluctuated between small gains and losses in after-hours trading on Thursday. Apple has risen 18 percent this year and remains the most valuable company in the world with a market capitalization of $3.3 trillion. 

However, revenue for the closely watched Greater China region declined again, falling 7 percent to $14.7 billion from $15.8 billion a year earlier, as Apple continues to face competitive pressure from local handset makers and a governmental ban. Despite acknowledging the challenges in the country amid US-China geopolitical tensions, chief financial officer Luca Maestri noted that on a constant currency basis, the fall in sales was only 3 percent and the rate of decline was slowing. 

More encouraging was Apple’s services business—which includes the App Store, Apple Pay, and the TV+ streaming platform—accelerating to $24.2 billion from $21 billion a year ago. Revenue from its flagship iPhone was $39.3 billion, down slightly from $39.7 billion a year ago. This was offset by a 24 percent jump in iPad sales to $7.2 billion, driven by the release in May of new models with more powerful chips and larger screens. 

“[The] focus will be on underlying demand across various product categories, especially iPhones given concerns around the overall smartphone market and China competition,” said Citigroup analyst Atif Malik. 

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