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An unexpectedly strong acceleration in Apple’s services business and a return to growth for the iPhone helped it withstand the worst effects of weaker consumer demand in the latest quarter, although that was not enough to prevent a fourth consecutive period of overall revenue declines.
The tech group reported a 1 per cent fall in revenue from a year before, to $89.5bn, as demand for other gadgets such as Macs and iPads fell, according to figures released late on Thursday. Revenue would have risen had it not been for a 2 percentage point decline caused by exchange rate moves, chief financial officer Luca Maestri said.
However, Apple’s earnings per share rose 13 per cent to $1.46 thanks to the higher margin from services, such as commissions from App Store sales and the share of search advertising revenue it receives from Google.
Wall Street had been expecting revenue of $89.2bn and earnings per share of $1.39.
Services revenue jumped by 16.3 per cent in the quarter, double the rate of the preceding three months and far ahead of the 11.4 per cent most analysts had been expecting. The performance boosted Apple’s gross profit margin for the period to 45.2 per cent, the record for a September quarter, Maestri said.
The fiscal year that ended in September marked Apple’s first revenue decline since a 2 per cent slip in 2019, with sales down nearly 6 per cent at $298bn. Gross margins for the full year reached a record 44.1 per cent, the company said.
Hardware revenue began to stabilise after a first half in which supply shortages and a weakening macroeconomic backdrop dented sales. However, it was not enough to prevent the year ending on a further decline. Most analysts are expecting a return to growth of about 6 per cent in the current fiscal year as services become the main driver of growth and the iPhone 15 sparks a recovery in handset sales.
Apple shares fell nearly 2 per cent in after-hours trading following the earnings release.
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