Apple announced its earnings results for the fiscal fourth quarter of 2023, ending on September 30th. The company posted $89.5 billion in overall revenue, down 1% year-over-year but slightly exceeding analysts’ estimates. Earnings per share came in at $1.46, up 13% compared to a year ago, and also topping expectations.

The results marked Apple’s fourth straight quarter of declining yearly revenues as the company grapples with macroeconomic challenges and slowing device upgrade cycles. However, iPhone sales rebounded thanks to the new iPhone 15 lineup while services revenue hit an all-time high.

Smartphone Sales Rebound on the Back of the iPhone 15’s Release

A bright spot for Apple (AAPL) was the iPhone, with sales rising 3% year-over-year to $43.8 billion. This growth was driven by the successful launch of the iPhone 15 and 15 Pro models in September.

The CEO of the Cupertino-based tech firm, Tim Cook, said that the iPhone 15 lineup has gotten off to a good start, setting quarterly records in both China and the U.S. However, he noted that supply constraints on the higher-end Pro models continue but said that production figures are improving.

“We now have our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030”, Cook told investors in his prepared remarks.

The new iPhones went on sale on September 16th, just over a week before the end of the quarter. So the wider impact on iPhone sales growth will not be seen until the holiday-heavy December quarter.

That said, the initial iPhone 15 sales results are encouraging despite concerns about consumer spending weakness. The iPhone remains Apple’s most important product, representing over 49% of its total fourth-quarter revenue.

Shares of the tech giant are dropping by 0.8% during today’s stock trading session following the release of its quarterly statement.

Services Revenue Keep Surging to New Highs

Apple’s services segment continued its strong momentum, with revenues rising 14% year-over-year to a new all-time high of $22.3 billion. The services division includes offerings like the App Store, Apple Music, iCloud, Apple Care, and newer services such as Apple TV+, Apple Arcade, and Apple Fitness+.

Apple has amassed nearly 1 billion paying subscribers for its services ecosystem. It is benefiting from broad-based growth globally across both digital services and offerings like the extended-warranty program Apple Care.

The services segment has become Apple’s second largest division, generating 25% of its total sales as of this past quarter. The unit has helped Apple diversify its revenue streams beyond just hardware sales.

Weakness in Mac and iPad Sales Continue to Hurt Apple’s Hardware Segment

Offsetting the iPhone and services strength, Apple saw significant declines in other hardware categories as macroeconomic conditions across the globe continued to be in relatively poor shape.

Mac sales plummeted 66% year-over-year to $7.6 billion, reflecting weak demand and tough comparisons to the prior year’s strong back-to-school season. Apple just announced new high-end MacBook Pro laptops and iMac desktops powered by the firm’s faster M3 chips to potentially revive this segment’s growth heading into the holidays.

Meanwhile, iPad revenues fell 11% to $6.4 billion as consumers held off purchasing new tablets. However, Cook said that the installed base of iPads reached new highs during the quarter.

Finally, wearables, home, and accessories sales dipped by 4% to $9.3 billion, impacted by lower demand for smartwatches and AirPods. Apple Watch sales tend to be weaker in the September quarter ahead of new product launches.

Greater China Sales Drop Amid Heavy Competition From Huawei and Xiaomi

From a geographic perspective, Apple’s revenues experienced positive growth in the Americas only. Meanwhile, sales in Greater China fell 3% overall. Along with Europe, China continues to be an important market for the tech giant and investors tend to pay attention to how sales are behaving as this could either catalyze or plunge the company’s future growth.

Apple continues to face tougher competition from local rivals in Asia like Huawei and Xiaomi. The company also cited currency headwinds as one of the factors that negatively impacted its Chinese revenues.

However, Cook emphasized that iPhone sales in mainland China reached a new September quarter record. Apple’s penetration in the premium smartphone segment remains strong there.

Apple’s Q1 2024 Forecasts Disappoints Wall Street


For the holiday-driven first quarter of 2024, Apple forecasted that revenues will remain flat year-over-year. These estimates disappointed market participants as analysts estimated a 6% revenue growth for the period.

Apple partially blamed a shorter quarter of only 13 weeks compared to 14 weeks last year. Without this variation, its guidance would imply an 8% revenue growth. However, investors remained disappointed amid the high expectations that they placed on the iPhone 15 series for the crucial holiday shopping season.

Cook emphasized that the company is adopting a conservative stance given the uncertainty of global economic conditions.

Despite the sales decline, Apple generated robust cash flow and maintained stellar profitability. The company’s cash flow statement shows that $15 billion were distributed to stockholders in the form of dividends while the company repurchased $77.6 billion of its stock within the past 12 months.

Apple ended the quarter with $161 billion in liquid reserves, underscoring its tremendous financial strength. The company is able to invest aggressively in new products, services, and future innovations by relying on this sizable war chest.

The initial success of the strategic iPhone 15 release may have reignited some positive momentum heading into 2024. Nonetheless, Apple faces various near-term headwinds including weaker consumer demand and ongoing supply chain constraints.

Overall, the company delivered a respectable Q4 performance considering the tough macro backdrop. In addition, it maintains tremendous brand loyalty and industry-leading profitability. That said, returning to healthier top-line growth figures will require reviving broader hardware sales beyond just the iPhone.