Apple’s overall profits decline in spite of record-breaking sales of iPhones and services

The company reports a sales loss for the fourth quarter in a row, yet shares are up roughly 32.5% so far this year.

With $89.5 billion in revenue for the quarter that ended in September, Apple reported its fourth straight revenue loss, down 1% from the prior quarter. Even while the total quarterly revenue exceeded Wall Street estimates of $89.28 billion, the dip was not unexpected. According to Apple CEO Tim Cook, the company did record quarterly revenue for the quarter that ended in September with $43.81 billion in iPhone revenue and $22.3 billion in services revenue.

Apple’s stock increased more than 2% ahead of the planned results call, and shares have already increased by roughly 32.5% this year despite the anticipated decline in sales. With the holidays approaching, the corporation is approaching its busiest quarter, which is when the financial report is out. It is probable that investors will be seeking information regarding the current quarter’s performance as well as the state of demand for the iPhone 15, which was released a few days before the end of the quarter. Mac revenue decreased 34% year over year to $7.6 billion, while iPad revenue decreased by 10%.

“A huge milestone in our efforts to make all Apple goods carbon neutral by 2030, we now have our strongest range of products ever coming into the holiday season, including the iPhone 15 lineup and our first carbon-neutral Apple Watch models,” Cook said in a statement.

Cook claims that Apple’s service income, which analysts believe adds value to the company’s hardware, has increased from $19.2 billion to $22.3 billion, another new high. According to the earnings call, Apple now has 1 billion active subscriptions across all of its products, which is twice as many as it had three years ago. Analysts predict that the company’s pricing increases on products, such as Apple TV+ and Apple News, which it announced last week, will pay off in the upcoming quarter. (Apple TV+ now costs $9.99 a month instead of $6.99.) Forrester chief analyst Dipanjan Chaterjee stated that the swift expansion of services “offsets declines from the Mac and iPad lines of business.”

In an email comment, Chaterjee added, “This is a good thing because services create stickiness and recurring revenue and have much higher margins than products.” “Services revenue will increase even more as a result of the recent increases in subscription revenue pricing, though the full effect won’t be felt until the following quarter.”

Apple has to contend with unstable markets outside of the US. The company has been growing its retail business; this week it opened a new location in China, and in April it opened its first-ever store in India. Nonetheless, Apple’s $15.5 billion quarterly revenue from China fell short of the $16.8 billion analysts had predicted.

Long-term Apple service users are also more likely to purchase another Apple device, according to Julie Ask, vice-president and principal analyst at Forrester.

“The crucial figure is services revenue,” Ask stated. “Apple has a long game planned. Hardware becomes more valuable with services. The services are worth more when there are more devices. Apple gets a deeper understanding of its customers and can function as a virtual assistant to them the more frequently they use their products and services.