Apple on Thursday reported its fourth straight quarter of annual sales declines as the iPhone maker continues to struggle with slower device sales amid an uncertain economic environment.
The company reported sales of $89.5 billion for the three months ended Sept. 30, down 1% from the same period a year earlier and in line with the $84.3 billion expected by Wall Street analysts. Despite the decline in sales, Apple’s net income for the quarter beat analysts’ estimates, rising nearly 11% year over year to $22.96 billion.
Shares of Apple ( AAPL ) fell more than 1% in after-hours trading after the report.
“During the September quarter, we continue to face a challenging macroeconomic environment,” Apple CEO Tim Cook said on Thursday’s analyst call. “We’ve continued to invest in the future … We’ve continuously adapted to circumstances beyond our control, while making thoughtful and deliberate spending.”
Revenue from Apple’s products segment fell more than 5% year over year in the September quarter, mainly due to lower Mac and iPad sales. (CFO Luca Maestri noted on the analyst call that the product segment faced a difficult comparison to the year-ago quarter, when the company fulfilled a large number of orders that had been backlogged due to earlier supply disruptions.)
However, iPhone revenue rose 3% year-over-year to $43.8 billion, setting a record for iPhone sales in the September quarter.
Maestri said on the analyst call that Apple also hit a record number of installed devices that are actively used across all of its products and geographic segments.
The sales figures could provide an early indication of the iPhone 15’s performance, after analysts worried that consumers would be less eager to upgrade, with the new lineup featuring only minimal upgrades. However, the iPhone 15 series went on sale just eight days before the end of the September quarter, so its real impact likely won’t be felt until Apple reports for the crucial holiday quarter. The company also announced earlier this week that it is upgrading its notebook and desktop PCs.
“We believe in this dangerous macro [economic] The environment combined with a mature market will lead to an uninspiring iPhone 15 era,” Monness Crespi Hardt analyst Brian White said in a research note ahead of Apple’s Thursday earnings report.
“It’s really quick to call the iPhone,” Cook said Thursday  period … it’s really early to tell what the upgrade rates will be and what the replacement rates will be.
Analysts also pointed to a 2.5% year-on-year decline in Apple’s China sales in the September quarter as a sign that the iPhone maker could be losing ground in this important market.
“Apple’s troubling China sales figures suggest that demand for its high-end iPhones is slower than expected in the face of growing competition from domestic companies including Huawei,” Investing.com senior analyst Jesse Cohen said in an emailed statement following the report on Thursday. .
However, Cook told analysts that Apple was facing a difficult exchange rate in China, and that iPhone sales actually hit a record for the September quarter in mainland China. According to him, the decrease in sales in the region is mainly due to the decline in Mac and iPad revenues, similar to the company’s overall results.
However, sales growth in Apple’s services segment continues to partially offset declines in device revenue growth. Revenue from Apple’s services division, which includes subscription products like Apple TV+, rose more than 14% year-over-year in the September quarter to a quarterly record of more than $22 billion.
The company may see further growth in its services business in the December quarter after Apple last month raised the prices of Apple TV+, Apple Arcade and Apple News subscriptions by $2 or $3 a month.
Apple expects total company revenue in the December quarter to be flat from a year earlier, Maestri added, adding that the December 2023 quarter was a week shorter than a year ago.
On Thursday, Cook also touched on the launch of the Vision Pro mixed reality headset, which is expected to be available to consumers early next year. Developers work with the product in select developer labs that Apple has set up around the world to create apps, he said, and “there are some things that are coming out.” Cook added that the Vision Pro will initially be sold exclusively at Apple stores so the company can educate consumers on how to use them.