iPhone Sales Fell in the First Quarter but Apple's Services, Mac and Wearables Set Revenue Records
Apple said sales for its fiscal second quarter would most likely be lower than expected, a signal that it continues to face weak demand for its iPhone, especially in China.
The maker of iPhones said its revenue fell 5 percent in the first quarter, compared with $88.3 billion a year earlier.
Apple’s revenue came in at $84.31 billion, slightly higher than the company estimated earlier this month, when it warned that sales would fall to about $84 billion. Apple’s warning was its first in more than 15 years. At the time, Apple chief executive Tim Cook cited a slowdown in China’s economy as well as President Trump’s trade war for weakening iPhone demand.
Revenue from iPhone declined 15 percent from the prior year, while total revenue from all other products and services grew 19 percent. Services revenue -- Apple Music, the App Store and others -- reached an all-time high of $10.9 billion, up 19 percent over the prior year. Revenue from Mac and Wearables, Home and Accessories also reached all-time highs, growing 9 percent and 33 percent, respectively, and revenue from iPad grew 17 percent.
The company said it now has 360 million subscribers to both its own and third party services, and set a goal to expand that to 500 million by the end of 2020. It said it now has 1.4 billion active devices, an increase of 100 million from last year, and that 900 million of those are iPhones.
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” said Tim Cook, Apple’s CEO. “Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”
“We generated very strong operating cash flow of $26.7 billion during the December quarter and set an all-time EPS record of $4.18,” said Luca Maestri, Apple’s CFO. “We returned over $13 billion to our investors during the quarter through dividends and share repurchases. Our net cash balance was $130 billion at the end of the quarter, and we continue to target a net cash neutral position over time.”
Apple also said it is expecting lower revenues next quarter — between $55 billion and $59 billion — compared to the same time last year, when it reported revenues of $61.1 billion.