Apple reports Q1 revenue down 5% YoY to $117.2B, marking its largest annual quarterly revenue decline since 2016, and net income down 13% YoY to $30B

Installed base crosses 2 billion active devices and hits all-time high for all major product categories — Services set new all-time revenue record

Apple 2023-02-03

Context & Ripple Effects

Apple’s Q1 decline came after a prior quarter in which it reported record Q3 revenue but lower net income, while its earlier Q1 reporting showed services growing faster than device shipments. The current results pair a sharper top-line decline with a record in Services and an installed base above 2 billion active devices.

The subsequent second consecutive quarterly revenue decline and third straight quarter of declining revenue show that the Q1 result became the opening point of a broader 2023 sales slowdown, rather than an isolated miss.

First-order effects

Apple enters the quarter with revenue down 5% and net income down 13%, putting immediate pressure on its hardware-led growth and profitability.
A record Services result and an all-time-high active-device base give Apple a larger base from which to generate recurring revenue while total sales fall.

Second-order effects

Apple’s ability to grow Services during a revenue decline raises the strategic value of monetizing each active device, rather than relying solely on new hardware sales.
The continued declines reported in Q2 and Q3 make Services performance a more important offset in how Apple’s quarterly results are assessed.

Third-order effects

If hardware sales remain uneven, Apple’s business mix is likely to be judged increasingly by revenue per active device: the installed base becomes a central growth asset alongside unit sales.
The pattern points toward a more durable split between cyclical device demand and recurring platform revenue, with Apple’s scale in active devices determining how much the latter can cushion the former.

The trend: Large device platforms are increasingly using installed-base monetization to stabilize growth when hardware revenue weakens.

Discussion

@Gartenberg@mastodon.social Michael Gartenberg on mastodon
More and more people are holding on to their devices longer but still wanting to do more with the devices they do have. Hardware is down and services are up but at the end of the day, the hardware is still the business. …
@patrickmcgee_ Patrick McGee on x
*breaking* @Apple earnings: Revenue: $117.2bn, -5.5% Net Profit: $30bn, -13.4% iPhone sales: $65.8bn, -8.2% Services: $20.8bn, +6.4% Shares down 4.6% *thread* https://twitter.com/...
@markgurman Mark Gurman on x
A tough quarter for Apple: 5% year over year revenue decline that also substantially misses Wall Street estimates. Big iPhone sales decline, as well as misses on Macs and Wearables. Positives are iPad and Services. Company blames economy and supply chain. https://www.bloomberg.co…
@aatilley Aaron Tilley on x
Tim Cook on whether layoffs will happen at Apple: “I view layoffs as a last resort kind of thing,” Mr. Cook said. “You can never say never. We want to manage costs in other ways to the degree that we can.” https://www.wsj.com/...
@carnage4life Dare Obasanjo on x
Apple had the roughest time of the big techs with revenue down -5%. iPhone revenue was -8% while Mac was -30% mirroring steep decline in PC market seen in Microsoft & Intel earnings. Despite all the red, Tim Cook implied layoffs are a last resort. https://arstechnica.com/...
@gregcrennan @gregcrennan on x
Back in my day when $AAPL had its worst quarter in years the like in 2016 the stock would be down -8% after hours not a measly -3% and would be near record lows and trade at a discount to the overall market not a premium. https://twitter.com/... https://twitter.com/...
@zollotech Aaron Zollo on x
Apple announces its first quarter revenue results. All new record for services at $20.8 billion Quarterly Revenues of $117.2 billion which is down 5% from last year. $34 Billion in operating cash flow https://www.apple.com/...
@munster_gene Gene Munster on x
$AAPL has only missed 3 out of the almost 60 quarters I've followed the company. I'm happy to report, despite the shortfall, the core business is intact. The reason; Apple's customer base remains in love with and loyal to their products.
@dez_blanchfield Dez on x
Trillion dollar company not making insane profits for a for weeks.. or.. “Apple Q1 earnings miss the mark almost across the board” ;-) my heart bleeds for them, it truly does[n't].. https://arstechnica.com/...
@lisamateotv Lisa Mateo on x
Apple blames a poor holiday quarter...it's worst in 4 years...on supply chain issues and a softening economy. https://www.bloomberg.com/...
@bdsams Brad Sams on x
Thoroughly enjoying Apple is doomed Twitter when the company made over $100b in revenue.
@anthony Anthony DeRosa on x
Apple earnings: MISS on top and bottom Apple's overall sales for the holiday quarter were about 5% lower than last year's, the first year-over-year sales decline since 2019. $AAPL https://www.cnbc.com/... https://twitter.com/...
@neilcybart Neil Cybart on x
Apple's granular 1Q23 results: - iPhone revenue: $65.8B (my estimate: $70.8B) - Services: $20.8B (vs. my $20.1B) - Mac: $7.7B (vs my $7.7B) - Wearables / Home: $13.5B (vs. $16.6B) - iPad: $9.4B (vs. $7.9B) Really good iPad results offset weak wearables. iPhone weak on supply.
@teroterotero Tero Kuittinen on x
Apple did with iPhone what Motorola did with RAZR - bet everything on a single, expensive product line that they froze without any meaningful annual changes. There is a LOT riding on the AR glasses now.
@caro_milanesi Carolina Milanesi on x
3 factors impacting Apple's performance: - currency - COVID related supply constraints on iPhone14 and 14Pro - macro-economic environment. We are thoughtful and deliberate and we manage for the long-term says @tim_cook #AAPL
@rsgnl Joe Rossignol on x
Apple's Q4 2022 revenue is down 5% compared to the year-ago quarter — worse than the average 2% forecasted. First quarter with a decline since before the pandemic.
@divestech Dan Ives on x
Street was fearing a negative Apple conf call...yet demand holding up firmer than feared. Services showing rebound which is key. Clearly some wild cards but this is not an Cupertino backing down on demand front. When Cook talks everyone listens. A masterpiece conf call for tech.
@divestech Dan Ives on x
Big Tech calls from Apple, Amazon, and Alphabet painting a much different picture of demand environment than the tech bears were hoping for. Caution in the air BUT sounds more like soft landing backdrop. Many yelling fire into a crowded theater-tech eps season better than feared
@rsgnl Joe Rossignol on x
This is not concerning to me. Pandemic-induced demand that sent Apple's revenue skyrocketing is probably slowing and the iPhone 14 Pro faced significant supply constraints due to pandemic issues in China. Apple is expected to return to growth this year. Extremely rare miss!
@patrickmcgee_ Patrick McGee on x
Biggest question for earnings - which CFO declined to answer, saying to wait for the call - is what demand is like YTD. the ~8% iPhone shortfall from December quarter is either lost forever, or is made up for from Jan-March. Stock reaction will be determined by that info. https:/…
@patrickmcgee_ Patrick McGee on x
Total revenue in the quarter fell 5.5% to $117.2bn, below forecasts of $121.1bn, according to Refinitiv. Analysts had been pricing in a 2% decline after Apple warned of supply chain disruptions in November. Net profits fell 13.4% to $30bn, below forecasts of $31bn.
@neilcybart Neil Cybart on x
Apple Guidance: 2Q23 revenue growth will be similar to December quarter. If I heard that correctly, that is weak guidance.
@greengart Avi Greengart on x
This terrible, very bad quarter for @apple meant that it only earned about $30 billion in profit over the past three months. Apple is doomed.
@neilcybart Neil Cybart on x
iPhone channel inventory ended the quarter below Apple's target range. No surprise there given that iPhone revenue figure. $AAPL
@patrickmcgee_ Patrick McGee on x
For context: before Covid hit “iPhone City,” analysts were forecasting $128.5bn in @apple revenue, versus $123.9bn the year before. Actual revenue fell 5.5% to $117.2bn.
@domsplaying Dom on x
Rough quarter for Apple. 5% was largest quarterly revenue decline since 2016. First YoY sales decline since 2019. Missed analyst estimates for 1st time in ~ 7 years. Strong dollar, production hiccups & macro pressures. Tough for consumer tech right now. https://www.cnbc.com/...
@copernicus2013 Igor Schatz on x
Apple is expected to say its sales fell 2% in the December quarter, as the iPhone maker contended with manufacturing disruptions in China https://www.wsj.com/...
@drbarnard David Barnard on x
@iansherr I missed the first part of the call, did Apple make is clear that Q1 2023 had an extra week compared to Q1 2022? The 5% decline YoY is actually worse than it appears. https://twitter.com/...
@benbajarin Ben Bajarin on x
Apple's store foot traffic to demand model has to be one of its strongest competitive advantages in predicting demand.
@htsfhickey Fred Hickey on x
AMZN, GOOGL, AAPL all out with crappy reports, but AAPL likely most important. “The quarter was a stunning miss by Apple, and its first earnings miss versus consensus expectations in almost seven years.” CC will be key with supply shortage excuse no longer https://www.cnbc.com/..…
@divestech Dan Ives on x
This is a confident Cook on the conf call. Macro remains uncertain but December was a supply chain China situation as we discussed. March iPhone commentary positive and will be a focus of the Street. Teflon like is Cupertino despite macro storm clouds.
@divestech Dan Ives on x
With the China supply chain lockdown a disaster for Apple in the holiday quarter we view these overall Dec numbers as much better than worst case Street whisper numbers. It's all about March guide for Cupertino as Services beat and golden installed base the key in this macro..
@aapltree @aapltree on x
@BenBajarin Fair. Not that Apple's being particularly “dishonest” with the numbers, though. “Devices” after all. Predominantly iPhones, of which most people just have one.
@benbajarin Ben Bajarin on x
Apple's 2 billion active devices are not 2 billion active users. The actual number of unique/individual active Apple customers is likely ~1.3-1.5b.
@ragnarisapirate Jeff Moore on x
@bluff_capital Gosh. These are still insane results. 2 BILLION installed devices?! That's. Just. Legendary.
@neilcybart Neil Cybart on x
Apple: We now have 2 billion active devices in our ecosystem. Number of Apple users is less than 2 billion. $AAPL
@patrickmcgee_ Patrick McGee on x
Tim Cook on India: “India is a hugely exciting market for us and a major focus. We brought the online store there in 2020 and *we will soon bring Apple Retail there*.” @FT story confirmed: https://www.ft.com/...

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