Apple reports Q2 revenue down 3% YoY to $94.84B, declining for a second quarter in a row but beating estimates of $92.96B, and net income down 3% YoY to $24.16B

Services revenue reaches new all-time high iPhone revenue sets March quarter record — CUPERTINO, CALIFORNIA Apple today …

Apple 2023-05-05

Context & Ripple Effects

Apple entered the March quarter after its largest annual quarterly revenue decline since 2016 in the preceding holiday period. This result narrows that decline while extending the negative revenue streak to a second quarter.

The mix is the key counterweight: iPhone revenue reached a March-quarter record and Services set a new high, echoing Apple’s earlier pattern of record Services revenue during a declining quarter.

First-order effects

Apple beat the reported revenue estimate despite lower year-over-year sales and profit, while extending its revenue-decline streak to two quarters.
Record iPhone revenue and all-time-high Services revenue become the immediate growth offsets within Apple’s quarterly mix.

Second-order effects

The stronger Services contribution makes Apple’s results more dependent on monetizing its installed device base when total revenue is under pressure.
iPhone remains the central product engine despite the broader decline, concentrating near-term attention on whether hardware demand can sustain the offset.

Third-order effects

If recurring Services growth continues to cushion hardware cycles, Apple’s performance will increasingly be assessed through revenue generated per active device rather than unit-driven growth alone.
The subsequent third consecutive quarter of declining revenue shows that a favorable mix can soften a slowdown without necessarily ending it.

The trend: Apple’s results are one data point in the shift toward Services and installed-base monetization as stabilizers during uneven hardware revenue cycles.

Discussion

@alternatejones @alternatejones on x
Even Apple is not immune to the slowdown ... Apple reports Q2 revenue down 3% YoY to $94.84B, declining for a second quarter in a row but beating estimates of $92.96B, and net income down 3% YoY to $24.16B (Apple) https://www.techmeme.com/...
@inafried Ina Fried on x
Update: CFO Luca Maestri told analysts that Apple expects revenue in the current quarter to show a similar slight year-over-year decline as the company saw in the March quarter, assuming the overall economy doesn't worsen. https://www.axios.com/...
@levynews Ari Levy on x
Apple is in serious troub.. wait https://twitter.com/...
@lexnfx Alexei Oreskovic on x
Wall Street thought $AAPL revenue would shrink 5% Revenue decline was only 3% Stock is up 1%
@dougboneparth Douglas A. Boneparth on x
Apple reports better-than-expected quarter driven by selling the same phone but with a slightly better camera.
@sarthakgh Sar Haribhakti on x
Apple is so doomed as always https://twitter.com/...
@stevemoser Steve Moser on x
“We view AI as huge” -Tim Apple
@adamsinger Adam Singer on x
Apple: makes 94B $ in the quarter, beating expectations Analysts: so how many people are you planning to layoff here, you're gonna fire people right? https://twitter.com/...
@neilcybart Neil Cybart on x
Tim Cook: The Mac is facing FX and macro issues, and a tough year-over-year compare due to M1 Macs. (Said another way, there was pent-up demand and a sales rush that Apple is now working through.) $AAPL
@epro Emil Protalinski on x
$AAPL Q2 2023 Revenue down 3% to $94.8 billion Net income down 3% to $24.2 billion iPhone revenue up 2% Mac revenue down 31% iPad revenue down 13% Wearables/Home/Accessories revenue down 1% Services revenue up 5%
@rsgnl Joe Rossignol on x
Apple expected its revenue to be down around 5% this quarter — like it was last quarter — but it ended up being down 3% in reality. Accordingly, Apple says this result is better than it expected.
@thetranscript_ @thetranscript_ on x
Live $AAPL thread for Q2 23 earnings call: 1. CEO @tim_cook starts with a summary: “During the March quarter, we continued to face foreign exchange headwinds, which had an impact of more than 500bps as well as ongoing challenges related to the macroeconomic environment” https://t…
@patrickmcgee_ Patrick McGee on x
Apple call, live-tweeting here: Cook “We set an all time record for services and a March quarter record for iPhone. We were particularly pleased with the performance in emerging markets, with all time records in Mexico, Indonesia, the Philippines, Saudi Arabia, Turkey & UAE”
@patrickmcgee_ Patrick McGee on x
Tim Cook asked about Generative AI: “There's a number of issues that need to be sorted ... but the potential is certainly very interesting. And we've obviously made enormous progress, integrating AI and machine learning throughout our ecosystem. ....We believe AI is huge:”
@patrickmcgee_ Patrick McGee on x
Cook asked if Apple might be eligible for subsidies in the CHIPS act. “I don't see Apple participating in the CHIPS act, directly,” Cook says. “We would be a beneficiary, indirectly, b/c some of our partners will hopefully be recipients of it...”
@neilcybart Neil Cybart on x
Cook confirming what can be seen in Apple's financials = demand trends in emerging markets is strong while some macro issues continue to be felt in the U.S. (For Apple, “macro issues” basically means less upgrading.)
@munster_gene Gene Munster on x
$AAPL results: Key takeaway from the quarter, the device flywheel is working. The most important aspect of the results so far (still waiting for guidance) is a comment from Cook in the press release, “ our installed base of active devices reach an all-time high”.
@neilcybart Neil Cybart on x
Apple saw all-time quarterly revenue records in Mexico, Indonesia, the Philippines, Saudi Arabia, Turkey, and the UAE.
@rjonesy Ryan Jones on x
Above the headlines, Apple's revenue mix has been weirdly stable over the last 5 years. https://twitter.com/...
@lexnfx Alexei Oreskovic on x
$AAPL says revenue performance in current quarter should be similar to March quarter. In other words, Apple expects revenue to decline 3% year-over-year in the current quarter.
@brandonbutch Brandon Butch on x
Apple just reported their Q2 2023 numbers! Revenue: $94.8B vs. $92.96B (expected) EPS $1.52 vs. $1.43 (expected) - Services revenue reaches new all-time high - iPhone revenue sets March quarter record https://www.apple.com/... $AAPL 💸
@lexnfx Alexei Oreskovic on x
Tim Cook joins cautionary chorus on AI: “I do think it's very important to be deliberate and thoughtful in how you approach these things. There's a number of issues that need to be sorted out... But the potential is very interesting.”
@lexnfx Alexei Oreskovic on x
$AAPL inventories totaled $7.48 billion at end of quarter. Highest level in at least 5 years. New VR/AR headsets waiting in warehouses or unsold Macs piling up?
@patrickmcgee_ Patrick McGee on x
*breaking* @apple revenues fell for a 2nd quarter, but beat forecasts thanks to iPhone sales. *revenues fell 2.5 per cent to $94.8bn *net profits were down 3.4 per cent to $24.2bn. *thread* @Techmeme https://twitter.com/...
@neilcybart Neil Cybart on x
Revenue isn't the best way of measuring Apple's momentum or ecosystem strength as it is strongly impacted by device upgrading trends. $AAPL
@mike_wuerthele Mike Wuerthele on x
Let's keep this all in perspective. This is equivalent to what Apple generated in the 2019 holiday quarter. https://twitter.com/...
@neilcybart Neil Cybart on x
No new comparisons given for the size of Apple's wearables business relative to the Fortune 500. That's because AirPods sales remain under pressure (less upgrading is my suspicion). $AAPL
@asymco@mastodon.social @asymco@mastodon.social on mastodon
After CFO comments on guidance and the end of management prepared statements, shares are up 2%.
@rebeccajarvis Rebecca Jarvis on x
Tim Cooking with gas https://twitter.com/...
@tculpan Tim Culpan on x
Apple's @tim_cook “I don't see Apple participating the CHIPS Act”.. But Apple could benefit indirectly via its partners Remember that Apple is now one of the world's key fabless chip designers.
@vadimyuryev Vadim Yuryev on x
The downside for Apple is that this current quarter doesn't look so good either for Mac sales. No new Macs until June which is the last month of this quarter. The 15" MacBook Air will be nice, but the M2 chip might be offputting considering the rumors of the M3 coming soon. https…
@jkaonline John Ashcroft on x
Apple said strong iPhone sales in India and other countries helped offset waning demand for Macs and iPads ... ⁦@WSJ⁩ https://www.wsj.com/...
@gerberkawasaki Ross Gerber on x
Great results from apple. Navigating the macro environment quite well. Tim Cook masterfully managing the Company through lots of headwinds. Tech market saved... $AAPL
@Gartenberg@mastodon.social Michael Gartenberg on mastodon
Translation? Apple is way behind Google and Microsoft and Siri is not saving well. — https://www.axios.com/...
@inafried Ina Fried on x
Apple CEO Tim Cook says AI is “huge,” but care is needed. His comments came as counterparts at Microsoft, Google, OpenAI and Anthropic were at the White House on Thursday talking AI https://www.axios.com/...
@Gartenberg@mastodon.social Michael Gartenberg on mastodon
@asymco — Yep. Tim invested heavily in services, he knew hardware that was just evolutionary couldn't drive the stock. Predictable revenue streams from services? Good content to fuel those subscriptions? …
@asymco@mastodon.social @asymco@mastodon.social on mastodon
The 1 billionth subscriber will arrive on schedule by June 15th or so.
@asymco@mastodon.social @asymco@mastodon.social on mastodon
Apple's biggest growth was in services which grew 5.5% to $20.9 billion. Apple now has 975 million subscribers.
@gartenberg Michael Gartenberg on x
Services, IAPs in apps, these are all the type of predictable revenue streams that Wall Street just loves, Tim is definitely reaping through rewards of the seeds that he sowed with strong investments into service models
@patrickmcgee_ Patrick McGee on x
Apple now has 975mn paying subscribers to services, up 150mn in 12 months.
@howardlindzon @howardlindzon on x
Apples New buyback program equal to 3.4% of market cap; that buyback is larger than the total market cap of 420 S&P 500 members. Why even shoe up to work tomorrow if you don't work for $aapl 🚴‍♂️💩
@neilcybart Neil Cybart on x
Apple increases its quarterly cash dividend to $0.24/share. Share buyback authorization was increased by $90 billion. That's an aggressive increase in buyback. I was expecting $75 billion. The cash dividend remains stingy.
@thesullivan Mr. Sullivan on x
#Apple's gross margin in Services business in March quarter - 71%
@patrickmcgee_ Patrick McGee on x
Apple $AAPL shares jumped 1.9% on revenue + profit beat. https://twitter.com/...
@dividendgrowth @dividendgrowth on x
Apple $AAPL increases quarterly dividends by a paltry 4% to $0.24/share The board of directors also authorized an additional program to repurchase up to $90 billion in stock This is the eleventh year of consecutive annual dividend increases for this dividend achiever
@lexnfx Alexei Oreskovic on x
Apple said it now has 975 million paid subscriptions across various services and platforms Interesting to note it said “subscriptions” and not “subscribers” — suggests the 975 million counts each sub you might have separately (eg Apple Care, Apple+)...
@divestech Dan Ives on x
Lebron-like results from Apple. Solid iPhone beat and headline numbers all ahead of the Street. China coming back a key narrative. Cupertino flexes muscles in stable and solid backdrop. All about the golden installed base 🍎🍎🍎
@xpangler Todd Spangler on x
In the March quarter, Apple topped 975M paid subscribers for digital services (which includes both Apple-branded offerings like Apple Music and Apple TV+ and services via third-party apps), up 150M over the last 12 months, according to CFO Luca Maestri https://variety.com/...
@neilcybart Neil Cybart on x
Narrative Violation Alert: Apple's 2Q23 revenue growth was stronger in Greater China than in the U.S.
@patrickmcgee_ Patrick McGee on x
Regionally, Apple results were buoyed by emerging markets. Sales in Asia, excluding China and Japan, were up 15.3 per cent to $8.1bn. Sales fell about 3 per cent in China and 8 per cent in the US.
@neilcybart Neil Cybart on x
Me keeping track of the number of times “India” is mentioned on this Apple earnings call (and rightly so given the company's progress and news in the country): https://twitter.com/...
@stockmktnewz @stockmktnewz on x
The word “India” was said on Apple's $AAPL earnings call 4x more than the word “AI” was said

Chronicles