Apple has reported one of its worst quarters, marking the first significant yearly decrease in revenue in seven years.
Key Details
- Apple released its first quarter financial statement on Thursday, February 2, noting a 5% year-over-year decrease in revenue down to $117.2 billion. Wall Street anticipated $121.1 billion.
- Production issues in China, a strong dollar, and the state of the economy hurt the company’s revenue during the holiday season, according to Apple CEO Tim Cook.
- Apple’s stock briefly dipped 4% on Thursday after the press release but has overall increased 8.4% over the past several days, since Wednesday morning.
- CNBC calls the announcement a “stunning miss” for Apple, marking one of the most significant revenue drops for the company since September 2016.
Why It’s News
As with most of the tech industry struggling with employment problems, inflation, and supply-chain issues, Apple has suffered and been forced to take drastic steps to improve productivity, including moving iPhone production from China to Vietnam and India. The company has thus far avoided the mass layoffs plaguing the tech industry.
Thursday’s report wasn’t entirely negative though. The company did celebrate higher than expected services revenue, reporting $20.7 billion when it has only expected $20.4 billion, including revenue from Apple TV+, equipment warranties, cloud storage subscriptions, and digital purchases for the App Store and Apple Music.
Notable Quote
“We set an all-time revenue record of $20.8 billion in our services business, and in spite of a difficult macroeconomic environment and significant supply constraints, we grew total company revenue on a constant currency basis. We generated $34 billion in operating cash flow and returned over $25 billion to shareholders during the quarter while continuing to invest in our long-term growth plans,” says Apple CFO Luca Maestri.
Key Takeaway
As CNBC notes, the company did offer guidance for the next report on the second quarter ending in March. However, it set performance expectations and noted that investors should expect a similar declining trend as iPhone sales decline in the spring.
