Apple reported record services revenue of $21.2 billion for the third quarter, ended July 1. That was up more than 8% from services revenue of $19.6 billion in the prior-year period.
Services revenue includes sales of movies and TV shows on iTunes, the App Store, Mac App Store, Apple Music, Apple Pay, Apple TV+, Apple Arcade and Apple News+, among others.
However,, sales of iPhones dipped 2.5% in the quarter to $39.7 billion from $40.7 billion in the prior-year period. Mac revenue dropped almost 7.5% to $6.84 billion from $7.4 billion. Sales of iPad tablets declined almost 20% to $5.79 billion from $7.22 billion. Wearables, home and accessories, which includes Beats earplugs, increased 2.5% to $8.28 billion from $8 billion last year.
“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Tim Cook, Apple’s CEO.
“From education to the environment, we are continuing to advance our values, while championing innovation that enriches the lives of our customers and leaves the world better than we found it.”
While Apple did not experience the rapid growth that investors have come to expect over the years, and the sales decline was the third of its fiscal year, the company narrowly exceeded Wall Street expectations for sales and profit for the quarter.
The number of paid subscriptions managed by Apple is now twice as many as the number of subscribers to Disney+, Netflix, HBO and Peloton combined. Services also have hefty profit margins of 71 per cent, roughly double that of Apple’s hardware division. The unit’s outperformance was largely responsible for Apple’s higher profit in the quarter.
“Our June quarter year-over-year business performance improved from the March quarter, and our installed base of active devices reached an all-time high in every geographic segment,” said Luca Maestri, Apple’s CFO.
“During the quarter, we generated very strong operating cash flow of $26 billion, returned over $24 billion to our shareholders, and continued to invest in our long-term growth plans.”
Apple’s share price fell about 2 percent in after-hours trading after the company projected that sales in the current quarter would be similar to the April-to-June period, as accelerating iPhone and software sales are offset by double-digit declines in sales of Macs and iPads.
Apple’s board of directors has declared a cash dividend of $0.24 per share of the Company’s common stock. The dividend is payable on August 17, 2023 to shareholders of record as of the close of business on August 14, 2023.
Apple is expected to unveil a new iPhone in September, as well as updated models of the Apple Watch.