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Apple marked a return to revenue growth last quarter, lifted by the long-awaited arrival of new iPads, even as sales remained sluggish in China.
Sales rose 5 per cent to US$85.8 billion in the fiscal third quarter, which ended June 29, the iPhone maker said in a statement Thursday. Analysts had predicted US$84.5 billion on average. Three months ago, Chief Financial Officer Luca Maestri said the company would grow by a percentage in the low single digits during the period.
The upbeat results bring a jolt of momentum to the company ahead of its next iPhone release in September. The tech titan is counting on a new suite of AI features – dubbed Apple Intelligence – to help spur demand for its latest devices.
Earnings amounted to US$1.40 a share in the period, exceeding the US$1.35 analysts had estimated. The third quarter is typically one of Apple’s slowest, coming at a time when many customers are waiting for the next iPhone to arrive in the fall.
The revenue and profit both represented a record for a June quarter, though China remained a weak spot. Sales from that region declined 6.5 per cent to US$14.7 billion, short of the US$15.3 billion that analysts anticipated.
Sales of Apple’s flagship product, the iPhone, came in at US$39.3 billion. Though the number was down slightly from a year earlier, it edged past Wall Street expectations. Three months ago, the company declined to forecast iPhone revenue for the June period – a signal it was still unsure about the shaky smartphone market.
Apple’s iPad business benefited from the long-awaited release of new models. The company introduced major upgrades in May after a sluggish stretch for the tablet line-up. The new products included a pricier iPad Pro with an M4 chip, as well as a faster version of the iPad Air with a bigger-screen option.
The Cupertino, California-based company reported US$7.16 billion in revenue from the category, up 24 per cent. That beat the estimate of US$6.6 billion. Apple previously said it expected the iPad to grow by a percentage in the double digits during the June period – something it easily accomplished. For several months, some customers and schools had been holding out on iPad purchases in expectation of the new models.
Beyond the new iPad Pro and iPad Air, Apple is working on versions of its entry-level iPad and iPad mini with faster processors. That could spur additional upgrades when they are released sometime in the coming months.
The company also unveiled Apple Intelligence last quarter, showing off the new AI features at its developers conference in June. But the technology – headed for the iPhone, iPad and Mac – is not expected to be released to customers until October. Apple also has not yet explained how it plans to generate revenue from the features, beyond spurring demand for compatible devices.
“We very much look forward to sharing these tools with our users, and we continue to invest significantly in the innovations that will enrich our customers’ lives,” Chief Executive Officer Tim Cook said in the statement.
The services business, which includes the App Store, Apple Music and the TV+ streaming platform, continues to be a growth driver. It generated US$24.2 billion in sales last quarter, up 14 per cent.
Wall Street was looking for just under US$24 billion. Still, that business is under pressure from regulators who are seeking changes to the App Store, which they see as an anticompetitive force in the industry. That could ultimately limit Apple’s ability to collect revenue from subscriptions and app downloads.
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