Apple reports 2% jump in Q3 profit despite drop in revenue

Cupertino-based company’s net profit surged to more than $19.8bn

Apple's revenue dropped 1 per cent on an annual basis to nearly $81.8 billion during the last quarter. AFP
Powered by automated translation

Apple’s net profit jumped 2.3 per cent on an annual basis in its fiscal third quarter, despite the company reporting a yearly drop in total sales.

The Cupertino-based company’s net profit in the period that ended on July 1 surged to more than $19.8 billion. However, it was 17.7 per cent down on a quarterly basis.

Revenue dropped 1 per cent on an annual basis to nearly $81.8 billion during the quarter, exceeding analysts’ estimates of $81.6 billion. This was more than $13 billion less than the March quarter.

Apple did not issue official guidance about future revenue and profits. The company stopped offering guidance at the start of the Covid-19 pandemic because of uncertainty in business.

“We are happy to report that we had an all-time revenue record in services [division] during the June quarter, driven by over one billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Tim Cook, Apple’s chief executive.

The company’s diluted earnings per share surged 5 per cent year-on-year to $1.26, exceeding estimates of $1.19.

The company’s stock, which has surged more than 52 per cent since the start of the year, was trading 2.45 per cent less at $186.49 a share in after-market hours on Thursday.

Apple’s market value topped $3 trillion in June, anchoring its position as the world's most valuable company. It stood at $3.01 trillion at market close on Thursday.

iPhone sales account for about 48.5 per cent of the company's total revenue.

Smartphone sales dropped nearly 2.4 per cent to almost $39.7 billion in the quarter from the prior year period, missing analyst estimates of $39.9 billion.

The company’s total revenue from its services division grew about 8.2 per cent annually to more than $21.2 billion, while revenue from wearables, home and accessories products jumped 2.4 per cent annually to more than $8.2 billion.

Revenue from iPads and computers dropped 13.5 per cent to $12.6 billion.

“It's the third consecutive quarter in which Apple reported slowing annual revenue growth, reflecting the challenging macro environment … Apple's strong fundamentals and its reputation for high-margin device sales may benefit the company going forward,” said Jesse Cohen, senior analyst at

“Solid demand growth for its line-up of high-end iPhones helped offset incremental weakness in other areas of the business.”

Apple’s sales in the Americas region accounted for more than 43 per cent of the company's total third-quarter revenue, with more than $35.3 billion.

It was followed by Europe and the Greater China market (China, Hong Kong and Taiwan), which added $20.2 billion and $15.7 billion, respectively, to the company’s revenue.

Japan and the rest of the Asia Pacific market added more than $10.4 billion to Apple’s third-quarter sales, an annual drop of 9.8 per cent.

Apple generated $26 billion of operating cash flow and returned more than $24 billion to its shareholders during 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 chief financial officer.

Apple said its board of directors had declared a cash dividend, payable on August 17, of $0.24 for each share of the company’s common stock.

Next month, the company is also expected to launch its iPhone 15 series smartphones and new variants of Apple Watch.

During the earnings call, Mr Maestri said September quarter sales could be similar to the June quarter performance. This implies the company is expecting a 1 per cent annual drop, or $89.25 billion in revenue. Analysts are expecting revenue of $90.19 billion in the current quarter.

Updated: August 04, 2023, 5:56 AM