Apple’s net profit dropped 13 per cent year-on-year to $10.04 billion (Dh36.88bn) in the third quarter to June, as earnings from its flagship product iPhone declined.
Sales of iPhone dropped 11.8 per cent to $25.9bn in the third quarter from a year ago, the company said. However, strong sales in other parts of the business, such as services and wearables, meant the US technology giant posted quarterly revenue of $53.8bn, a 1 per cent increase on the same period in 2018.
“This was our biggest June quarter ever – driven by all-time record revenue from services, accelerating growth from wearables, strong performance from iPad and Mac and significant improvement in iPhone trends,” said Tim Cook, chief executive of Apple.
“Results are promising across all our geographic segments, and we are confident about what’s ahead,” said Mr Cook.
For the first time since 2012, Apple generated less than half of its total quarterly revenue from sales of the iPhone – a sign the company needs to look beyond its most famous product.
Total revenue from services, however, grew nearly 13 per cent while revenue from wearables, home and accessories products increased by almost 48 per cent.
According to Apple, its global sales – outside the US market – accounted for 59 per cent of the company's total third-quarter revenue. Although it lost ground in the Greater China market (mainland China, Hong Kong and Taiwan), which has been a stronghold for the company in the past.
Greater China contributed more than 18 per cent to Apple's overall revenue in its 2018 financial year. However, its contribution fell more than 4 per cent year-on-year in the third quarter of this year, contributing $9.2bn of total sales.
Analysts said a weaker Chinese economy was hitting Apple's bottom line. China's domestic market continues to be challenged as overall consumer spending on smartphones has fallen, said researcher International Data Corporation.
“Our year-over-year business performance improved compared to the March quarter and drove strong operating cash flow of $11.6bn,” said Luca Maestri, Apple’s chief financial officer.
Apple returned more than $21bn to shareholders during the quarter, including $17bn through open market repurchases of around 88 million Apple shares.
In its guidance for the fourth quarter of fiscal 2019, Apple forecast revenue in the range of $61bn to $64bn.
“The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products,” said Mr Cook.
Apple is expecting to announce a new iPhone line-up in September. In the final quarter of this financial year, the company will for the first time include sales for the two new subscription services – Apple TV+ and Apple Arcade – which could help to grow its bottom line.