Apple's revenue fell 5% in the final three months of last year to $117.2 billion, a rare decline for the company and significantly worse than Wall Street analysts had expected.
The drop marks the first time Apple has reported a year-over-year revenue decline since 2019. The iPhone maker's profits also sank more than 13% compared to the year-ago quarter to nearly $30 billion.
Shares of Apple fell as much as 4% in after-hours trading Thursday.
The disappointing earnings come after Apple faced a shutdown of a key Chinese factory late last year, hurting its supply. And it comes amid concerns consumers may be reducing their spending on pricey tech gadgets as recession fears loom. Apple has also taken a hit from high inflation and interest rates.
“As a result of a challenging environment, our revenue was down 5% year over year, but I'm proud of the way we have navigated circumstances seen and unforeseen over the past several years,” CEO Tim Cook said during a conference call with analysts Thursday to discuss the results.
Cook said the three factors that impacted revenue performance this quarter were foreign exchange headwinds, COVID-19-related challenges in China that impacted the supply of iPhone 14 Pro and iPhone 14 Pro Max, as well as “challenging macro-economic environment." In particular, Cook noted "the world continues to face unprecedented circumstances, from inflation to war in Eastern Europe, to the enduring impacts of the pandemic.”
Apple “is not immune” to these challenges, Cook said.
Still, Apple noted that its global installed base now reaches more than 2 billion devices. On the call, Cook called this “a truly incredible milestone.” The company also said its Services business, a key area of focus in recent years that includes Apple TV+ and gaming, reached an all-time quarterly revenue record of $20.8 billion. That's up 6% from the year-ago quarter but a sharp slowdown in growth from the nearly 24% increase it posted a year ago.
"Apple delivered a shockingly weak earnings report," Investing.com senior analyst Jesse Cohen said in a statement. "Apple’s poor quarter proves that even the most valuable U.S. traded company isn't immune to the challenges facing the tech industry at large."
Apple CFO Luca Maestri said on the call that the company was not providing revenue guidance for the upcoming quarter given the “continued uncertainty around the world in the near-term.” Still, Maestri said the company expects year-over-year revenue performance for the quarter ending in March to be “similar to the December quarter.”