Apple iPhone sales inch up, bolstering results amid shaky economy

San Francisco – Apple’s results beat expectations on Thursday, showing off the tech giant’s resilience in a slowing global economy thanks to better-than-expected iPhone sales and notable inroads in India and other newer markets.

Shares of Apple, the largest United States company by market value, rose 2 per cent after it beat Wall Street’s expectations for second-quarter revenue and profit. The company’s results contrast with disappointing figures out of big chipmakers due to a slower-than-expected rebound in China’s economic growth.

Apple executives on Thursday said gross profit margins for the current quarter would be better than forecast despite an expected dip in revenue as supply chain issues have improved.

Apple said sales for the three months to April 1 fell 2.5 per cent to US$94.8 billion (S$125.9 billion), ahead of expectations for a 4.4 per cent decline, according to Refinitiv data. Profit was flat at US$1.52 per share, compared with estimates of US$1.43 per share.

Sales of iPhones were up 1.5 per cent to US$51.3 billion, besting expectations for a 3.3 per cent drop even as consumers and businesses tightened up spending due to rising inflation. Global smartphone shipments fell 13 per cent during the first three months of 2023, according to research firm Canalys, which said Apple gained market share against Android rivals.

Apple chief financial officer Luca Maestri said the company’s gross margin will be between 44 per cent and 44.5 per cent, above estimates of 43.7 per cent, according to Refinitiv data. But he also said Apple’s revenue will likely decline slightly. Analysts were expecting a 2.1 per cent increase to US$84.7 billion for the company’s fiscal third quarter.

Apple’s stock has outperformed most of Wall Street in 2023, up 28 per cent in the year to date. Investors see the company as a defensive play during a time of economic uncertainty.

Apple chief executive Tim Cook told Reuters in an interview on Thursday that the company set a fiscal second-quarter record for iPhone sales, thanks in part to picking up new users in markets such as India, where Mr Cook recently travelled to for the opening of its first Apple stores.

“We were thrilled by our performance in emerging markets. We set records for the iPhone installed base in every geographic segment, and we had very strong ‘new to’ (sales in) emerging markets, particularly in Brazil, India and Mexico,” said Mr Cook.

“We had no material shortages at all during the quarter across any of the products,” he added, noting that supply chain snarls have vanished.

Not all of Apple’s business lines were immune to the electronics slump. Sales of Macs fell sharply, while iPad revenue slipped. Sales in China dropped 2.9 per cent, a slightly larger decrease than overall revenue.

“Apple still needs China on a near-term basis to drive sales and profits,” said Mr Tom Forte, senior research analyst at D.A. Davidson. “In the long term, emerging markets are important, especially India from a supply chain and sales standpoint.”

Other technology firms have predicted a second-half rebound. Wall Street expects Apple to recover faster and show modest year-over-year revenue growth during its fiscal third quarter ending in June.

Investors are still waiting for the company’s next major hardware product. Bloomberg has reported that the iPhone maker could unveil a mixed-reality headset as soon as next month, when it holds its annual software developer conference.

Mac sales fell more than 30 per cent compared with analyst estimates of a 25 per cent decline, according to Refinitiv.

Sales in Apple’s wearables business, which includes devices like AirPods and the Apple Watch, fell less than 1 per cent compared with estimates for a 4.4 per cent drop.

Apple’s biggest growth segment was its services business, including products like iCloud and Apple Pay, which grew 5.5 per cent to US$20.9 billion. Mr Cook said Apple now has 975 million subscribers on its platform, which includes both Apple services and third-party apps, up from 935 million in the last quarter and an increase of 150 million from a year ago. REUTERS