New York, United States — Apple reported solid profits on rising revenues Thursday, but the tech giant’s iPhone sales missed estimates as executives signalled a rising financial toll from the strong dollar.
Still, Apple’s smartphone revenues came in at $42.6 billion, up about 10 percent from the year-ago period, but a bit below the $43 billion projected by analysts.
The company also reported services revenue growth of just 5.0 percent compared with the year-ago period — much below the 12 percent jump in the prior quarter.
Some of the weakness in services stemmed from the impact of the strong dollar on overseas consumers, but executives also cited weakness in digital advertising and gaming, Maestri said.
While Apple avoided a specific forecast, Maestri cautioned analysts to expect revenue growth to “decelerate” in the fourth quarter, due in part to a foreign exchange hit of 10 percentage points.
Analysts described Apple’s results as respectable, but warned that the worsening consumer environment will pose challenges.
“Overall, we view the (September quarter) as a solid beat and see a good holiday selling season ahead, but do think conditions get more challenging as the iPhone 14 cycle extends given the uncertain economic conditions,” said CFRA Research analyst Angelo Zino.
“That said, we believe Apple’s prestige brand is allowing it to successfully increase prices to consumers across all devices and services.”
Heading into earnings season, investors had expressed worries about the headwinds from the weakening global economy as central banks enact aggressive interest rate hikes to counter grinding inflation.
This week’s tech results have shown that the sector, which enjoyed outsized growth during the peak period of Covid-19, is not immune to these factors.
Shares of Apple rose 0.7 percent to $145.87 in after-hours trading.