Apple reports all-time record Services revenue for fiscal Q1 but Wall Street is not impressed
Apple has just reported its earnings for the fiscal first quarter of 2024 and as usual, we will take a look at the company's biggest business segment first, the iPhone. Revenue for the iPhone amounted to $69.70 billion for the quarter, a 6% increase from the $65.78 billion in gross generated by the iPhone during the same quarter last year. The figure topped Wall Street estimates of $67.82 billion.
It was another miserable quarter for the iPad as sales of the tablet have been declining since the end of the pandemic. In addition, Apple, for the first time since the first iPad was released in 2010, went a full year without releasing any new models. Revenue from the tablet was $7.02 billion during the fiscal first quarter of 2024 compared with the year-earlier $9.40 billion. That works out to a rather stunning 25% drop in revenue for the device. Wall Street was disappointed since analysts expected the iPad business to gross $7.33 billion for the quarter.
The Wearables, Home and Accessories segment, which includes AirPods, HomePods, and the Apple Watch, saw revenue for the fiscal first quarter decline 11.4% from $13.48 billion to $11.95 billion. Apple's second-largest business unit, Services, the subject of much controversy over the so-called "Apple Tax," reported a strong quarter with $23.12 billion in revenue, an all-time quarterly high. That was a hike of 11.3% from the $20.77 billion in revenue that Services generated during fiscal Q1 of 2023. The result, as strong as it was, fell below Wall Street expectations of $23.35 billion.
The Vision Pro won't be included in Apple's financials until the next quarter
Sales in the Americas rose 2.3% to $50.43 billion, increased 9.8% to $30.40 billion in Europe, climbed 15% in Japan to $7.77 billion, and added 6.6% to $10.16 billion in the rest of the Asian Pacific market. The only geographic area where sales declined was in China where revenue dropped 12.9% to $20.82 billion.
Overall, Apple's revenue rose 2.1% year-over-year to $119.58 billion, the first revenue increase in a year. Wall Street was looking for $117.91 billion. Net income rose 13.1% to $33.92 billion, and diluted earnings per share came in 16% higher than last year at $2.18. That beat the $2.10 that Wall Street analysts were expecting.
Apple CEO Tim Cook, commenting about the earnings, said, "Today Apple is reporting revenue growth for the December quarter fueled by iPhone sales, and an all-time revenue record in Services. We are pleased to announce that our installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments. And as customers begin to experience the incredible Apple Vision Pro tomorrow, we are committed as ever to the pursuit of groundbreaking innovation — in line with our values and on behalf of our customers."
During regular trading hours on Thursday, Apple's shares rose $2.46 or 1.33% to $186.86. But after the report was released, the stock dropped in after-hours trading by $2.86 or 1.53% to $184.
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