Apple Inc on Tuesday delivered stronger-than-expected results for its fiscal third quarter as growth from services helped offset weak iPhone sales, sparking a rally in shares of the tech giant.
Profit in the quarter that ended on June 29 fell 13 percent from the year-earlier period to US$10 billion while overall revenue increased 1 percent to a better-than-forecast US$53.8 billion.
The results beat reined-in expectations of analysts, and Apple shares rose more than 4 percent in after-hours trade.
As iPhone sales weakened, Apple has been shifting to earnings from digital content and services sold to the legions of fans of its devices.
“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,” Apple chief executive Tim Cook said
Apple has more than 420 million paid subscriptions across its array of services and is confident that number will eclipse 500 million next year, chief financial officer Luca Maestri said.
Apple has stopped reporting iPhone unit sales, but Cook said he saw a “strong customer response” to iPhone promotions and financing programs.
Apple saw its sales improve in the crucial China market, which included a double-digit increase in services revenue driven by strong growth in the App Store there, the company said.
The sale of iPhones in China was boosted by government stimulus, pricing moves by Apple, and trade-in and financing programs, Cook said.
“Each of our categories — iPhone, iPad, Mac, Wearables, Services — everything improved sequentially,” Cook said of Apple’s performance in China. “So we couldn’t be happier with the results or the progress.”
Long the driver of Apple’s money-making machine, iPhone revenue overall was down 12 percent from last year to US$26 billion.
Cupertino, California-based Apple is expected to try to rev up iPhone sales with the launch of a new model later this year, but its rivals would be bringing flagship models of their own to market.
Sales of Mac computers and iPad tablets were up in the quarter, as was a “wearables and accessories” category that includes Apple’s smartwatch, smart speaker and popular wireless ear buds.
Money taken in from services, which Apple has repeatedly stressed as being a potential big revenue source for the company, rose to US$11.5 billion from US$10 billion in the same quarter last year.
Apple launches slated for later this year include an Apple TV+ streaming television service to compete against the likes of Netflix Inc and Amazon.com Inc along with a new credit card that ties in with its Apple Pay digital payments.
Apple Card is being tested by thousands of the company’s employees and would launch this month, Cook said.
The company said it expects revenue between US$61 billion and US$64 billion this quarter.
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