Apple logs ‘best quarter ever’ but iPhone sales dip despite AI rollout

The iPhone missed expectations in the fiscal first quarter ended December 28, falling 0.8 per cent from the same period a year earlier.

Despite logging what its CEO called the “best quarter ever”, smartphone giant Apple's sales growth fell short of market expectations as iPhone sales dipped slightly during the holiday-season despite AI rollout.

FILE PHOTO: FILE PHOTO: A man holds an Apple iPhone 16 Pro Max ahead of the launch of sales of the new iPhone 16 series smartphones in a store in Moscow, Russia September 20, 2024. REUTERS/Evgenia Novozhenina/File Photo/File Photo(REUTERS)

The iPhone missed expectations in the fiscal first quarter ended December 28, falling 0.8 per cent from the same period a year earlier to $69.1 billion compared with the $71 billion anticipated by Wall Street, according to information in Bloomberg report.

The iPhone’s approximately 1 per cent revenue decline compared to the October-December period last year wasn’t entirely surprising, as the first software update enabling its AI features was released just before Halloween, and the technology is still unavailable in many markets outside the US.

‘Best quarter ever’

The company posted a profit of $36.3 billion, with CEO Tim Cook calling it “the best quarter ever.” Apple reported a record revenue of $124.3 billion for the year-end holiday quarter on Thursday.

"Today Apple is reporting our best quarter ever, with revenue of $124.3 billion, up 4 percent from a year ago... We were thrilled to bring customers our best-ever lineup of products and services during the holiday season. Through the power of Apple silicon, we’re unlocking new possibilities for our users with Apple Intelligence, which makes apps and experiences even better and more personal. And we’re excited that Apple Intelligence will be available in even more languages this April,” a statement by Apple CEO Tim Cook posted on apple.com read.

Revenue growth was driven by Apple's services and digital content division, although iPhone sales declined in key markets like mainland China, where it earned $18.5 billion. Overall, iPhone sales totaled $69.1 billion in the quarter—about $500 million less than the same period last year, according to the earnings release.

Apple CFO Kevan Parekh noted, “Our record revenue and strong operating margins drove earnings per share to a new all-time high with double-digit growth.” He also highlighted that Apple’s installed base of active devices reached a new record across all products and regions.

Apple’s services segment, which includes Apple Music, iCloud, the App Store, and Apple TV, generated $26.3 billion in revenue, up from $23.1 billion a year ago.

Although Apple shares initially dipped, they later rose nearly 3 per cent to $244.67 in after-market trading.

The Americas remained Apple's largest market with $56.2 billion in revenue, while Europe showed strong growth, reaching $33.9 billion.

Apple CEO Tim Cook also commented on Apple Intelligence, a suite of AI features for Apple devices, noting that the company had not yet rolled it out in China. “We did see better results in markets where we’ve launched Apple Intelligence than in markets where we haven’t,” he said, referring to China as “the most competitive market in the world.”

Apple lost its title as the best-selling smartphone brand in China last year, overtaken by local competitors who surged ahead with increased shipments, according to Canalys data cited in a news agency AFP report. Amber Liu, a research manager at Canalys, commented, “Intense competition has led to a constantly shifting landscape.”