Apple experienced its third consecutive quarter of declining sales in Q2, with a 1.4 percent slip to revenue of $81.8 billion. But the Cupertino-based company managed to generate record performance in its Services division, up 8.2 percent to $21.21 billion. Sales of the company’s largest device segment, iPhones, underperformed estimates with $39.7 billion in sales, a 2.4 percent dip year-over-year. Overall, however, Apple slightly overperformed Wall Street expectations, which were forecast at $81.64 billion for the quarter ending in June. For Q2, Apple reported 1 billion paid subscriptions — including Apple Music, Apple TV+ and third-party apps.

“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Apple CEO Tim Cook.

According to Variety, “Mac sales fell 7.3 percent in the June quarter and iPad revenue was down 19.8 percent,” while “sales in Apple’s Wearables, Home and Accessories segment, which includes Apple Watch, rose 2.5 percent to $8.28 billion.”

In June, Apple unveiled its new mixed-reality headset, the $3,500 Vision Pro, which will cater to enterprise users when it goes on sale in 2024. The Vision Pro “marks the company’s first entry into a new product category since the Apple Watch launched in 2015,” Variety writes of the device, explaining that Cook feels it will “establish ‘spatial computing’ in the same way the iPhone introduced smartphones to millions of people.”

The Wall Street Journal reports it’s been roughly seven years since Apple posted three straight quarters of declining revenue. The last time was fiscal 2016, which ended “with sales down 7.7 percent annually, mostly due to declining iPhone sales.”

The same factor is driving Apple’s 2023 slump, WSJ writes, noting the $39.7 billion in iPhone sales missed analyst expectations of $40.2 billion.

But “investors and analysts generally remain optimistic that the company will find a way to maintain and grow its dominant position in consumers’ lives,” WSJ writes, adding that “Apple’s next major iPhone upgrade — likely called the iPhone 15 — is expected in September.”

The iPhone “currently accounts for roughly half of Apple’s overall sales, WSJ writes.

Apple’s China revenue grew 7.9 percent in Q2 to $15.8 billion, and India also produced record sales in the quarter. Cook said in the company’s earnings release that the iPhone is driving growth in emerging markets.

Related:
Apple’s Most Profitable Line of Business Is Making Up for Some Hardware Struggles, CNBC, 8/3/23
Apple’s Big Services Bet Is Paying Off as iPhone Sales Dip, The Verge, 8/3/23
Apple Revenues Fall for Third Straight Quarter as Company Invests Heavily in AI, The Guardian, 8/3/23