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What we learned about Apple during today’s first-quarter earnings conference call

Apple today held its first 2023 earnings conference call, covering the fourth calendar quarter of 2022. During the conference call, Apple CEO Tim Cook and Apple CFO Luca Maestri shared several interesting tidbits about recent product sales, service results, and more. We’ve highlighted the most interesting parts of the call below.


On the subject of artificial intelligence, particularly in services, Cook said it will affect everything the company does going forward.

It’s an important focus for us. It’s incredible how it can enrich the lives of customers and look no further than some of the things we announced in the fall with Crash Detection and Fall Detection or a way back with ECG. These literally saved lives. We see tremendous potential in this space to impact almost everything we do. It’s a horizontal technology, not a vertical one, so it’s going to impact every product and service we have.

Revenue from services

While Apple’s quarterly revenue fell five percent year over year, Apple’s services business hit an all-time revenue record of $20.8 billion. Services include Apple Music, Apple TV+, Apple Arcade, iCloud+, AppleCare+ and more.

Apple now has more than 935 million paid subscriptions, up 150 million over the past 12 months. Apple also set sales records for iCloud, Payments and Apple Music.

iPhone sales

Apple issued a rare warning of iPhone 14 Pro shipment restrictions in November, telling the market that shipments would be lower than expected due to COVID-19 restrictions. The ‌iPhone 14 Pro‌ models were backordered throughout the holiday season and as a result, iPhone sales fell year over year.

iPhone revenue was $65.8 billion, compared to $71.6 billion in the same quarter last year. Production has since improved and lead times for “iPhones” are shorter.

There were questions about whether customers would opt for cheaper iPhones or upgrade in the March quarter due to the November/December shortages, and Cook said it was difficult to predict customer behavior. “It’s hard to gauge recapture because you have to know what would have happened, how many people would have bought, and it takes a while for those reports to come out throughout the quarter,” Cook said. He added that in the insights it released for the March quarter, Apple gave its “best guess” on the recapture.

Cook also said that “iPhone” revenue would have increased in the first quarter of 2023 had it not been for the supply tightening.

Wearables Revenue

Wearables sales were $13.8 billion, down 8 percent from a year earlier. Despite the decline, Cook said Apple remains “excited about the long-term opportunity” in the wearables category.

The wearables category currently includes the AirPods and the Apple Watch, but in the future it will also include the mixed reality headset, which Apple is expected to launch later this year.

Although revenue declined, Apple CFO Luca Maestri said the Apple Watch install base set a new all-time record, largely because there were a record number of new users who purchased an Apple Watch during the quarter.

Macs and iPads

iPad revenue rose 30 percent thanks to the launch of new M2 iPad models, but Mac revenue fell significantly as no new Macs were launched in the final months of 2022.

Mac sales were $7.7 billion compared to $10.9 billion in the same quarter last year. iPad sales were $9.4 billion, up from $7.2 billion in the same quarter last year. Cook said that overall Apple has a “low share and competitive advantage with Apple silicon,” meaning the company is “well positioned in the market” over the long term.

March quarter

Apple hasn’t provided guidance for the upcoming March quarter, but it has provided some directional insights. Apple CFO Luca Maesteri said year-over-year revenue is expected to be similar to the December quarter. Services and “iPhone” revenue are expected to increase, while Mac and “iPad” revenue are expected to decline at double-digit rates year-over-year.

Maestri stated that sales in these categories will decline due to macro headwinds and difficult comparisons to the prior-year quarter due to product release schedules.

US manufacturing

Cook was asked if manufacturing components in the United States (like TSMC’s upcoming Arizona plants) would be more expensive than where components are now manufactured, and he said he didn’t necessarily expect it to be more expensive to manufacture , as implied by the person who asked the question.

“We don’t know at this time what the impact will be, but we are all set to be TSMC’s largest customer in Arizona,” Cook said. “We are very proud to be part of it.”

Higher average selling price

Cook was asked if the higher average selling price Apple expects for the next quarter is “sustainable” in a tough macro environment, and Cook said people are willing to “make an effort” to get the best thing they can afford.

I would say that the smartphone – iPhone for us – has become such an integral part of people’s lives, it holds their contacts, health information, banking information, smart home and so many different areas of their lives. It is a means of payment for many people. I think people are willing to make a real effort to get the best they can afford in this category.

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For a more complete picture of Apple’s earnings per category, see our official earnings article.

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