Apple sales boost profits, but China struggles continue

Apple has finally ended its losing streak.

The company reported its first sales growth in a year on Thursday, boosted in particular by record revenue from its App Store and other services. But it’s still encountering difficulty in China.

The earnings report comes one day before the company launches its biggest new product in years, the Vision Pro headset, which the company hopes to make the next must-have piece of home electronics.

The company’s earnings come just one day before Apple begins selling one of its riskiest new hardware releases in recent years: An augmented reality headset, the Vision Pro.

Over the past five years, Apple has spent an estimated $100 billion in research and development on the device, which will cost $3,499 in the US, according to a recent analysis.

“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,” Cook said.

Net iPhone sales grew from $65.7 billion one year ago to $69.7 billion in the last three months of 2023, but Jesse Cohen, a senior analyst at Investing.com, said that China’s revenue numbers indicate demand for the device in the region is slowing “more than expected in the face of rising competition from local companies, including Huawei.”

“The big question is if this is just a blip, or signs of a bigger shift among consumers as rising interest rates and a weaker economic backdrop discourage consumers from making pricey purchases,” Cohen said.

Cook addressed concerns about falling sales in China, saying, “I remain very optimistic about China over the long term.”

Overall, Apple reported earnings per share of $2.18 for the quarter, a record for EPS for the company and higher than the $2.11 analysts had predicted.

Revenue also beat analysts’ expectations for the quarter at $119.6 billion.

Despite beating expectations on both the top and bottom lines, Apple’s stock dropped more than 3% after the market close. The debut of the Vision Pro dominated much of a question session with analysts and executives Thursday.

“This has been multiple years of efforts from so many people across Apple,” Cook said of the Vision Pro. “It really took a whole company effort to bring it this far.”

Correction: A previous version of the story misstated Apple’s past profits.