Apple Q1 earnings miss the mark almost across the board

Apple reported its earnings for Q1 2023 today, and it was one of the company’s poorest-performing quarters in recent years. It was the company’s biggest decline since 2016 and the first since 2019. Overall revenue was down more than 5 percent year-over-year as the company failed to match sales from the same quarter last year across most of its hardware categories.

iPhone revenue was $65.78 billion for the quarter, down 8.17 percent year over year. Similarly, “Other Products”—which includes the Watch, AirPods, and some other outliers—was down 8.3 percent year over year at $13.48 billion. The real underperformer was the Mac, which was down almost 30 percent at $7.74 billion.

The two parts of the business that did grow were services— which include things like Apple Music and TV+, iCloud, and AppleCare—and the iPad. Services were up 6.4 percent at $20.77 billion, while the iPad grew 29.66 percent to $9.4 billion.

CEO Tim Cook said in the company’s earnings call that Apple faces a “challenging macroeconomic environment.” Besides that, he named two other main factors behind the down quarter: production and supply issues in China and a strong US dollar. Apple struggled to meet consumer demand across many of its products, with shipping sometimes running several weeks behind. Cook said that while Apple might have met analysts’ estimates had the supply issues not been a factor, it’s impossible to know for sure.

On the bright side, Apple says it has resolved many of those supply problems for now and that there are now 2 billion active Apple devices in users’ hands worldwide. And obviously, $117.15 billion in revenue for the quarter is still huge, even if it didn’t meet expectations or match last year.

Apple declined to give guidance on what it expects for the next quarter. It has not done so for any quarter since the pandemic began in 2020.