Apple experiences biggest quarter revenue drop in 7 years

Apple's holiday quarter sales dropped by 5% compared to the previous year, marking the first year-over-year sales decrease since 2019.

Apple faced disappointment in its revenue, profit, and sales figures across several of its businesses on Thursday, causing the company's stock to fall in after-hours trading. Apple's overall holiday quarter sales were approximately 5% lower compared to the previous year, marking the first yearly sales decline since 2019.

The CEO of Apple, Tim Cook, attributed the disappointing results to three factors: the strong US dollar, production challenges in China for the iPhone 14 Pro and iPhone 14 Pro Max, and the broader economic environment. Cook stated in an interview with CNBC's Steve Kovach that the "challenging macroeconomic environment" was affecting many companies.

As a result of the earnings report, Apple's shares declined by over 4% in after-hours trading, following a 3.7% increase on Thursday.

Here’s how Apple did versus Refinitiv consensus expectations:

• EPS: $1.88 vs. $1.94 estimated, down 10.9% year-over-year
• Revenue: $117.15 billion vs. $121.10 billion estimated, down 5.49% year-over-year
• iPhone revenue: $65.78 billion vs. $68.29 billion estimated, down 8.17% year-over-year
• Mac revenue: $7.74 billion vs. $9.63 billion estimated, down 28.66% year-over-year
• iPad revenue: $9.40 billion vs. $7.76 billion estimated, up 29.66% year-over-year
• Other Products revenue: $13.48 billion vs. $15.23 billion estimated, down 8.3% year-over-year
• Services revenue: $20.77 billion vs. $20.67 billion estimated, up 6.4% year-over-year
• Gross margin: 42.96% vs. 42.95% estimated

Apple CEO Tim Cook revealed that the company missed its sales projections for the latest quarter due to a strong dollar and supply chain issues related to the COVID-19 pandemic. The company's sales of iPhones, Macs, and wearables such as the Apple Watch were impacted by the challenging economic environment. However, Cook noted that iPad sales increased by nearly 30% YoY due to the release of new models.

The services segment of the business also saw a growth of 6% and Cook announced that the company will soon launch a buy-now-pay-later feature as part of its services. Cook also stated that Apple is cutting costs and slowing down hiring to navigate the current economic situation. Apple reported 2 billion active devices, up from 1.8 billion the previous year.