The company's shares were down more than 3% immediately following the report.
Key Numbers from Apple's Q1 Report
- Revenue: $117.1 billion vs. $121.1 billion expected
- Adj. earnings per share: $1.88 vs. $1.94 expected
- iPhone revenue: $65.7 billion vs. $68.3 billion expected
- Mac revenue: $7.7 billion vs. $9.72 billion expected
- iPad revenue: $9.4 billion vs. $7.7 billion expected
- Wearables: $13.4 billion vs. $15.3 billion expected
- Services: $20.7 billion vs. $20.4 billion expected
- Factors Behind the Missed Expectations
Apple faced significant headwinds throughout November and December, from COVID lockdowns and worker protests at manufacturer Foxconn's facility in Zhengzhou, China. The plant produces most of Apple's iPhone 14 Pro and iPhone 14 Pro Max handsets. The two devices, which start at $999 and $1,099, respectively, are two of Apple's most important devices, helping boost the average iPhone selling price.
According to IDC's Worldwide Quarterly Mobile Phone Tracker, shipments of Apple's iPhone fell 14.9% year-over-year, from 85 million units in Q4 2021 to 72.3 million units in Q4 2022. Mac and Wearables sales also fell year-over-year.
Positive Developments for Apple
Despite the slowing sales, Apple has managed to avoid large-scale layoffs, unlike its peers, including Microsoft, Google, and Amazon (AMZN). Apple CEO Tim Cook announced that there are now $2 billion active devices among Apple's install base. In a statement, Cook said, "As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do."