In a rarity for the tech giant, Apple missed Wall Street’s earnings and revenue expectations for its first quarter, reporting earnings per share of $1.88 and revenue of $117.15 billion. Both income and revenue came in below the year-earlier totals of $2.10 and $123.9 billion.
Still, Apple Services, which encompasses Apple TV+, Apple Music, Apple Arcade and more, came in at $20.8 billion for the three months ending Dec. 31, setting a new revenue record, up from $19.5 billion a year earlier. Apple now has more than 935 million paid subscriptions, up from more than 900 million paid subscriptions reported in the previous quarter.
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“We set an all-time revenue record of $20.8 billion in our Services business, and in spite of a difficult macroeconomic environment and significant supply constraints, we grew total company revenue on a constant currency basis,” said Apple CFO Luca Maestri. “We generated $34 billion in operating cash flow and returned over $25 billion to shareholders during the quarter while continuing to invest in our long-term growth plans.”
On the investor call, Apple CEO Tim Cook specifically cited foreign exchange headwinds, supply chain challenges related to COVID-19, which impacted Apple’s iPhone 14 and iPhone 14 Pro Max sales, and the challenges of “inflation, war in Eastern Europe and the enduring impacts of the pandemic,” for the company’s revenue miss. iPhones continued to make up bulk of Apple’s revenue, bringing in $65.8 billion this quarter, down from $71.6 billion a year earlier.
“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,” Cook said. “During the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base.”
Helping to contribute to the Apple Services revenue record was the fact that Apple raised its subscription prices at both Apple TV+ and Apple Music this fall, alongside many other competitors. Maestri also spoke to increased customer engagement during the quarter and highlighted the sector’s achievements, which he noted came in spite of challenges in digital advertising and mobile gaming.
The price of Apple TV+ increased to $6.99 per month from $4.99 per month, while the annual plan increased to $69 per year from $49 per year. Apple Music increased the price of its single plan by $1 per month to $10.99, its family plan by $2 per month to $16.99 per month and the annual plan by $10 to reach $109 per year.
The Apple One bundle, which includes Apple TV+, Apple Music, Apple Arcade and more, also raised its prices.
Apple also launched its Major League Soccer subscription service, MLS Season Pass, on Wednesday in its biggest push yet into live sports, which should figure into future earnings. As part of the deal, Apple has exclusive rights to MLS games through 2033, with the subscription currently available in 100 countries.
