Tim Cook pleased with Apple's India growth as June quarter revenue hits record in the country

AppleCEO Tim Cook said he was “really pleased” with the company’s growth in India as the iPhone maker hit a record for June quarter revenue and saw strong double-digit growth in the country amid a decline in overall sales.

However, Cook highlighted that Apple’s market share in India still remains “very modest” and “low”, despite the country being the world’s second-largest smartphone market.

“It’s a huge opportunity for us, and we’re putting all of our energies in making that occur,” he added, during the third-quarter earnings call.

Earlier this year, the iPhone maker opened its first two Apple stores in India, in Mumbai and Delhi.

“It’s early going currently, but they’re currently beating our expectations in terms of how they’re doing,” Cook remarked. “We continue to work on building out the channel and putting more investment in our direct-to-consumer offers as well,” he added.

Globally, Apple reported better-than-expected topline and bottomline numbers in the third quarter of the financial year ended July 1, 2023, driven by robust services sales.

However, Apple’s overall declining iPhone revenue and the expectation of a fourth consecutive quarter of decreasing sales led to a 2% drop in share value during after-hours trading for the largest US firm by market value.

In the latest fiscal quarter, Apple’s net profit reached $19.9 billion, slightly higher than the corresponding period of the previous fiscal year. However, the company’s revenue experienced a 1.4% decline, totalling $81.8 billion compared to $83 billion in the year-ago period.

Additionally, its total operating expenses in the quarter increased to $13.4 billion from $12.8 billion in the previous year.

Discussing the factors impacting its third-quarter performance, Cook noted, “We continue to face an uneven macroeconomic environment, including nearly four percentage points of foreign exchange headwinds.”

Dip in iPhone sales

Apple's flagship smartphones have been driving the firm's sales, but its iPhone revenue dipped slightly to $39.7 billion in the third quarter from $40.7 billion in the year-ago period. The decrease in iPhone sales from the year-ago quarter was in line with the worldwide smartphone shipment decline of about 7.8% during the same period, according to IDC estimates.

On the other hand, Apple's revenue from services reached a new all-time high of $21.2 billion during the quarter, marking 8.2% increase year over year.

“We had an all-time revenue record in services during the June quarter, driven by over 1 billion paid subscriptions,” Cook said.

Like the decline in iPhone sales, revenue from its Mac and iPad products also experienced a drop of 7.3% and 19.8%, respectively. However, Apple's wearables, home, and accessories category saw a 2.5% increase, aligning with the company's expectations.

Overall, sales from Apple products amounted to $60.6 billion, representing a 4.4% decrease from the $63.4 billion reported in the year-ago period.

Outlook

Apple expects the September quarter's year-over-year revenue performance to be similar to that of the June quarter.

“Assuming that the macroeconomic outlook does not worsen from what we are projecting today for the current quarter,” said Luca Maestri, Chief Financial Officer of Apple.

Foreign exchange will continue to be a headwind, and the company expects a negative year-over-year impact of nearly 2 percentage points, he noted.

“We expect iPhone and services year-over-year performance to accelerate from the June quarter,” Maestri stated. “Also, we expect the revenue for both Mac and iPad to decline by double digits year over year due to difficult compares, particularly on the Mac,” he added.

Apple has not provided revenue guidance since 2020 citing uncertainty.