Apple reports another record quarter but shows signs of lukewarm iPhone 14 demand

Apple reported its fiscal fourth quarter earnings on Thursday, tallying $90.1 billion in revenue and earnings per share of $1.29 — both above Wall Street expectations — in a period when other tech giants aren’t faring so well. Practically all of Apple’s divisions, including iPhone, Mac, services, and wearables, were up year over year, with the exception of the iPad. But despite YOY growth, iPhone revenue came in beneath estimates.

There’s been conjecture among analysts and other reports that the iPhone 14 and iPhone 14 Plus are underperforming Apple’s expectations for the “regular” lineup, with most upgraders favoring the 14 Pro and 14 Pro Max. The Pro phones include a faster processor, upgraded camera system, and the new Dynamic Island interface. The quarter only included eight days’ worth of iPhone 14, 14 Pro, and 14 Pro Max sales; the larger Plus version wasn’t released until several weeks later.

Supply is constrained for the iPhone 14 Pro models and new Apple Watch Ultra, CFO Luca Maestri told The Wall Street Journal.

“We clearly countered the industry trends on the phone if you look at third-party estimates of what the smartphone industry did,” CEO Tim Cook told CNBC. He also reiterated that Apple is being “deliberate” in its hiring and is thus slowing down its pace of bringing on new employees.

Apple’s services division was up year over year, but only by single digits. The company just raised subscription prices for Apple Music, Apple TV Plus, and its Apple One bundle, so that might give upcoming quarters a boost after this slowdown. The monthly price of Apple Music only went up by a dollar, but it marked an end to the long-standing $9.99 / month rate for streaming music. Competitors like Spotify and Amazon Music might soon follow suit.

On the software side, Apple rolled out iOS 16 and watchOS 9 during the quarter but waited until this week to release iPadOS 16.1 and macOS Ventura. The iPad software’s new Stage Manager feature has been met with criticism.

After announcing new iPads earlier this month, Apple is expected to release upgraded 14-inch and 16-inch MacBook Pros in the coming weeks.