Apple reports record revenues despite stagnant iPhone sales

CEO Tim Cook spent much of the earnings call hyping Apple Intelligence.
Apple reported its earnings results for the third quarter of the 2024 fiscal year, and it satisfied investors’ expectations at the top level with 5 percent growth year over year. The company set a third-quarter record with $85.8 billion in revenue.

Despite that growth, a couple of key things investors were concerned about—overall iPhone sales and revenue in China—slipped downward, and Apple’s stock fell slightly in after-hours trading.

Revenue in China fell to $14.7 billion, down 6.3 percent from a year ago, as Apple faces fierce competition from Huawei and other smartphone companies. CEO Tim Cook said on the investor call that iPhone models are still the top sellers “in urban China.”

Overall, the iPhone business fell slightly from $39.67 billion in the same quarter last year to $39.30 this year. As a percent of total sales, the iPhone accounts for its lowest portion amongst the company’s other products and services in almost four years.

So how did the company still achieve a 5 percent overall in overall revenue? That was driven in no small part by substantial gains in both services and iPad revenue.

Apple introduced major new iPad updates in Q3 2024, and consumers seemed to respond well: iPad revenue was $7.16 billion, up almost 24 percent.

Services, which includes things like Apple TV+ and Apple Music, was up 14 percent, continuing an upward trend for that business.

Other product categories include “Wearables, Home, and Accessories” (including AirPods and the Apple Watch, among other things)—down 2 percent to $8.1 billion during the quarter—and the Mac, which was up 2 percent to around $7 billion in sales.

Apple was careful to point out that a very large percentage of buyers of both the Apple Watch and the iPad this quarter were first-time owners of those device categories, suggesting the market is not yet saturated for either.

Cook spent the majority of his time speaking during the earnings call hyping Apple Intelligence, the suite of generative AI features coming in iOS 18.1 this fall. The company first unveiled it during WWDC 2024 earlier in the quarter.

Apple believes Apple Intelligence will help drive sales of its newest and most expensive iPhones, as it won’t run on devices before last year’s iPhone 15 Pro.

Cook also took a brief moment to share enthusiasm for Apple Vision Pro, saying that developers have released more than 2,500 native spatial apps. He listed use cases and described the product in terms of customer satisfaction, though he did not go into specifics about sales numbers for the device.