Apple reported strong demand for the iPhone 16 in its quarterly earnings report on Thursday, though sales in China slightly decreased year-over-year. The company reported $94.9bn in revenue, up 6% year-over-year, and $1.64 in earnings per share (EPS). The company’s earnings slightly beat Wall Street projections of $94.4bn in sales and an EPS of $1.60.
The company saw $46.2bn in revenue from iPhone sales, up from $43.8bn year-over-year. Fourth-quarter revenue from its services division, which include subscriptions, increased from $22.31bn to $24.97bn year-over-year.
The earnings report is the first look at demand for the iPhone 16, which Apple released days before the end of the fourth quarter. The launch of the latest iPhone was expected to be a boon for Apple in China and could enable it to claw back market share, according to an analysis by market intelligence firm International Data Corporation. Due to tight competition from players such as Huawei and Xiaomi, the company had fallen to sixth place among smartphone sellers last quarter.
In a statement, CEO Tim Cook touted the release of the company’s “best products yet”, which included Apple Intelligence in addition to the iPhone 16.
“And this week, we released our first set of features for Apple Intelligence, which sets a new standard for privacy in AI and supercharges our lineup heading into the holiday season,” Cook said in a statement.
Apple has struggled with flagging demand for its other devices over the past year. Sales of its wearable devices such as the Apple Watch and Airpods have declined for four straight quarters. Sales of the Vision Pro headset, Apple’s first new hardware product in the better part of a decade, have also failed to take off.
In addition to the latest on iPhone 16 demand, investors will be looking for the company’s updates on the slow roll out of its suite of AI features, called Apple Intelligence, which is included in the latest version of Apple’s iPhone operating system. Cook has defended the company’s decision to take its time releasing a competitor to Google’s Gemini, OpenAI’s ChatGPT and Meta AI. In an interview with the Wall Street Journal, he said the company wanted to focus on creating the best AI assistant, not the first.
“We weren’t the first to do intelligence,” he said. “But we’ve done it in a way that we think is the best for the customer.”
The bare-bones version of Apple Intelligence, which some users got a hold of in a limited release, has had some trouble on the intelligence front. The AI feature has woefully misinterpreted news alerts and shared inaccurate summaries, according to several examples users have shared on social media.
The company has not rolled out the feature in important markets such as Europe and China, where it still faces steep competition. Apple has also faced some pressure in other parts of Asia. Indonesia banned iPhone 16 sales after the government said the company failed to come through on its promise to invest more in the local economy.
