Apple’s $117.2 billion Q1 misses earnings expectations

Apple on Thursday reported revenues of $117.2 billion in the first fiscal quarter, off 5% from a year earlier. While there were several bright spots, the financial report confirmed iPhone supply challenges plagued the company in the last three months of 2022, compounded by the effects of a strong dollar.

The numbers game

The overall numbers tell the story:

• Product sales generated $96.3 billion compared to $104.4 billion in Q1 FY 22.
• Services generated $20.7 billion, up from $19.5 billion a year ago.

Apple’s execs cited a difficult foreign exchange environment and supply chain challenges as the main problems. They explained the company revenue did grow on a “constant currency basis” — though the currency wasn’t constant and revenue didn’t grow as a result.

It could have been worse. Apple had anticipated the strong dollar would shave 10% off company revenue; the actual impact was 8%.

Notably, research and development spending rose considerably, from $6.3 billion in Q1 FY 22 to $7.7 billion in the most recent quarter. That’s a big increase as Apple preps new products and services over the coming 12 months.

And while quarterly revenue was down from the year ago quarter, it was up on every other quarter back to 2018. The company also returned its second-highest ever earnings per share, iPhone and services revenue in the quarter.