Apple has posted its highest fourth quarter revenue on record as a drop in iPhone sales was offset by strong growth from its other products and services.
Quarterly revenue for its fiscal quarter ended 28 September grew by 2% year-on-year to $64 billion, despite a continued decline in iPhone sales, which fell 9% year-on-year to $33.4 billion. However, the company noted this is a significant improvement over the 15% decline it reported across the first three quarters.
While the iPhone is still Apple’s biggest source of revenue (it represented 52% of Q4’s total net sales), the company's strategy of diversifying its portfolio is bearing fruit.
The tech giant, which is set to launch its Apple TV+ streaming service this week, brought in record revenue from its services business, which reported net sales of $12.5 billion in Q4, up 18% from $10.6 billion in the same quarter last year. Apple says it now has “over 450 million paid subscriptions across the services on our platform, compared to over 330 million just a year ago.”
It also set Q4 records for sales of its wearables, with 54% revenue growth year-on-year to $6.5 billion in the quarter, while sales of the iPad increased 14% to $4.7 billion.
Overall, the iPhone dragged down its products revenue by 1% to $51.5 billion in the quarter. Net income in the quarter ending in September slipped 4% to US$13.7 billion from the same quarter in 2018.
Apple Q4 2019 earnings
Revenue from the Americas and ‘Rest of Asia Pacific’ both increased 6% year-on-year to reach record $29.3 billion and $3.7 billion in the quarter, but declined in its three other geographies: Europe, Greater China and Japan. Europe brought in $14.9 billion in revenue, Greater China $11.1 billion, and Japan $5 billion.
However, in its analyst call Apple said it made continuous improvement in Greater China, where year-over-year revenue comparisons became more favorable each quarter of fiscal 2019 from a 27% decline in the first quarter to a 2% decline in the fourth quarter.
Apple CEO Tim Cook noted that the company is paying some of the tariffs the Trump administration imposed this year on China, but said he remains hopeful about the trade situation.
"In general, my view is very positive about how things are going," he said. "The tone has changed significantly. I have long thought it was in both countries' best interest to get to an agreement that maybe initially doesn't solve everything but solves some things that each country wants and gets us to a better place."
In the call, the company also said it established new Q4 records in many major developed and emerging markets including the US, Canada, Germany, France, Korea, Singapore, Brazil, India, Thailand, Malaysia and Vietnam.