Apple reported strong demand for the iPhone 16 in its quarterly earnings report on Thursday, although overall sales in China declined slightly year over year. The company reported $94.9 billion in revenue, up 6% year over year, and $1.64 in earnings per share (EPS). The company’s earnings slightly exceeded Wall Street projections of $94.4 billion in sales and earnings per share (EPS) of $1.60.
The company earned $46.2 billion in revenue from iPhone sales, up from $43.8 billion year over year. Fourth-quarter revenue from its services division, which includes subscriptions, rose from $22.31 billion to $24.97 billion year over year.
The company also said it received a one-time fee of $10.2 billion due to the reversal of a European general court decision requiring Apple to pay back taxes to Ireland.
The earnings report is the first look at demand for the iPhone 16, which Apple launched 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 allow it to regain market share. according to an analysis by market intelligence firm International Data Corporation. Due to tough competition from players like Huawei and Xiaomi, the company fell to sixth place among smartphone vendors last quarter.
In a statement, CEO Tim Cook touted the launch of the company’s “best products yet,” which included Apple Intelligence in addition to the iPhone 16.
“And this week, we launched our first set of features for Apple Intelligence, setting a new standard for privacy in AI and powering our lineup heading into the holiday season,” Cook said in a statement.
The company declined to go into detail about whether it expects Apple Intelligence to increase demand for its products during the holiday season.
“We’re very early in the cycle with a lot of new products and features we’re launching,” said Apple CFO Luca Maestri. “We’re very excited about them, but it’s early days and the rollout of Apple’s intelligence will happen over time, not around the world like we normally do with software releases.”
Apple has struggled with falling 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 consecutive quarters. Sales of the Vision Pro headphones, 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 sought updates on the company’s slow rollout of its AI feature set. called Apple Intelligence, which is included in the latest version of Apple’s iPhone operating system.
On Thursday’s earnings conference call, Cook said that in the three days since Apple Intelligence launched, consumers downloaded the new iOS update, 18.1, twice as fast as 17.1 a year ago.
“There’s definitely interest in Apple Intelligence,” Cook said.
Cook has defended the company’s decision to take its time launching a competitor to Google’s Gemini, OpenAI’s ChatGPT, and Meta AI. In an interview with Wall Street JournalHe said the company wanted to focus on creating the best AI assistant, not the first.
“We were not the first to do intelligence,” he said. “But we’ve done it the way we think is best for the customer.”
The basic version of Apple Intelligence, which some users got in a limited release, has had some issues on the intelligence front. Unfortunately, the AI feature has misinterpreted news alerts and shared inaccurate summaries, according to several examples that users have shared on social media.
The company plans to roll out additional features in December and over the coming months, Cook said. In the results call, he indicated that future iterations may be much more advanced.
“I’m into future versions of Apple Intelligence and it’s changing my life,” he said.
The company has not rolled out the feature in major markets such as Europe and China, where it still faces stiff competition. Apple has also faced some pressure in other parts of Asia. Indonesia banned sales of the iPhone 16 after the government said the company failed to deliver on its promise to invest more in the local economy.