Earlier last week, Apple (AAPL) announced its third-quarter results that surpassed market expectations but showed a slowdown in growth for the company.

Apple’s Financials

Apple’s third quarter revenues grew 2% to $83 billion, ahead of the market’s forecast of $82.81 billion. EPS grew 8% over the quarter to $1.20, surpassing the Street’s forecast of $1.16.

By segment, iPhone revenues grew 3% to $40.67 billion, ahead of the estimates of $38.33 billion. Mac sales fell 10% to $7.38 billion, significantly short of the estimated $8.7 billion. iPad sales fell 2% to $7.22 billion, ahead of the estimates of $6.94 billion. Revenues from other products fell 8% to $8.08 billion, short of the estimated $8.86 billion. The services segment revenues grew 12% to $19.6 billion, falling short of the estimates of $19.7 billion.

Apple did not provide any forecast for the current quarter. The market estimates revenues of $90 billion and an EPS of $1.31 for the quarter.

Apple also attributed the growth slowdown to difficult economic conditions. Many suspect a slowdown in demand for smartphones and PCs around the world as consumers deal with fears of recession and significant high inflation. A year ago, its revenues rose 36% over the year. A quarter ago, it had reported 8% growth.

Apple’s Product Upgrades

Despite the growing concerns of global economic conditions, Apple continued to deliver on several product upgrades. Last month, Apple released the completely redesigned MacBook Air and a new 13-inch MacBook Pro. Both these systems are powered by M2, its next generation of Apple silicon for Mac. M2 delivers a faster CPU, GPU, and neural engine along with higher memory bandwidth and new capabilities like Pro Res acceleration.

It released the upgraded iPad OS 16, which includes a range of new features including the ability to edit or delete sent messages, a new way of organizing apps on iPad and Mac, and a customizable lock screen on iPhone. It unveiled new innovations and accessibility such as door detection and live captions that support users with disabilities with navigation, health, communication, and more.

It also announced Apple Pay Later, a solution that gives customers more flexibility to make purchases with their Apple devices. It is improving its IoT offerings with the next generation of CarPlay that is delivering an improved driving experience with deeper integration into vehicle hardware, allowing drivers to control their music, change the temperature, and monitor their fuel levels, all from a single platform.

Within the wearables department, Apple Watch is bringing more data about the wearer’s workouts, sleep cycles, and medications. It also received the FDA approval for a new feature that will let users with irregular heart rhythms track the time they spend in AFib.

Apple remains focused on services and the content on its services. Services revenue rose 12% to $19.6 billion, a June quarter record. Apple TV+ productions like Severance and Black Bird have received rave reviews.

In the two and a half years since the launch of Apple TV+, the service has earned over 250 award wins and more than 1,100 award nominations. Last month alone, it earned 52 Emmy Award nominations across 13 titles. It continues to add to its content lineup and recently announced a 10-year deal to present Major League soccer matches around the world.

Apple’s iOS app economy continued its strong run. Apple reported that the App Store supports more than 2.2 million jobs in the United States and many more globally.

Among some key highlights, its installed base of active devices reached record highs, transacting accounts grew double digits, and paid subscribers grew 35 million to 860 million.

Its iPhone customer satisfaction remained high at 98%, highlighting the stickiness of Apple’s ecosystem. Apple also saw strong double digit revenue growth in newer markets of Indonesia, India, Vietnam, and Brazil, which are still largely unpenetrated by its products. Clearly, despite the current economic environment, there is enough room to grow for Apple.

Apple’s stock has recently been trading at around $161.15 with a market capitalization of approximately $2.5 trillion. It touched a 52-week high of $182.94 in December last year. The stock was trading at a 52-week low of $129.04 earlier last month.

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