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Apple (AAPL - Free Report) is set to report its first-quarter fiscal 2023 results on Feb 2.

Apple expects year-over-year revenue growth to decelerate in the fiscal first quarter compared with the fiscal fourth quarter (the September-end quarter) due to an unfavorable year-over-year impact from the forex of roughly 10%.

The Zacks Consensus Estimate for revenues is pegged at $121.21 billion, indicating a decline of 2.21% from the year-ago quarter’s reported figure.

The consensus mark for earnings is pegged at $1.93 per share, unchanged over the past 30 days and indicating an 8.1% decrease from the figure reported in the year-ago quarter.

Apple Inc. Price and EPS Surprise

Apple Inc. price-eps-surprise | Apple Inc. Quote

Apple’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the earnings surprise being 6.26% on average.

Let’s see how things have shaped up for the upcoming announcement.

iPhone Revenues to Suffer From China Disruptions

Apple’s fortunes are heavily reliant on the iPhone, which is by far its biggest revenue contributor. The device accounted for 47% of net sales in the last reported quarter, wherein sales increased 9.7% year over year to $42.63 billion.

Our estimate for fiscal first-quarter iPhone net sales is pegged at $60.96 billion, down 14.9% year over year.

Apple is expected to have suffered from disruptions at its China partner Foxconn’s factory in Zhengzhou, as well as shrinking demand. We expect Apple to have shipped roughly 70 million iPhones in the first quarter of fiscal 2023.

Per the latest Canalys report on worldwide smartphone shipments, Apple expanded its market share to 25% in fourth-quarter 2022, beating Samsung’s 20%.

Services Growth to Slow Down in Q1

Apple expects Services revenue growth to be negatively impacted by challenging macroeconomic conditions, unfavorable forex, and weakness in digital advertising and gaming.

In the fiscal fourth quarter, Services revenues grew 5% from the year-ago quarter to $19.19 billion and accounted for 21.3% of sales.

Nevertheless, an expanding paid subscriber base has been a key catalyst for the Services business, which is riding on the increasing popularity of the App Store.

Apple has more than 900 million paid subscribers across its Services portfolio. App Store has been grabbing the attention of prominent developers from around the world, helping the company to offer exciting apps that drive traffic.

Services like Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle are expected to have contributed to overall growth.

Apple TV+ has been gaining recognition due to award-winning shows despite strong competition from Netflix (NFLX - Free Report), as well as services from Disney (DIS - Free Report) and Amazon (AMZN - Free Report).

Per a report by JustWatch, Amazon prime video is the leader in the streaming market in the United States with a 21% market share, trailed by Netflix at a 20% market share and Disney+ at a 15% market share.

Meanwhile, Apple TV+ now has a 6% global market share, down 1% in fourth-quarter fiscal 2022.

Apple has been keeping no stone unturned to make TV+ service a success. At a more affordable price of $4.99, Apple TV+ has been benefiting from quality content with its strong portfolio of original shows and movies.

Our estimate for fiscal first-quarter Services net sales is pegged at $20.21 billion, up 3.5% year over year, lower than 5% growth reported in the previous quarter and 23.8% in the year-ago quarter.

Wearables’ Growth to Remain Strong

Apple has been dominating the wearables market, thanks to the strong adoption of the Apple Watch.

This Zacks Rank #3 (Hold) company’s Fitness+ subscription service, built on Apple Watch, has been a game changer.

Notably, Fitness+ tracks health and workout-related data from Apple Watch that users can view on their iPhones, iPads or Apple TVs.

Apple Watch’s adoption rate has been growing rapidly. More than two-thirds of customers, who purchased it in fourth-quarter fiscal 2022, were first-time customers.

Our estimate for Wearables, Home and Accessories revenues stands at $15.99 billion, up 8.8% year over year.

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