TMTPost -- Apple Inc. posts better-than-expected sales of its most important product iPhone in the past quarter despite ongoing sluggish performance in China, one of its key markets that contributed nearly 20% of revenue that quarter.

Credit：Apple

Apple recorded revenue of $85.78 billion for its third fiscal quarter ended June 30, beating Wall Street expectation of $84.46 billion. The California, Cupertino-based company accelerated revenue with a year-over-year (YoY) increase of 4.9% following a 4.3% YoY decline three months ago. Earnings per share (EPS) that quarter surged 11% YoY to $1.40, compared with analysts estimated $1.35.

iPhone sales for the June quarter edged down 0.9% YoY to $39.3 billion, still better than analysts’ projection of $38.95 billion. In the quarter ended March 30, iPhone generated $45.96 billion that quarter with a 10.5% YoY decline, reversing its YoY growth for third consecutive quarter. The robust growth of service and iPad helped offset decline in sales of iPhone. Revenue from service rose 14% YoY to $24.21 billion, versus expectations of $$23.96 billion. iPad revenue of $7.16 billion with a 23.7% YoY increase was way better than analysts expected $6.63 billion.

All the major markets but China reported positive growth during the April-June period. Revenue from Americas, Europe and Japan that quarter climbed 6.5%, 8.3% and 5.7%, respectively, while Greater China, which includes mainland China, Taiwan, Hong Kong and Singapore, brought $14.73 billion, representing a 6.5% YoY decrease. Analysts anticipated revenue in the third largest market for Apple fell 3.2% YoY to $15.26 billion. In the previous quarter, $16.37 of Apple revenue came from Greater China with an 8.1% YoY fall, still topped estimates of $15.87 billion with a YoY decrease of 11%.

As Apple’s third largest market next to North America and Europe, Great China remained a major drag amid intense smartphone competition between Apple and homegrown vendors including Huawei. Apple CEO Tim Cook expressed optimism about sales in China. “I don’t know how every chapter of the book reads, but we’re very confident in the long term,” Cook said on a call with analysts. Apple Chief Financial Officer Luca Maestri said sales in China dropped less than 3%, excluding the effects of foreign exchange and added that he feels good about Apple's performance in that country, given any softness in its economy.

The recovery signs of iPhone sales in China have emerged ahead of Apple’s financial results. iPhone shipments in China rose nearly 40% year-over-year (YoY) in May, suggested by data from China’s Academy of Information and Communications Technology (CAICT), a scientific research institution which is subordinate to the Ministry of Industry and Information Technology.  

The latest CAICT data showed iPhone sales maintained double-digit growth in China. The shipments surged 52% and 12% YoY in April and March, respectively,  after Apple has recorded decrease in iPhone sales for a second straight month in China. iPhone shipments in China dived nearly 39% and about 33% YoY in January and February, respectively, and the first two months of this year saw a 37% plunge, CAICT data showed.

Apple's business could be making a comeback as iPhone demand looks like it's stabilizing in China, according to supply-chain checks Wedbush conducted in Asia. "We strongly believe June will be the last negative growth quarter for China with a growth turnaround beginning in the September quarter. China remains the linchpin of growth for Apple and now this key region is set to see growth once against starting with iPhone 16 in our view," Wedbush analysts wrote in a note in July.