Apple Reports First Revenue Decline Since 2019 as iPhone Sales Fall

iPhone 16e

Apple (NASDAQ:AAPL) released its fiscal first-quarter earnings for 2025, reporting a 5% decline in revenue compared to the same period last year.

This marks the company’s first year-over-year revenue drop since 2019, a sign that Apple is feeling the effects of slowing consumer demand, supply chain disruptions, and intensified competition in the smartphone market. The company posted total revenue of $117.2 billion, slightly below Wall Street’s expectations, with net income coming in at $27.1 billion, down from $30 billion a year earlier.

The biggest drag on Apple’s performance was the iPhone segment, which saw sales drop by 8% year-over-year. The iPhone has historically been Apple’s largest revenue driver, accounting for nearly half of the company’s total revenue.

However, weak demand in China, combined with economic uncertainty in key global markets, has impacted sales. Analysts believe that Apple’s struggles in China are partly due to increased competition from domestic brands like Huawei, which has gained ground in the premium smartphone market.

Additionally, some customers appear to be holding off on upgrades, waiting for anticipated advancements in AI and foldable technology before making their next purchase.

Despite the decline in iPhone sales, Apple (NASDAQ:AAPL) saw growth in its Services division, which includes the App Store, Apple Music, iCloud, and Apple Pay. The segment posted a 6% increase in revenue, reaching an all-time high of $23.1 billion.

Services now represent nearly 20% of Apple’s total revenue, and this steady expansion has helped offset some of the declines in hardware sales. The wearables, home, and accessories category, which includes the Apple Watch and AirPods, also saw modest growth of 3% year-over-year, showing continued demand for Apple’s ecosystem of devices.

Apple (NASDAQ:AAPL) CEO Tim Cook addressed the revenue decline in the company’s earnings call, acknowledging the difficult macroeconomic environment but expressing confidence in Apple’s long-term strategy. He emphasized that Apple’s strong ecosystem, continued innovation, and investments in AI and augmented reality will help the company navigate near-term challenges.

Cook also noted that Apple remains committed to expanding its presence in emerging markets, where demand for premium smartphones and services is still growing.

Looking ahead, Apple (NASDAQ:AAPL) did not provide specific revenue guidance for the next quarter, citing economic uncertainties and geopolitical risks. However, the company did highlight the upcoming iOS updates, new AI-powered features, and rumored product innovations, including a potentially redesigned iPhone 16 and updates to its Mac and iPad lineup.

Apple is also reportedly making progress on its mixed reality headset, the Vision Pro, which could help drive revenue growth in future quarters.

Following the earnings announcement, Apple’s stock dipped slightly in after-hours trading, reflecting investor concerns about the iPhone slowdown and challenges in key international markets.

While Apple’s strong brand loyalty and diverse product ecosystem remain key strengths, analysts believe the company will need to accelerate innovation and find new revenue streams to maintain its leadership position in an increasingly competitive tech landscape.

Despite short-term setbacks, Apple (NASDAQ:AAPL) remains one of the most valuable and resilient companies in the world, with a strong balance sheet, growing services revenue, and a loyal customer base.

Investors will be watching closely to see how Apple responds to its latest challenges and whether it can reignite iPhone demand in the coming quarters.

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