Apple has taken a hit in iPhone sales for the third consecutive quarter but services have softened the financial blow overall.

Apple’s earnings report for its third quarter ending July 1 says iPhone sales fell 2.4 percent to $US39.7 billion from $40.7 billion in Q3/2022, but a record revenue of US$21.2 billion from subscription services: Apple TV, Apple Music, cloud services, games and the App Store softened the blow.

Overall sales were down 1.4 percent at US$81.8 billion.

Services are now Apple’s second biggest source of revenue, with iPhone sales still the cash cow for the organisation. Apple says it has more than one billion paid subscriptions.

“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Apple CEO Tim Cook in a statement.

ChannelNews yesterday reported that Apple services might soften the financial blow of a smartphone market that has plummeted 25 percent and this week delivered a slump in chip sales for chipmaker Qualcomm.

Qualcomm announced it will terminate staff to help reduce its losses.

Apple Park, California

The increased services revenue vindicates Cook’s long term move to diversify Apple’ revenue sources. It shows that while consumers are tightening their belts with reduced spending on new Apple devices, they are continuing to plough billions of dollars into month-by-month subscription services despite the prevailing economic hardships.

Apple says its June quarter results were an improvement from the previous quarter. “During the quarter, we generated very strong operating cash flow of $26 billion, returned over $24 billion to our shareholders, and continued to invest in our long-term growth plans,” Apple said.

The report showed that Mac and iPad sales were down from a year ago, but wearables, home product and accessory sales had marginally increased.

Apple’s board declared a cash dividend of US$0.24 per share.