Apple reported record revenue of $83 billion in its third quarter, up two percent year-over-year, beating Wall Street estimates.

However, the services business saw slow growth from Q2.

Apple reported results for its cloud services business in the same segment as the App Store, Apple TV+ and Apple Music.

Third-quarter service revenue was $19.6 billion, up 12 percent year-over-year, but less than second-quarter service revenue of $19.7 billion.

Wall Street investors had expected Apple’s service sales to hold steady at $19.7 billion.

Apple’s in general operating income also declined 4.6% to $23.07 billion on an annual basis.

Apple CFO Luca Maestri told investors on an earnings call transcribed by Searching for Alpha that the seller is satisfied with his performance in a market gripped by inflationary pressures.

“Our results for the June quarter continued to demonstrate our ability to manage our business effectively despite a challenging operating environment,” he said.

“We set a revenue record for the June quarter and our installed base of active devices reached record levels in every geographic segment and product category.”

Apple and China Covid Block

Apple CEO Tim Cook also acknowledged that Apple is vulnerable to ongoing lockdowns affecting parts of China and the supplier’s supply chain.

“We continue to have constraints in our Mac offering, but we are encouraged by the strong customer response to our incredible range. The iPad, like the Mac, continued to see strong demand in the June quarter despite continued supply constraints,” he said.

Anticipating further economic headwinds in the form of supply chain constraints, inflation, the threat of a US recession and the Russia-Ukraine war, Cook said the company was trying to keep a “clear eye” as it looked to Q4.

Apple Services Forecast for Q4

CFO Luca Maestri added that the performance of the provider’s services was supported by the increase in subscriptions already reached in Q3.

Paid subscriptions to Apple’s platform grew to 860 million, up 35 million from the second quarter and up more than 160 million in the last 12 months alone.

“The record level performance of our portfolio of services in the June quarter reflects the strength of our ecosystem,” he said.

“First, our install base continued to grow, reaching an all-time high in every geographic segment and major product category.”

He added: “And we also saw increased customer engagement with our services in the quarter, our transaction accounts, paid accounts and paid subscription accounts.

“All saw double-digit growth for the year and paid subscriptions showed very strong growth.”

Other parts of the business have a less rosy outlook.

Maestri pointed to Apple’s advertising, accessories and home products as business units that are “weak spots” for the supplier.

“Fortunately, we have a very broad portfolio, so we know we’ll be able to navigate that,” he said.

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