Apple’s iPhone success may be reaching its peak

Apple doesn’t provide estimates for iPhone sales in future quarters, but it’s easy to draw conclusions from its revenue forecast because the smartphone now represents about two-thirds of the company’s sales. ( AAPL ) once again announced a record quarterly profit on Tuesday. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices”.

While Apple recorded good financial figures, the company saw essentially no growth in iPhone sales compared to the same quarter past year. During the year-ago quarter, Apple earned $18 billion, or $3.06 a share, on $74.6 billion in sales.

But here’s the deal: iPhone sales won’t keep climbing forever-though they’re still growing, it’s at a slower rate than ever before, from 74.5 million units to 74.8 million year-over-year.

Sales of the iPad, which have been falling for nearly two years, were down from 21.4m to 16.1m, despite the release of the iPad Pro, a larger tablet targeted at corporate customers.

But the company’s performance was still enough to break the profit record set this time past year, with sales up 56% on the last quarter too.

Apple forecasts that its total revenue in Q2 2016 will be between $50 and $53 billion, compared to $58 billion in the year-ago quarter, signaling the company’s first year-over-year drop in revenue in thirteen years. Apple’s iPhone shipments in the first quarter fell short of market expectations of 75.5 million, according to research house FactSetStreetAccount.

Apple did reveal that 1 billion devices (across all of its products, not just iOS products, including Mac PCs and Apple TV) have been connected to its services in the last 90 days.

Apple’s premium pricing has also afforded it a vast pile of cash reserves – about $200 billion and climbing – which gives it flexibility few companies enjoy.

While the next quarter will be hard for the company, Cook argues that the company will get better as it moves forward.

In other news, SVP Daniel J. Riccio sold 13,588 shares of Apple stock in a transaction on Monday, November 2nd. Apple Watch sales were not broken out.

Apple’s move to introduce a refreshed entry-level model may boost the iPhone’s sales amid weakening growth, stemming from market saturation.

“There are downside concerns given continued negative data points from the supply chain as well as continued currency deterioration, particularly in China”, UBS analyst Steven Milunovich said in a note before Apple’s earnings release.