Apple reported a tough December quarter on Thursday, including the company’s biggest quarterly revenue decline since 2016, along with sales drops in its iPhone, Mac and wearables businesses.

At first, investors didn’t like the results, with Apple shares dropping as much as 4% in extended trading.

But the stock had a brief rally after Chief Financial Officer Luca Maestri started to give data points on a call with analysts, suggesting Apple’s performance will get better during the current quarter even if overall sales will still be down from last year.

The tech giant hasn’t provided guidance since the start of the pandemic. But its data points — or “directional insights,” as management calls it — allow analysts covering the stock to get a sense of how the company is doing and update their models.

Here’s how Apple’s forward-looking statements on Thursday break down.

“For iPhone, we expect our March quarter year-over-year revenue performance to accelerate relative to the December quarter year-over-year revenue performance,” Maestri said. “This represents an acceleration in our underlying year-over-year business performance, as the December quarter benefited from an extra week.”

The iPhone is Apple’s biggest product segment by far, amounting for 56% of sales in the most recent quarter. Apple said on Thursday that iPhone sales had declined over 8% year over year. But Maestri’s comment suggests they won’t continue to fall as quickly in the March quarter.

Management said one reason for the drop in November and December was that it couldn’t make enough high-end iPhones because of Covid restrictions at Chinese factories, and that production had recovered.

Still, there’s a risk that customers who couldn’t find a new phone during the holiday season will just give up, rather than buying one in the current quarter. Apple CEO Tim Cook said it was “very hard to estimate” this possibility when analysts asked on the call.

Before Thursday, analysts had expected Apple to guide to about $98 billion in sales in the company’s fiscal second quarter.

On Thursday, Apple said that revenue had declined 5.49%. Last year, in the March quarter, Apple reported $97.28 billion in sales. A similar decline in the March quarter this year would put sales around $92 billion.

So on the surface, this should’ve been a disappointment.

But as Apple explained, a drop of 5.49% would actually be an improvement from the December quarter, because Apple’s results in that quarter were artificially boosted by the fact that there was an extra week. In other words, December 2022’s year-over-year revenue performance was even worse than it looked.

In addition, Covid lockdowns at factories in China were a big factor in the shortfall, but Apple said on Thursday that its production was back to a level it was comfortable with, suggesting that supply won’t be as big a drag on the March quarter as it was in December.

“For Services, we expect revenue to grow year-over-year while continuing to face macroeconomic headwinds in areas such as digital advertising and mobile gaming,” Maestri said.

Services revenue was one of the few pleasant surprises for Apple on Thursday, as its $20.77 billion in sales beat Wall Street consensus expectations. The segment includes App Store, warranties, iCloud, and Apple Music, among other things.

Last year, Apple reported $19.82 billion in services revenue in the March quarter, so the company is suggesting an increase from there, even though executives said it remains a tough environment with decreased gaming and advertising sales.

“For Mac and iPad, we expect revenue for both product categories to decline double digits year-over-year because of challenging compares and macroeconomic headwinds,” Maestri said.

This represents a significant shift for the iPad, which was Apple’s fastest growing hardware business during the December quarter, spiking nearly 30% on a year-over-year basis to $9.4 billion in sales. Now Apple is suggesting the business will go from 30% growth to more than a 10% decline.

In contrast, the Mac business declined nearly 29% during the December quarter, but Cook told analysts it was partially because of when the company released new laptops, and Apple announced new Mac desktops and laptops in January. Mac sales will be down at least 10% in the March quarter, based on these comments, but will likely improve.

“We expect gross margin to be between 43.5% and 44.5%. We expect OpEx to be between $13.7 billion and $14.9 billion,” Maestri said.

Apple’s margins remain significantly higher than they were before the pandemic. For example, in the quarter ending in December 2019, the last full quarter before the Covid pandemic was declared, Apple reported a gross margin of 38.4%.

“We’re doing a lot of work on the cost structure and that is paying off,” Maestri said.

Cook told CNBC’s Steve Kovach on Thursday that Apple had actually come in under its operating expenses goal for the December quarter.

“We’re being prudent and deliberate. If you look at our OpEx guidance, what we said we were going to do this quarter, we came in half of a billion dollars underneath it,” Cook said. “So we are squeezing costs out.”