1 billion subscribers push Apple’s services revenue to all-time high [Updated] | Cult of Mac

1 billion subscribers push Apple’s services revenue to all-time high [Updated]


Apple logo with
Apple says more than a billion paid subscriptions pushed services revenues to an all-time high last quarter.
Photo: Goran Bogicevic/Free Stock photos by Vecteezy

The number of people subscribing to Apple services passed the 1 billion mark during the company’s most recent financial quarter, allowing that segment of the company to bring in record revenue.

But total revenue decreased slightly during the June quarter, the third time that’s happened in a row. And the money coming in from all Apple’s hardware groups is down.

Besides services, not strong financial results for Apple

During the April-to-June period, Apple’s revenue totaled $81.8 billion, down 1% year over year. Quarterly earnings per diluted share were $1.26, up 5% year over year.

The Wall Street consensus was for revenue to come in at $81.8 billion, exactly what the company took in. But analysts’ consensus was for earnings per share to come in at $1.19, so Apple beat that Street prediction.

And Apple’s CEO went looking for a bright spot in the quarterly results just announced.

“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 Tim Cook in a statement released along with the financial results.

In Thursday afternoon’s earnings call, which followed Apple’s release of its quarterly numbers, CFO Luca Maestri predicted further growth for the company’s services sector. And to do that, Apple is counting on a strategy as old as opium — the first one’s free.

“I would say the biggest opportunity is that we know that there’s a lot of customers that we have that are very familiar with our ecosystem, they are engaged in the ecosystem, but still today, they’re using only the portion of the ecosystem that is free,” Maestri said. “And so we think that by offering better content, and more content over time, we’re going to be able to attract more of them as paid customers.”

Apple total revenue in its financial Q3 2023
Apple total revenue in its financial Q3 2023 (figures in millions)
Chart: Ed Hardy/Cult of Mac

iPhone, Mac and iPad revenue all slip

While revenue from services like the App Store and Apple Music are up, the same isn’t true for hardware.

iPhone brought in $39.7 billion during the June quarter, down 2%, year over year. That’s important, as iPhone is by far the largest segment of the company — Apple’s total financial results depend heavily on handsets.

Sales of MacBooks, iMac and all Macs brought in $6.9 billion, a 7% annual decrease. That’s actually an improvement: Mac revenue dropped 31% in the March quarter.

iPad venue in the April-to-June period was $5.8 billion, down 20% year over year. However, company executives pointed out that last year’s tablet revenue was pushed up by the launch of the new 2022 iPad Air.

Looking ahead to future good news

During the earnings call, Cook and Maestri both cited strength of iPhone sales in emerging markets — despite an overall earnings dip of 2% — and seemed to hint iPhone sales may pick up in the next quarterly earnings cycle. That would include the new iPhone 15 lineup, expected in September.

Cook noted June quarter records for iPhone sales in India, Indonesia, Mexico, the Philippines, Poland, Saudi Arabia, Turkey and the United Arab Emirates. He threw in records for developed countries as well, including France, the Netherlands and Austria.

But, along with expected ongoing services strength, accelerating iPhone 15 sales could boost earnings, Maestri implied.

“We expect our September quarter year-over-year revenue performance to be similar to the June quarter, assuming that the macroeconomic outlook doesn’t worsen from what we are projecting today for the current quarter,” he said. “We expect iPhone and services year-over-year performance to accelerate from the June quarter.”

David Snow and Lewis Wallace contributed to this report.


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