Apple had a rare quarter where it missed its revenue target due to problems in the supply chain and manufacturing. But its services revenue was a bright spot in the earnings. The company said it now has 935 million paid subscriptions across its services.
These offerings, including iCloud, Apple Music, Apple TV+, Apple Arcade, Apple News+, Apple Fitness+, Apple One and Apple Pay, brought in $20.8 billion in the first quarter of the financial year. That is a 6% increase year-on-year as the company registered $19.5 billion during the same time period last year. The iPhone maker also provides enterprise services like Business Essentials, AppleCare, Tap to Pay and Apple Financial Services.
Apple said that it reported double-digit growth from App Store subscriptions. The company is facing regulatory pressure in multiple markets related to monopoly around app distribution through the App Store. The tech giant is already allowing third-party payment systems in some markets like the Netherlands and South Korea. Plus, the company is reportedly exploring the possibility to let users sideload apps with iOS 17.
Apple Music expanded its catalog and now has more than 100 million songs. The service also introduced a karaoke feature called Apple Sing just before the holidays and hiked prices of music streaming apps by $1 per month for individual plans and $2 per month for family plans.
The tech giant made its Apple TV+ offering more attractive by signing up deals to show live sports with Major League Baseball (MLB) and Major League Soccer (MLS).
While the Cupertino-based company doesn’t expand on specific categories around services, it said that payments and cloud services brought in record revenue. Apple first launched tap-to-pay on iPhone last February with Stripe and later brought in Square, Venmo and PayPal as partners. The company previewed the Apple Pay Later solution at the Worldwide Developer Conference (WWDC) last year, and CEO Tim Cook in an interview with CNBC on Thursday said that it will launch soon.
Earlier this month, the company introduced AI-powered narration for audiobooks with select titles. So Apple is clearly looking to expand into new areas of services that can bring in more moolah.
Apple also said that its active device install base has reached 2 billion, which includes iPhones, iPads, Macs, HomePods, Apple TVs and Apple Watches. The company’s CFO Luca Maestri said that this milestone is important as some customers turn into paid subscribers of services later.
“Over the last seven years, as we doubled the installed base, we’ve seen a growing engagement of our customers on the platform. That happens, first of all, by customers transacting on the platform and then moving to paid accounts. So starting to pay for some of the services. That percentage of paid accounts tends to grow over time. We’ve seen it in developed markets,” he said during the earnings call.