Apple's Services Revenue Hits New All-Time High of $11.5 Billion in Q2 2019

[MacRumors]

Apple's services category, which includes iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, and AppleCare, has become an increasingly important revenue driver for Apple amid stagnating iPhone sales, and Apple has been focusing more than ever on its services category.

During the second fiscal quarter of 2019, Apple's services segment brought in $11.5 billion in revenue, up from the $9.9 billion services earned in the second quarter of 2018. Apple set a new all-time record for services revenue this quarter.

Apple set new March quarter revenue records for the App Store, iCloud, Apple Pay, and AppleCare. Apple Pay is available in 30 markets and expect to be live in 40 markets by the end of the year.

Apple now has 390 million paid subscriptions across all of its services, an increase of 30 million compared to last quarter. By 2020, Apple expects to pass half a million paid subscriptions by 2020.

Apple in March announced a slew of new services that will boost services revenue even higher in the future. Apple News+, a $9.99 per month service that provides unlimited access to more than 200 magazines, has already launched, and later this year Apple is introducing Apple Arcade, Apple News+, and a new Apple Card credit card.

Apple has said that it is aiming to reach $14 billion in services revenue per quarter by 2020, and the company is well on its way to reaching that goal.

Article Link: Apple's Services Revenue Hits New All-Time High of $11.5 Billion in Q2 2019

 

[44267547]

11.5 billion and yet those will stay that Apple is failing. Apple is absolutely on fire with Services at 54% of generated revenue, that speaks milestones of where this company is leading and will continue to lead with other services from the March announcement.

 

[tomnavratil]

Does that mean more free iCloud storage for everyone?

 

[triton100]

11.5 billion and yet those will stay that Apple is failing. Apple is absolutely on fire with Services at 54% of generated revenue, that speaks milestones of where this company is leading and will continue to lead with other services from the March announcement.

This is true though I wonder if consumers may get ‘services fatigue’ at some point. It’s like adding on another utility bill every time you sign up to a new service and surely there’s only so many people can signup for. Fitness app, news app, music streaming, tv streaming, Netflix, iCloud, etc etc. I know I’m going to start cancelling a bunch. Too many

 

[Intellectua1]

Bravo Apple! I didn't believe in Apple's services at all, especially the new line up (News+, Arcade, and TV) but I guess since I don't use them it makes my thoughts a bit bias.

 

[heov]

11.5 billion and yet those will stay that Apple is failing. Apple is absolutely on fire with Services at 54% of generated revenue, that speaks milestones of where this company is leading and will continue to lead with other services from the March announcement.

Why is it 54% of generated revenue? What do you mean by that? Wasn't their revenue $58B?

 

[44267547]

Why is it 54% of generated revenue?

 

[ad1815]

I wonder the gross margin of service revenue. Also for App Store sales, is a $1 sale counted as $0.3 or $1 in service revenue?

 

[Classie]

Services will eventually be bigger than iPhone...

 

[heov]

View attachment 834617

Uh, are you reading iPhone or Services?

It's 11.5/58.

 

[Carnegie]

I wonder the gross margin of service revenue. Also for App Store sales, is a $1 sale counted as $0.3 or $1 in service revenue?

Apple's Services gross margin was 64% this past quarter.

For App Store sales, Apple only counts as revenue the portion of sales which it keeps.

 

[jayducharme]

I'm really impressed how much their services sector has grown over the past few years. They needed to steer themselves away from such a heavy reliance on the iPhone. It looks like services and wearables will help Apple do that.

 

[44267547]

It's 11.5/58.

I was commenting strictly on the services aspect, and the growth at 54%. I’m not relating anything to the iPhone specifically

 

[heov]

I was coming strictly on the services aspect, and the growth at 54%. I’m not relating anything to the iPhone specifically

Sorry, I'm still confused. Services grew 54% to 11B? Can you list the source? I'm reporting on this tomorrow, and your number caught my eye. And why did you post that pie chart?

 

[centauratlas]

"...pass half a million paid subscriptions by 2020...."

Shouldn't that be Billion vs Million?

 

[sracer]

Is there a breakdown of that $11.5 Billion? I'd like to know how much of that is AppleCare... it would prove that scaring customers is a profitable "protection racket".

That's a real nice iPhone XS ya got there... it would be a shame if something happened to it.

 

[sidewinder3000]

I’d love if Apple would move past their “good enough” attitude toward services and adopt a “best in class” approach to things like Music, News, TV, cloud storage, etc.

 

[jonblatho]

Sorry, I'm still confused. Services grew 54% to 11B? Can you list the source? I'm reporting on this tomorrow, and your number caught my eye. And why did you post that pie chart?

He’s said it at least twice in two separate threads and is correct in neither instance. iPhone generated 54% of Apple’s Q2 revenue and Services 20%. Services grew 16.2% year-over-year.

 

[Shanghaichica]

This is true though I wonder if consumers may get ‘services fatigue’ at some point. It’s like adding on another utility bill every time you sign up to a new service and surely there’s only so many people can signup for. Fitness app, news app, music streaming, tv streaming, Netflix, iCloud, etc etc. I know I’m going to start cancelling a bunch. Too many

Some of the services go under the radar like Apple Pay, iCloud storage and Apple care. People won’t really think of those as a traditional subscription. You will pay for iCloud if you need the space. It doesn’t cost anything to use Apple Pay yet Apple still makes money on every transaction. Apple care is a one off payment.

 

[solace]

I was commenting strictly on the services aspect, and the growth at 54%. I’m not relating anything to the iPhone specifically

But why did you say Services was 54% of their revenue and then include that pie chart showing that Services are only 20%, and that iPhone sales are 54%? Possibly color blind?

 

[triton100]

Some of the services go under the radar like Apple Pay, iCloud storage and Apple care. People won’t really think of those as a traditional subscription. You will pay for iCloud if you need the space. It doesn’t cost anything to use Apple Pay yet Apple still makes money on every transaction. Apple care is a one off payment.

I don’t reabras these as the subscription services I was referring too. Apple Pay isn’t an extra cost to the consumer as such. The price of the goods remains the same. So that’s not a ascibacription you pay extra for. And Apple care is like a warranty you pay extra for like with any other electrical brand. It’s not a subscription service I was referring too. You are under no obligation to purchase that and I never have.