Apple added more than 30 million paid subscriptions in 2022
Apple continues to see growth in Services across iCloud, music, Apple TV+, and the App Store, reaching a record 816 million in Q3.
Apple Services
During Thursday's earnings report, Tim Cook said Apple has 816 million current paid subscriptions, which includes anyone who subscribes to an app sold on the Apple App Store in addition to products such as Apple Music and iCloud.
In January, Luca Maestri, Chief Financial Officer and Senior Vice President of Apple, reported that Apple had a total of 785 million subscribers.
In May, Eddy Cue, Apple's senior vice president of Services, was reportedly working to shake up the company's lucrative Services business. The company has allegedly identified streaming and advertising as two areas for revenue growth.
Services has been a steady money maker for Apple over the years. In Q2 2022, the segment brought in $19.8 billion, up year-over-year from $17 billion.
Apple is also working on bringing more services to the table, including a potential "buy now, pay later" financial service and an Instacart-style grocery ordering service with an emphasis on nutrition.
Read on AppleInsider
Apple Services
During Thursday's earnings report, Tim Cook said Apple has 816 million current paid subscriptions, which includes anyone who subscribes to an app sold on the Apple App Store in addition to products such as Apple Music and iCloud.
In January, Luca Maestri, Chief Financial Officer and Senior Vice President of Apple, reported that Apple had a total of 785 million subscribers.
In May, Eddy Cue, Apple's senior vice president of Services, was reportedly working to shake up the company's lucrative Services business. The company has allegedly identified streaming and advertising as two areas for revenue growth.
Services has been a steady money maker for Apple over the years. In Q2 2022, the segment brought in $19.8 billion, up year-over-year from $17 billion.
Apple is also working on bringing more services to the table, including a potential "buy now, pay later" financial service and an Instacart-style grocery ordering service with an emphasis on nutrition.
Read on AppleInsider
Comments
Is that why AI's coverage is minimal this time ?
Granted the record is not quite the blowout of others but still, the stock is trading at around +3% in after hours trading, more than 3 hours after the report and AI usually has more detail and reports on the Q&A of the call.
30 million new subscriptions would be inconsequential considering there are more than 1 billion discrete Apple customers: would mean less than 3% of Apple customers purchased new services.
EDIT: I forgot to mention. Ages ago I read the first Foundation novel. It was the only thing by Asimov that I truly hated. I’m not even sure if I finished the book even. So no I won’t be catching that.
https://www.apple.com/investor/earnings-call/
https://www.fool.com/earnings/call-transcripts/2022/07/28/apple-aapl-q3-2022-earnings-call-transcript/
Is still leasing cloud space from Google and Amazon. Apple iCloud service margin will not be near that of Google, Amazon and Microsoft.
With the Apple App Store the margin can be no more than their commission, if they count total sales as service revenue. So 30% max. But if they only count their commission as revenue, then the margin will be much higher, but they better not let the politicians (specially the ones in the EU) know what it is. But the App Store revenue margin is at risk with all these politicians looking into their 30% commission and trying to force Apple to make changes in their App Store and iOS to make it harder for Apple to collect their commission.
Apple Music is probably still not profitable yet.
Apple TV+ is spending a lot of money with original programing and with the completion for streaming service dollars, it's probably won't be profitable for a while.
Apple only charges $99 for a Developer Account and $299 for an Apple Enterprise Account. Can't image those being high margin services.
Apple Pay is high margin and have a lot of room to grow as only about 6% of iPhone users uses for in-store purchases, while over 50% have activated Apple Pay. .
But Apple Service sector also includes ....
Apple revenue from licensing IP and Apple Care, are probably the highest margin services, but not the ones that brings in the most revenue. I remember a few years back, Cook (I think?) mentioned in a conference call that Apple Care had the highest margins in the service sector. Which is not surprising as selling extended warranty has always been very profitable for all businesses and in the 60-75% profit margin range. I remember I had a friend who worked as a sales person for GoodGuys in the 80's and he mentioned that he got more commission from selling a $150, 3 years extended warranty on a $1500 TV (no flat screens back then.), than selling the TV.
I believe iTunes Store (for music), Apple TV App (for movies) and iBook Store, all operate on a 30% commission. So have a margin of no more than 30%. iTunes Music sales is now at about $5B a year, not near the big revenue generator it once was and with no sign of any significant growth in the future.
Google default search engine on Safari is rumored to be in the $12- $15B range per year. But it might be for more than a year or not close to $15B a year at all. It has never been confirmed by Apple or Google. But that is a very high margin service, if not the highest. But also the most at risk if politicians gets their way. If they do ,that would be a lost of about 20% of Apple Service revenue (if the $15B a year is correct) and an even greater percent loss in Service profits.
Apple Service sector now already account for about 20% of Apple total revenue. Or about $78B a year. Revenue wise, it's twice that of Macs, iPads or Apple Watch (Wearables). Apple have never reveal or even hinted what percent of profit Apple Service sector generate but I don't think for now, its nearly as much as Macs, iPads or Apple Watch (Wearables), even if the Service sector revenue is twice that of Macs, iPads or Apple Watch (Wearables). Traditionally, Apple like to keep their hardware gross margins above 30% and the net profit margin in the mid 20's. I don't think as a whole, the Service sector is close to that. But for sure it is the fastest growing sector and it doesn't need to be high margin as a whole, for it to surpass Macs, iPads and Apple Watch (wearables) in profits in the near future, if it can keep growing at this rate.
iPhones account for 50% of Apple annual revenue.
Service, Macs, iPads and Apple Watch accounts for the bulk of the other half of revenue. With Services accounting for 20% and Macs, iPads and Apple Watch (wearables) accounting for about 10% each.
https://en.macromicro.me/collections/21/us-apple/243/global-iphone-sales-ratio