Apple Services Revenue Hits $22.3 Billion, a New Record, as Tech Giant Beats Wall Street Expectations on Strong iPhone Sales

Apple’s services segment continues to record healthy gains, increasing 16.3% for the September quarter to reach a record $22.3 billion, while it also reported a 2.8% lift in iPhone sales.

Overall, Apple posted revenue of $89.50 billion (down 1%) and net income of $22.96 billion (up 11%), translating to earnings per share of $1.46, for the quarter ended Sept. 30. That beat Wall Street consensus estimates for $89.28 billion in revenue and EPS of $1.39, per data compiled by Refinitiv.

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The company’s services revenue came in nearly $1 billion over analyst forecasts of $21.35 billion. The segment includes the App Store, Apple Pay and Apple Card; subscription services such as Apple TV+, Apple Music, Apple Arcade and iCloud; advertising; and payments from Google for search. In August, Apple boasted that it had topped 1 billion paid subscriptions across all apps and services (including those from third parties).

Last month, Apple TV+ hiked its monthly price to $9.99 — the second increase in a year and double the $4.99-per-month price point it launched with in 2019 — and also raised fees for Apple Arcade, Apple News+ and Apple One bundles.

Sales of the company’s flagship iPhone, by far its largest business segment, hit $43.81 billion for the period, a record for a September quarter and ahead of Apple’s internal expectations. The most recent quarter (which is Apple’s fiscal fourth quarter) included only about one week of sales of the iPhone 15, the first models in the smartphone family to eliminate the proprietary Lightning port, which started shipping Sept. 25.

However, the period marked Apple’s fourth consecutive quarter of year-over-year declines in total revenue, as Mac sales declined 34% (to $7.61 billion) and iPad sales dropped 10% (to $6.44 billion). On the earnings call Thursday, Apple CEO Tim Cook told analysts that the year-over-year fall-off on Mac sales was in part due to a factory disruption in the June 2022 quarter that pulled revenue forward to the following quarter. This week, Apple unveiled a new line of MacBook Pros and a 24-inch iMac, each featuring the company’s next-generation M3 family of chips.

CFO Luca Maestri said revenue in Apple’s year-end 2023 quarter is expected to be flat, noting that the December quarter this year will run the customary 13 weeks versus 14 weeks in the year-earlier period. He said revenue from the extra week last year added approximately 7 percentage points to the quarter’s total revenue.

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In addition, he said, the company anticipates iPhone sales will increase year-over-year and that Apple’s services business will see average revenue per week grow at a “similar strong double-digit rate as it did during the September quarter.”

“Today Apple is pleased to report a September quarter revenue record for iPhone and an all-time revenue record in Services,” Cook said in prepared remarks. “We now have our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon-neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030.”

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