Apple Reaches Over 1 Billion Paid Subscriptions as Services Revenue Hits Record in Q3

The tech giant reports $81.8 billion in revenue, above Wall Street expectations, as it touts Emmy nominations and MLS deal for Apple TV+

Apple Earnings
Photo illustration by TheWrap

Apple beat Wall Street expectations on Thursday after reporting net income of $19.8 billion, or $1.26 per share, on revenue of $81.8 billion for its third fiscal quarter of 2023. Analysts surveyed by Zacks Investment Research were expecting earnings of $1.19 per share on revenue of $81.4 billion.

The tech giant’s Products segment posted revenue of $60.5 billion, down 4% year over year as the company faced “[foreign exchange] headwinds and an uneven macroeconomic environment,” chief financial officer Luca Maestri said during the company’s earnings call.

“However, our installed base reached an all-time high across all geographic segments, driven by a June quarter record for iPhone switchers and high new-to rates in Mac, iPad and Watch, coupled with very high levels of customer satisfaction and loyalty,” Maestri added. Apple has an installed base of over 2 billion active devices.

Net sales of the iPhone fell 2% year over year to $36.7 billion, while net sales of the Mac fell 7% year over year to $6.84 billion and the iPad fell 20% year over year to $5.79 billion. Net sales for the Wearables, Home and Accessories category rose 2% year over year to $8.28 billion.

Meanwhile, the Services segment saw revenue grow 8% year over year to a record $21.2 billion, driven by over 1 billion paid subscriptions, up 150 million during the last 12 months. The Services segment does not break out sales figures by category, but includes Apple TV+, Apple Arcade, Apple Fitness+, Apple News+, Apple Music and iCloud.

During the tech company’s earnings call, chief executive officer Tim Cook touted Apple TV+’s “spectacular showcase of imaginative storytelling,” including the streaming service’s new series like “Hijack” and “Silo” alongside returning shows like “Foundation” and “The Afterparty.”

“In [the] few years since its launch, Apple TV+ has earned more than 1,500 nominations and 370 wins,” Cook said. “That includes the 54 Emmy Award nominations across 13 titles that Apple TV+ received last month.”

He also turned his attention to the “exciting time” for the streamer’s sports offerings, pointing to Apple TV+’s partnership with MLS, which comes as soccer legend Lionel Messi joined the league last month.

“We’re focused on original content… with TV+ and so we’re all about giving great storytellers the venue to tell great stories and hopefully get us all to think a little deeper [and] sport is a part of that because sport is the ultimate original story,” Cook added. “We could not be happier with how the partnership is going. It’s clearly in the early days, but we’re beating our expectation in terms of subscribers and the fact that Messi went to Inter Miami helped us out there a bit.”

During the quarter, Apple generated operating cash flow of $26 billion and returned over $24 billion to its shareholders.

Looking ahead, the company expects year over year performance of its iPhone and Services segment to accelerate from the June quarter and revenue for Mac and iPad to decline by double digits year over year due to “difficult compares, particularly on the Mac,” Maestri said.

Apple shares slipped 2% in after-hours trading Thursday following the earnings announcement.