Apple’s Services Division Sees Record Quarter With $21 Billion In Sales, 1 Billion Paid Subscriptions; Tech Giant Posts Total Revenue Of $81.8 Billion

The world’s most valuable tech company saw sales and profit for the three months ended in June beat on the top and bottom line although revenue was sluggish, down 1% at $81.8 billion. Earnings of $1.26 per share beat the $1.19 anticipated.

Revenue from iPhones, which are half of Apple’s total business, was $39.7 billion — below expectations and off 2% from the year ago. June can be a weak iPhone quarter ahead the fall when Apple usually unveils its new model, in this case the iPhone 15. The June quarter is Apple’s fiscal third quarter.

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But Services, the fast-growing division that houses Apple TV+ alongside a dozen other businesses — Apple Music, Apple Fitness, Apple Arcade, Apple Podcasts, Apple Books, Apple Cloud and the Apple App Store to name a few – saw sales of $21.2 billion, up more than 8% year-over year.

“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Tim Cook, Apple’s CEO. “From education to the environment, we are continuing to advance our values, while championing innovation that enriches the lives of our customers and leaves the world better than we found it.”

Apple’s financial reports don’t break out details of its Services components.

The company’s share have surged this year, up nearly 50% and riding a tech wave. The stock was the first to hit $3 trillion in market capitalization last month (as it was also the first to hit the $2 trillion mark in 2020 and $1 trillion in 2018). Shares are down down 1.3% at $188 in after-market trading Wednesday.

In a conference call starting shortly, Wall Street will be looking for commentary on the numbers, including sales and trends in China, the company’s new push in India, moves in AI — the tech giant is said to be developing a model to challenge Google’s Bard and OpenAI’s ChatGPT — growth in services. Here’s to hoping they ask Cook’s view of strikes by Hollywood actors and writers.

CEOs of pure play major media companies, from Warner Bros Discovery’s David Zaslav and Disne’s Bob Iger to Netflix co-chief executive Ted Sarandos, have opined on the work stoppage, mostly anodyne comments hoping that it will be over soon and everyone will feel fairly valued. Only Iger broke with that, calling the guilds’ demands unreasonable. Zaslav, on a WBD call today after quarterly earnings, noted that content “is all we do.”

Given that, it has puzzled the creative community that these traditional players are at the AMPTP negotiating table with Apple and Amazon, which operate their content businesses with a completely different purpose and model. Amazon also reported on its latest quarter today.     

The strikes have been impacting Apple productions. Deadline reported that Apple TV+ axed its Uma Thurman-starring spy series Suspicion after one season and has multiple shows in flux due to the strikes. Filming on the second season of sci-fi thriller Silo — Apple’s most-watched drama series — has entered an indefinite hiatus amid the double-strike action, while Foundation Season 3 also is expected to be impacted.

Sharon Horgan’s Bad Sisters has pushed on as it is under an Equity contract with an Irish writer, while Slow Horses filmed SAG member Gary Oldman’s scenes prior to the strike being called.

On the other hand, Israeli spy thriller Tehran has become one of the most high-profile TV series to land a SAG-AFTRA interim agreement, which allows productions to continue filming despite the ongoing actors strike.

Apple TV+ recently hit viewership highs with Ted Lasso, Silo and The Last Thing He Told Me.

There aren’t any official subscriber numbers on the service but it’s been growing, likely well above the 20 million reported a few years ago. Apple offers a year free subscription on new devices.

The streamer has been pushing into live sports, with Friday Night Baseball and Major League Soccer. Inter Miami’s innovative deal with Lionel Messi, that saw the superstar take to the field Stateside in July, included a revenue share with Apple for new subscribers to the MLS Season Pass streaming service.  

There’s been speculation it may go after college sports (Pac-12) and other rights.

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