Apple’s services revenue is growing quickly, up 25% over the past two years alone

In Apple’s most recent fiscal year, which ended September 30, 2023, its services segment grew 9% to $85.2 billion. Go back two years, and services revenue is up a scalding 25%.
David Jagielski for The Motley Fool:
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This latest fiscal year, services accounted for a record 22.2% of the top line, extending a yearslong trend that paints a bullish picture for shareholders.
There are more than 2 billion Apple devices in use by consumers worldwide. Even if consumers slow the pace at which they upgrade their iPhones and MacBooks, the company can still offer them services like Apple TV+, Apple Music, Apple Arcade, and Apple Fitness+, not to mention whatever else the company might roll out in the future.
It’s a huge opportunity for the company to further diversify its top line and become less reliant on hardware sales. A strong backbone of services also keeps users entrenched in Apple’s ecosystem, making it harder for them to switch to other platforms.
And while having 2 billion devices already in consumers’ hands can be an obstacle to steadily growing product revenue, it’s a huge opportunity for the company to upsell users on services. In that process, the company’s profit margins will also benefit as the services segment boasted a 70.8% gross margin in fiscal 2023, nearly double the 36.5% margin on products.

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MacDailyNews Take: Yup.
Apple’s services business – the uber-sticky ecosystem – is the most overlooked segment of Apple’s insanely efficient profit-generating machine. Wall Street wants growth? Well, there it is, right in front of their faces. Hardware unit sales aren’t where the action is – for proof of that just look at Windows PCs or Android. – MacDailyNews, April 20, 2016
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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
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