Apple Services Revenue Climbs 17% to Record $19.8 Billion, as iPhone Growth Slows but Still Hits All-Time High

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Apple’s digital services businesses fueled top-line growth in the first three months of 2022, as overall the tech giant handily topped analyst projections despite supply-chain challenges.

The services segment — which includes the App Store, Apple Music, Apple TV+, iCloud and other subscription businesses — notched a record $19.8 billion in sales for the quarter, up 17%.

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Apple at the end of March had more than 825 million paying subscribers worldwide (comprising both Apple-branded and third-party services), up more than 165 million in the last 12 months and up from 785 million in the year-end 2021 quarter.

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Sales of iPhones, Apple’s biggest product line, were $50.6 billion in the period, up 5.4%, a slowdown compared with a nearly 66% boom in the year-ago quarter. Still, it was quarterly record for Apple’s smartphone business.

Overall, the company reported $97.3 billion, up 9% year over year and a record for a March quarter, and quarterly earnings per diluted share of $1.52.

Wall Street expected total revenue of $93.89 billion and EPS of $1.43, per Refinitiv. Analysts had pegged Apple’s services coming in at $19.7 billion for the quarter ended March 26, Apple’s second quarter of fiscal 2022.

The earnings report comes after the historic Oscars wins for Apple TV+’s “CODA” — the first streamer to win the best picture trophy, which CEO Tim Cook touted in prepared remarks on the earnings call.

“This quarter’s record results are a testament to Apple’s relentless focus on innovation and our ability to create the best products and services in the world,” Cook said in announcing the results.

CFO Luca Maestri told analysts that Apple’s earnings in the June 2022 quarter will be affected by COVID-related supply-chain constraints and restrictions in China, to the tune of $4 billion-$8 billion, a much greater impact than in the March quarter. He added that services revenue growth in the June quarter will be under the 17% rate in the prior quarter, citing in part Apple’s suspension of sales in Russia.

With a market cap of more than $2.6 trillion, Apple is the most valuable company in the world.

On Thursday, Apple said its board authorized an increase of $90 billion to Apple’s existing share buyback program. The board also declared a cash dividend of 23 cents per share, an increase of 5%, payable on May 12.

(Pictured above: Tim Cook arrives at the Vanity Fair Oscar Party on March 27)

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