Apple Services Business Grows Double Digits, Helps Boost Quarterly Revenue

Apple CEO Tim Cook delivers the keynote address during an Apple special event on September 10, 2019 - Getty-H 2019
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The segment that encompasses Apple Music and Apple TV+ had net sales of $13.2 billion during the period.

Double-digit growth to Apple's services business helped the tech giant weather a difficult quarter amid the ongoing global coronavirus pandemic. 

The iPhone maker said Thursday that the division behind Apple Music, Apple TV+ and other software offerings grew its net sales to $13.2 billion during the three-month period from April to June.

Though that represents a nearly 15 percent growth rate compared with the same period in 2019, services is still less than a third of the size of Apple's products division, which brought in $46.5 billion during the fiscal third quarter. 

CEO Tim Cook, just one day after appearing before Congress, told investors that the double-digit growth for both products and services "is a testament to the important role our products play in our customers' lives and to Apple's relentless innovation."

All told, Apple had revenue of $59.7 billion and earnings of $2.61 per share. Analysts were looking for $52.3 billion in revenue, according to FactSet, and earnings of $2.07 per share.

The company also announced a four-for-one stock split that will take place Aug. 24 "to make the stock more accessible to a broader base of investors." 

Investors responded favorably to the earnings news, and the stock was trading up nearly 5 percent after hours. 

The iPhone is still the largest revenue generator for Apple, bringing in $26.4 billion during the period. Services, which also encompasses the App Store and iCloud, is the second largest. 

Apple has been focused on growing that business as it seeks to become less reliance on device sales. On a call with investors, Cook revealed that Apple had met his goal of doubling services revenue six months ahead of schedule. 

It's unclear how impactful a trio of new services — Apple TV+, Apple News+ and Apple Arcade — have been for the segment's growth. On the call, Cook said that video and music had all-time record revenue but he didn't provide specifics.

It was because of the App Store that Cook was asked to appear before the House Judiciary Committee. During the daylong hearing, which was also attended by Jeff Bezos, Mark Zuckerberg and Sundar Pichai, Cook was pressed to answer questions about how Apple works with developers to make apps available via its digital marketplace and whether it has exerted unfair control over that process.