Revenue from services like Apple Music, iTunes and Apple Pay reached an all-time high of $10 billion during Apple’s most recent quarter.
The milestone, which represents growth of 27 percent from $7.9 billion during the same period last year, shows that the iPhone and MacBook maker is successfully diversifying from the hardware that was once its bread and butter.
But that doesn’t mean the sale of devices doesn’t still fuel Apple’s business. The Cupertino, California, company brought in quarterly revenue of $62.9 billion for its fiscal fourth quarter, up 20 percent from the same period last year. That was well above the $61.57 billion that Wall Street, as polled by Thomson Reuters, was looking for. Earnings were $2.91 per share, above the $2.78 expected.
The growth was spurred by not just services but also Apple’s iPhone division, which saw a 29 percent increase in revenue to $37.2 billion. The revenue gains came despite a lower-than-expected 46.9 million iPhones sold during the period. Investors had been looking for sales of 48.4 million. Though iPhone unit sales remained flat, the devices that did sell were higher-priced versions that retail for $1,000 or more.
Apple said it will stop reporting unit sales of its devices starting next quarter, focusing instead on revenue. The move will make it harder to determine how Apple products are selling, since increased prices can help boost revenue if even unit sales are down.
Apple CEO Tim Cook on Thursday told investors during the company’s quarterly earnings call that services divisions like iTunes and Apple Music hit revenue records during the period. The company reportedly is on track to double its fiscal 2016 services revenue by 2020.
Apple shares, which closed the day up over 1 percent to $222.22, were trading down more than 4 percent after-hours on measured forecasts for the current quarter, the company’s fiscal first quarter. In what is normally a busy sales period because of the holidays, Apple is expecting revenue between $89 billion and $93 billion, which has likely disappointed some investors.