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Apple’s services business grew to $12.7 billion in revenue during the final three months of 2019, the tech giant reported Tuesday.
The operating division, which houses subscriptions including Apple Music, Apple TV+ and Arcade, was up 17 percent year-over-year, helping to drive a 9 percent overall boost in quarterly revenue to $91.8 billion. It was an all-time record, Apple said, during a period in which questions have mounted about the long-term growth prospects of the company’s iPhone business.
“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” CEO Tim Cook said in a statement. “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”
The Cupertino, California-based company said earnings per share were $4.99. Analysts polled by FactSet were expecting Apple to report net income of $4.54 per share and quarterly revenue of $88.41 billion. Apple had said it would bring in revenue of between $85.5 billion and $89.5 billion during the period.
IPhone sales remain Apple’s biggest revenue driver. The company had nearly $56 billion in iPhone revenue during the fiscal first quarter, up from nearly $52 billion during the same period last year.
Apple has been working to bolster its business beyond the device sales that have fueled its revenue for years. Services, in particular, have become a focus for the company, which on Nov. 1 launched the long-awaited streaming video service Apple TV+. The company has not said how many people have subscribed to the $5-per-month service, which is also being given away for free to people who buy qualifying Apple devices.
On a post-earnings call with investors on Tuesday afternoon, Cook said only that the service was “off to a rousing start” and would “continue to focus on telling stories that matter.” CFO Luca Maestri added that TV+, which launched two months into the quarter, did not have a material impact on services growth. A report by third-party analytics firm Ampere Analysis estimates that TV+ has amassed more than 33 million subscribers in its first three months of availability.
Apple is targeting 600 million total subscriptions across its services by the end of 2020 after it expects to hit its previous target, 500 million subscriptions, by the end of March.
Apple shares closed the day up nearly 3 percent to $317.69. Shares were up more than 2 percent during after-hours trading.