The news: Apple Services revenues hit $30.7 billion (up 12% YoY), fueled by 1.5 billion paid subscriptions—with one-third of those users added since 2023. Services revenues fell short of the $31.22 billion consensus, weighed by foreign exchange, yet still set a June-quarter high.

The company continues to expand services and subscriptions with its latest offering, a Klarna-backed leasing program that offers lower device payment options following its recent price hikes, per Bloomberg.

Apple’s Services division now delivers the margins that hardware alone cannot match, and CEO Tim Cook specifically called out advertising, the App Store, AppleCare, music, video, cloud, and payments as the company’s growth engines during the earnings call.

Zooming in: Apple’s own products—Apple TV, Music, iCloud+, Apple Card, and the Apple One bundle—make up only part of its Services income, although the company keeps rolling out new subscriptions.

Third-party apps remain a major driver of Services growth. Every time someone subscribes to something through the App Store, Apple collects a 15% to 30% cut and books that subscription as part of its own services revenues. 

Recommendations for brands: For advertisers, this subscriber base represents a captive, loyal, and high-intent audience. But reaching that audience comes at a cost—brands must pay Apple via Search Ads on a cost-per-tap (CPT) or install basis—and that toll is rising, with average CPT hitting $2.50, up from $1.59 in 2023.

Treat Apple’s ecosystem as a direct-response channel. The App Store’s search ads and Apple’s growing ad inventory inside News and Stocks offer precision reach. 

• Prioritize Apple Search Ads for high-intent keywords, especially when trying to reach a target audience with above-average household incomes and a preference for design, privacy, and integrated products and services ecosystems.
• Weigh the App Store fees against acquisition cost elsewhere: This audience converts at a premium because payment info is already on file.

As Apple’s Services engine keeps scaling on the back of its subscriber base, brands that pay to play inside that ecosystem can place themselves ahead with a captive audience that only gets more expensive to reach later.

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