For Q1, 2023, Apple reported record revenue of $20.8 in Services and announced it has 935 million paid subscriptions. With an active install base of over 2 billion active devices, the company accredits the growth in its paid subscribers to its Services and the increase in its active install base.
For a monthly subscription fee, Apple offers several services for storage, video streaming, music streaming, fitness, and health like One, Arcade, iCloud, TV+, Fitness+, Music, News+, Apple Card, and many more. And these services have successfully converted transacting accounts into paid accounts.
Apple Services drove the conversion of transacting accounts into paid accounts
In January 2023, Apple’s senior vice president of Services, Eddy Cue shared that the company had services had 900 million paid subscriptions. Now, it is reported that it has 935 million paid subscriptions.
At the latest earnings call, when asked about the correlation between services and install base, Apple’s CFO Luca Maestri listed the driving factors behind the growth of its services: increase in active install base, customer engagement, and conversion of transacting accounts into paid accounts.
Question: Amit Daryanani – Evercore ISI – Analyst
All right. And then I guess maybe if I think about services as you go forward. I know you had really good growth in services, I think, over the last several years. But as you go forward in services, what do you think drives the growth more? So is it the expansion of your installed base? Or is it more going to be driven by ARPU going higher for you? I’m just curious, how do you think about those two buckets as you go forward?
Answer: Luca Maestri – Chief Financial Officer
Amit, there’s a number of things, and I’ve mentioned a few of them during the call. The first step is always the installed base. It’s the engine for services growth.
The second one is that we are seeing that the level of engagement of our customers already in our ecosystem continues to grow. We — I mentioned that both transacting accounts and paid accounts grew double digits. And so that bodes very well for the future.
And we have a lot of transacting accounts that kind of moved to paid accounts over time. The other aspect that is very important for us is to continue constantly to improve the reach and the quality of our services.
Company’s CEO Tim Cook also summarized all of its services which offer entertainment to customers and convenience to businesses of all sizes like the growing library of TV+ with MLS Season Pass, hit movie Spirited, Fitness+ offering over 3,500 workouts and meditations, Business Connect a free tool for businesses to control how billions of people see and engage with their products and services every day and much more.