In the third-quarter earnings call, Tim Cook mentioned a figure that Apple only updates every few years: Over 1.5 billion paid subscriptions now run through the platform. The last milestone was reached almost exactly three years ago – and the growth is unfolding differently than the headline suggests.
Apple released the figure following the release of its quarterly results. It supplements the official statement in which the company reported revenue of $109.4 billion for the June quarter. The Services segment, which accounts for subscriptions, generated $30.74 billion, representing growth of 12.1 percent. Cook mentioned the $1.5 billion mark to CNBC, among others. Apple last released such a figure in August 2023, when it exceeded $1 billion.
From one billion to one and a half billion in three years
Almost exactly three years separate these two milestones. During this period, Apple gained 500 million subscriptions, averaging around 167 million per year.
In absolute terms, this is more than in the previous period: For the twelve months leading up to the June quarter of 2023, Apple reported an increase of 150 million. In percentage terms, the picture is reversed. Back then, 150 million represented an increase of approximately 17.6 percent, while the user base has since grown to one and a half times that amount – the average annual growth rate over the past three years is around 14.5 percent. The platform is growing faster in absolute numbers and slower in relative terms, which is the expected pattern given a user base of this size.
What's in the number
The figure encompasses significantly more than just Apple's own services. In addition to iCloud+, Apple Music, Apple TV, Apple Arcade, Apple Fitness+, and the Apple One bundle, Apple also includes every subscription a user takes out with an app from the App Store – such as streaming services, fitness apps, or third-party productivity tools. Apple retains a share of these revenues and therefore includes them in the same statistics.
A significant portion of the 1.5 billion is likely attributable to third-party services. Apple doesn't disclose the exact number, nor how it breaks down across individual services. Multiple subscriptions from the same user are also counted separately, meaning the figure cannot be equated with the total number of paying customers.
A look at the App Store reveals how the landscape is changing: The number of newly released apps has recently doubled, while downloads have stagnated. More offerings with constant demand mean fiercer competition for every single subscription.
Subscriptions are growing faster than revenue
A more interesting comparison emerges when you look at both figures side by side. In the June quarter of 2023, Apple generated $21.21 billion in revenue from services, while in the current quarter it's $30.74 billion – an increase of 44.9 percent. The number of subscriptions has risen by 50 percent over the same period.
Purely mathematically, this means that three years ago, services revenue amounted to $21.21 per subscription per quarter; today it's $20.49. This calculation is an approximation because the services category also includes advertising, AppleCare, payment services, and one-time purchases in the App Store, which are unrelated to subscriptions. Nevertheless, the trend remains significant: The number of active subscriptions is growing faster than the revenue they represent.
This aligns with the proportion of third-party subscriptions where Apple only takes a commission instead of the full subscription price. The more this segment grows, the less revenue an additional subscription generates on average.
Price increases as a second lever
In addition to new subscriptions, Apple is adjusting prices for existing services. In July, Apple Music became more expensive in Germany, while in the US, the single-user plan increased from $10.99 to $11.99 in the same month. iCloud+ is also gaining traction, as some features of iOS 27 now require the 2TB plan.
Both options are neutral in terms of subscriber numbers – a more expensive subscription counts just as much as a cheaper one. However, for service revenue, it's the faster lever. Those who want to keep track of their ongoing costs can find a comparison of the current rates of both Apple Music and Spotify.
Apple's subscription model becomes a counterweight to the hardware
The $1.5 billion figure is primarily evidence of how far Apple has moved away from simply selling devices. Services now contribute a good 28 percent of the company's revenue, with a margin significantly higher than that of the hardware business.
It's unclear when Apple will announce its next milestone. The gap between previously announced milestones has been around three years. (Image: Shutterstock / MMD Creative)
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