In a note to clients — as noted by Barron’s — Evercore ISI analyst Amit Daryanani says he thinks Apple can exceed US$100 billion in services revenue in the fiscal year ending in September 2024, accounting for 30% of total revenue and 45% of gross profit.
That’s up from about 30% of fiscal 2019 profit; the company had $46.3 billion in services revenue in fiscal 2019. Daryanani is especially bullish on the potential for new additions to the services portfolio, as well improving average revenue per user.
Apple services include its app stores, Apple Arcade, Apple Music, Apple TV+, Apple Podcasts, iCloud, Apple Card, Apple Pay, and AppleCare.
“Over the last five years, Apple’s services business has sustained about 20% [compounded annual revenue growth] creating a sizable base of high-margin, recurring revenue,” Daryanani writes in his research note. “Growth over the last five years was driven by installed base growth with limited contribution from incremental monetization and/or new initiatives.”
But he thinks the source of growth is shifting to additional services and higher adoption rates.