Apple reported record service-based revenue from its various products, including Apple TV Plus and Apple Music, during the company’s second fiscal quarter (Q2, coincides with calendar Q1) on Thursday.
During the three-month period that ended in March, Apple earned nearly $26.7 billion in service-based revenue, up 12 percent compared to Q2 2024 and above Wall Street expectations.
Service-based revenue included subscriptions sold to Apple Music, Apple TV Plus, Apple News, iCloud, Apple Fitness and Apple Arcade, among other products. Many of its services are tied to its smartphones, tablets and computers, though some, like Apple Music and Apple TV Plus, are available on competing platforms like Android.
Apple has worked diligently over time to make Apple TV Plus more of a destination for entertainment and sports fans alike, with rights to Major League Baseball and Major League Soccer games on the platform, along with hit series like “Severance,” “Ted Lasso,” “Silo” and “Mythic Quest.”
At the same time, Apple knows locking in its media-based services to its own platform will stymie efforts to reach new customers. To accommodate this, Apple has long allowed music fans to access Apple Music on Android devices, and its Apple TV Plus service is available on smart TVs and streaming devices made by Samsung, Sony, LG, Roku and Amazon, as well as those powered by Android TV.
Late last year, the company began selling subscriptions to Apple TV Plus through Amazon’s Prime Video Channels in the United States, priced at $10 per month — the same cost that Apple charges for direct access to the service. During Q2, the company made Apple TV Plus available through Prime Video Channels in other parts of the world, including Germany, Italy, Spain and New Zealand. The company’s MLS Season Pass is also available to purchase on Comcast’s Xfinity TV and on DirecTV’s satellite and streaming platforms, and a version of Apple TV Plus debuted for Android phones and tablets in February.
On a conference call with investors Thursday, Apple CEO Tim Cook noted that Apple TV Plus has earned more than 2,500 award nominations and 560 wins since it debuted several years ago. Awards have been an important marketing tool for the company as it seeks to compete against premium offerings like Netflix, Prime Video and Disney Plus, which have significantly large content catalogs.
Apple doesn’t disclose per-service subscriber counts, but Apple Chief Financial Officer Kevan Parekh said the company’s service-based business saw “double-digit” revenue growth during Q2.
Much of Apple’s revenue continues to be rooted in its hardware sales — specifically, iPhones. In April, the company successfully lobbied the White House to exempt it from tariffs on Chinese-manufactured consumer electronics, avoiding the 145 percent supplemental tax for the privilege of outsourced manufacturing.
Still, Cook said Apple expects to incur tariff-related costs of around $900 million during its Q3 financial period, which ends in June. Even without higher import taxes from tariffs, Apple says it will still be subject to higher prices on semiconductors and other parts needed for its phone, iPad tablets and Mac computers.
Apple also says it is shifting the manufacturing of its iPhones and Macs to India and Vietnam, and expects a “majority” of devices sold in the U.S. to come from its factories there over time. Still, the company is uncertain about how shifting policies on tariffs and trade will impact Apple over the long-term, and there is still a chance customers might have to shell out more money for devices if the company loses its exemption status or faces subsequent taxes on imports from other countries.
Apple is also grappling with an unfavorable decision in a federal lawsuit filed by Epic Games over commissions earned from in-app purchases on its devices. Earlier this week, a federal judge ruled that Apple had violated an injunction meant to prevent the company from giving itself a 30 percent commission on in-app purchases and subscriptions from third party services. Apple said it intends to appeal the ruling.
