Apple has crossed a major milestone in its services business, reaching 1.5 billion paid subscriptions, up from 1 billion in January 2025. Even so, the segment came in below market expectations in the company's fiscal third quarter, despite another strong period for hardware sales.
The services division, which includes the App Store, AppleCare, Apple Music, Apple TV, and cloud offerings, generated $30.74 billion in revenue, slightly under the $31.22 billion analysts had projected. The result contributed to a drop of more than 4% in Apple's share price in after-hours trading.
Apple CFO Kevan Parekh said several factors influenced the quarter, with the App Store playing a central role. A slowdown in mobile gaming weighed on performance, while changes to the App Store business model in some markets, including the U.S., also affected results.
The company noted that developers are now able to direct customers to payment options outside the App Store, reducing Apple's commission-based revenue in some cases. Apple also pointed to foreign exchange pressure and a difficult comparison with a previous quarter boosted by the success of its F1 theatrical release.
Even with these headwinds, Apple said the App Store still delivered a June-quarter record. The broader services portfolio also showed strength, with Apple Ads, AppleCare, Apple Music, Apple TV, cloud services, and payment services all reaching new highs in different areas.
Apple highlighted continued momentum across global markets, including double-digit growth in most regions it tracks. Parekh said transacting and paid accounts both hit all-time highs, while emerging markets posted especially strong gains.
The company also pointed to future opportunities through newer offerings such as Creator Studio subscriptions, Apple Cash bill-splitting features, and the Apple Upgrade program with Klarna. These additions could deepen user engagement across Apple's ecosystem and expand recurring revenue streams.
Apple's evolving services model suggests a future where devices, content, payments, and subscriptions become even more tightly connected across the company's platform.
