Think You Know Apple? Here's 1 Lesser-Known Fact You Shouldn't Overlook.

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Neil Patel, The Motley Fool

Sun, Apr 6, 2025, 7:00 AM 4 min read

With a marketplace capitalization of conscionable nether $3 trillion, Apple (NASDAQ: AAPL) holds the rubric of the world's astir invaluable company. Its marque has tremendous value, with consumers crossed the globe paying premium prices for its products. Even Warren Buffett recognizes Apple's quality, arsenic it's the largest banal presumption successful Berkshire Hathaway's equity portfolio.

Given each that, astir each capitalist volition beryllium acquainted with Apple. But you mightiness beryllium overlooking 1 lesser-known information astir the company.

Apple generated $391 cardinal successful income successful its fiscal 2024 (which ended Sept. 28). Of that figure, 75% was derived from products, which see its fashionable iPhone, iPad, Apple Watch, and Mac lineups, among different items. And with astir 2.4 cardinal progressive Apple devices successful usage each implicit the satellite arsenic of its fiscal 2025 archetypal 4th (ended Dec. 28), those are astir apt the archetypal things that travel to caput erstwhile consumers and investors deliberation of the company.

However, the creation of its income premix is changing. Its services conception accounted for the different 25% of income past fiscal year, totaling $96 billion. That fig has accrued astatine a compound yearly complaint of 15.7% successful the past 5 years, a overmuch faster maturation gait than products registered. As a result, the stock of gross being derived from services is expanding implicit time, and that inclination is apt to continue.

The services part covers a wide scope of offerings. Apple Music, Apple TV+, iCloud, AppleCare, the App Store, Apple Fitness+, Apple News+, Apple Arcade, Apple Pay, Apple Card, and integer advertizing each autumn successful this segment. In reality, the institution is 1 of the starring integer platforms connected Earth, and that gives it a sizable recurring gross stream.

"We besides spot accrued lawsuit engagement with our services offerings," CFO Kevan Parekh said connected the Q1 2025 net call. "Both transacting and paid accounts reached caller all-time highs. ... We person good implicit a cardinal paid subscriptions crossed the services connected our platform."

While that standard is impressive, profitability is worthy highlighting here. Services reported a gross margin of 75% successful Q1 2025. That was importantly higher than the 39% gross borderline for products. Theoretically, much gross from services should effect successful a fatter bottommost line, each different things being equal.

Apple's services assistance circular retired its offerings, and combined with hardware devices, they make an ecosystem that promotes loyalty and fundamentally locks users in.

Every existing Apple shareholder and prospective capitalist surely needs to recognize the value of the services conception to the company. However, it's hard to reason with the information that Apple remains a hardware institution first, with the iPhone successful peculiar driving its fiscal performance. Its smartphone enactment provided 56% of its gross successful Q1.