Apple’s Paid Subscriptions Growth Reaccelerates, The Case for Higher Apple Gross Margins

Hello everyone.

We will conclude our Apple earnings review by looking at Apple’s paid subscriptions growth and gross margins. There are a few follow-ups that we have not covered yet. The discussion includes Neil’s thoughts on why Apple’s gross margins still have room to move higher.

Let’s jump right in.

Apple’s Paid Subscriptions Growth Reaccelerates

In keeping with its usual disclosure, Apple provided updated comments regarding the number of paid subscriptions across the Apple ecosystem.

Based on Apple’s commentary, here are my estimates for the number of paid subscriptions across Apple’s ecosystem (first party and third party) on a quarterly basis:

  • 1Q20: 482M paid subscriptions

  • 2Q20: 518M

  • 3Q20: 553M

  • 4Q20: 588M

  • 1Q21: 623M

  • 2Q21: 663M

  • 3Q21: 705M

  • 4Q21: 749M

An Above Avalon membership is required to continue reading this update. Members can read the full update here. An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.

(Members: Daily Updates are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)

Above Avalon Membership

Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.

More information about Above Avalon membership, including the full list of benefits and privileges, is available here.

Inside Apple’s Record Mac Quarter, What’s Going On With iPad Sales?, Charting Apple’s Ecosystem Growth (Daily Update)

In today's update, we will continue our Apple 4Q22 earnings review with a few granular takeaways. In particular, we look beyond the Mac and iPad numbers. Tomorrow, our focus will be geared toward everything that was discussed on management's earnings call.

Inside Apple’s Record Mac Quarter

Apple reported $11.5B of Mac revenue in 4Q22. It was a quarterly record that exceeded my estimate by a significant $1.5B. Prior to 4Q22, the previous Mac revenue record was $10.9B (in 1Q22).

Diving deeper into 4Q22 Mac results, things become more complicated. We may be seeing something equivalent to a near-term plateau, or growth air pocket, for Mac sales.

An Above Avalon membership is required to continue reading this update. Members can read the full update here. An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.

(Members: Daily Updates are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)

Above Avalon Membership

Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.

The daily updates have become widely read and influential in the world of Apple and technology. They are unmatched in the marketplace in terms of comprehensive analysis and research on all things Apple. Members reside in 60 countries and hold a diverse range of backgrounds and occupations. They include Silicon Valley executives and investors, the largest Apple shareholders, and the leading Apple journalists in the business.

More information about Above Avalon membership, including the full list of benefits and privileges, is available here.