Apple’s Services Division Does Not Only Provide A Solid Financial Cushion, But Its 75.7 Percent Gross Margin Means It Offers A Healthy Net Income Source Compared To Other Categories
The Q2 2025 earnings saw Apple’s Services category once again register a solid revenue growth, helping the technology giant record a gross amount of $95.4 billion, with the $26.4 billion figure making up 25 percent of the quarterly top-line. Comparing Services with the Cupertino giant’s hardware business, it is clear that the iPhone has and will likely always be the bigger earner, but it is not just about revenue generation, but how much Apple pockets. Well, Services also has an edge here, because a new report states that it makes a whopping 75.7 percent in gross margins.
For hardware, Apple makes 35.9 percent in gross margins, making Services the undisputed winner
Despite Apple’s iPhone business bringing $46.84 billion in revenue, which makes up more than half of the total Q2 2025 quarterly earnings, the company’s 35.9 percent gross margins mean that the California-based giant does not pocket as much as it does with Services. During the earnings call, 9to5Mac reports that the 75.7 percent gross margin is based on costs of $6.46 billion, but this inclusion helped Apple raise its overall gross margin to an impressive 47.1 percent.
The high margins of Services is thanks to a bevy of businesses under its umbrella, such as Apple Music, iCloud, AppleTV+, AppleCare and of course, the cut the company takes from its App Store’s in-app purchases, which can go up to 30 percent, but only if that particular service is generating more than $1 million in revenue from the platform. It is estimated that Services will bring in $100 billion by the end of 2025, making up 25 percent of Apple’s grand total of $400 billion in revenue.
In our previous analysis, we mentioned that the Services business has witnessed revenue growth for the past nine consecutive quarters, with the latest one being the tenth, materializing a new record. As long as there will be millions of customers purchasing Apple hardware, it will supplement the income stream from Services, meaning that from this angle, we do not see revenue slowing down.
