Apple Inc. (NASDAQ:AAPL) Q1 2023 Earnings Call Transcript

Amit Daryanani: All right. And then I guess maybe if I think about Services as you go forward. I know you had really good growth in Services, I think, over the last several years. But as you go forward in Services, what do you think drives the growth more so? Is it the expansion of your installed base? Or is it more going to be driven by ARPU going higher for you? I’m just curious, how do you think about those 2 buckets as you go forward?

Luca Maestri: Amit, there’s a number of things, and I’ve mentioned a few of them during the call. The first step is always the installed base. Installed base is the engine for Services growth. And the fact that the installed base is growing very nicely, and it’s growing in a lot of emerging markets, it’s growing even faster, that gives us a larger addressable pool of customers. So that’s incredibly important. The second one is that we are seeing that the level of engagement of our customers already in our ecosystem continues to grow. We — I mentioned that both transacting accounts and paid accounts grew double digits. And so that bodes very well for the future. And we have a lot of transacting accounts that kind of moved to paid accounts over time.

The other aspect that is very important for us is to continue constantly to improve the reach and the quality of our services. And I give the example of Apple Pay, which it’s a great example because we started off primarily in the United States. Now we’ve taken it to 70 markets, millions of merchants. And so obviously, payment services are — continue to set new highs all the time for us. And then as you’ve seen over the last few years, we also launched new services over time, and that obviously contributes to the growth. We’re very excited. And when we look at the behavior of our installed base, we think it’s very promising for the continued growth of our Services business.

Operator: Our next question comes from Harsh Kumar of Piper Sandler.

Harsh Kumar: Tim, I had a quick question on emerging markets. Seems like you’re making a lot of strides in India. Potentially wanted to understand the kind of share you have in China and India. And relative to that, what would be your aspirational but sort of achievable share in iPhones in those territories, whether it’s units or revenues? And I was hoping to draw on your experience and maybe what you’ve seen in other countries where you’ve had some longer presence.

Timothy Cook: And looking at the business in India, we set a quarterly revenue record and grew very strong double digits year-over-year. And so we feel very good about how we performed, and that was — that’s despite the headwinds that we’ve talked about. Taking a step back, India is a hugely exciting market for us and is a major focus. We brought the online store there in 2020. We will soon bring Apple retail there. So we’re putting a lot of emphasis on the market. There’s been a lot done from a financing options and trade-ins to make products more affordable and give people more options to buy. And so there’s a lot going on there. We are, in essence, taking what we learned in China years ago and how we scale to China and bringing that to bear.

And I don’t have the exact market shares in front of me, but I think you would see that from a market share point of view that we grew around the world last quarter despite — on iPhone despite the challenges that we’ve had on the supply side. And I wouldn’t expect to have a difference in those 2 markets.