Apple's Services Revenue Up 17% Year-Over-Year in 4Q 2018, Hits All Time High of $10B

Apple's services category, which includes iTunes, the App Store, the Mac App Store, Apple Music, iCloud, Apple Pay, and AppleCare, continues to be an increasingly important revenue driver for Apple, and services growth is once again at an all time high.

During the fourth fiscal quarter of 2018, Apple's services segment brought in $10 billion in revenue, up 17 percent from the $8.5 billion services earned in the fourth quarter of 2017.

According to Apple CEO Tim Cook, services growth was actually at 27 percent if a one-time favorable adjustment from the year-ago quarter is excluded.

Several services categories, including the App Store, AppleCare, Apple Pay, and Apple Music hit all-time revenue records. 330 million Apple customers subscribe to Apple services, a number that has increased 50 percent compared to a year ago.

Cook highlighted Apple Pay's success during the quarter. Apple Pay transaction volume tripled year-over-year, with Apple Pay generating significantly more transactions than PayPal mobile and growing 4x faster.

With the rollout of Apple Pay at Costco locations in the United States, 71 out of 100 major retailers support Apple Pay, and 60 percent of all U.S. retail locations support the Apple Pay service.

Apple has said that it is aiming to reach $14 billion in services revenue per quarter by 2020, a goal the company is well on its way to achieving.

Earlier this year, Morgan Stanley analyst Katy Huberty predicted that over the course of the next five years, services revenue growth will contribute more than 50 percent of Apple's total revenue growth.

Apple is working on bolstering its services category in the future, breaking into the television industry. Apple has more than a dozen original television shows in the works right now, which it is rumored to be planning to distribute via television streaming service set to debut sometime during the first half of 2019.