Apple (AAPL 1.66%) has a strange and frustrating way of characterizing its growing businesses. Management often prefers to compare various segments to different rankings within the Fortune 500, which makes about as much sense as measuring revenue using the distance to the moon. Earlier this year, Apple said its wearables business was "approaching" the size of a Fortune 200 company.

At the time, No. 200 on the 2018 Fortune 500 was Aramark, with $14.6 billion in revenue, but the publication has since released the 2019 list. This year, No. 200 is General Mills, with $15.7 billion in revenue. The threshold went up modestly, but Apple's wearables segment has hit the mark.

Woman wearing AirPods using an iPhone

Image source: Apple.

Word on the Street

UBS put out a research note this week, with analyst Tim Arcuri estimating that wearables revenue growth contributed "materially more" to overall growth than the services business for the first time. CEO Tim Cook had noted that Q3 was an "absolutely blow-out quarter for wearables," with revenue growth of "well over 50%." The wearables business reached the size of a Fortune 200 company on a trailing-12-month (TTM) basis, Cook added.

Apple aggregates wearables revenue in its broader wearables, home, and accessories segment, which brought in $5.5 billion in revenue last quarter. AirPods demand remains "phenomenal," according to Cook, thanks in part to a minor refresh earlier this year. There may still be upside, as Arcuri estimates that the AirPods attach rate is still only around 7%, suggesting that plenty of iPhone owners have yet to buy the wireless earphones.

Apple will sell 40 million sets of AirPods this fiscal year, which may grow to 51 million in fiscal 2020. That could potentially push the AirPods installed base up to 100 million next fiscal year, before going on to generate $10 billion in sales in fiscal 2021, according to Arcuri's modeling. Adoption may also tick higher as the tech titan continues to add more health-oriented functions to future generations of the product.

UBS reiterated its buy rating on Apple shares alongside a $235 price target.

Wearables TTM revenue between $15.7 billion and $18.6 billion

There's another way to analyze Cook's comparisons. Cook had also said, "When you step back and consider wearables and services together, two areas where we have strategically invested in the last several years, they now approach the size of a Fortune 50 company."

No. 50 on the 2019 list is Prudential Financial, with $63 billion in revenue. Apple's TTM services revenue is currently $44.38 billion, which means wearables revenue is greater than $15.7 billion and approaching $18.6 billion. If only Apple would just disclose wearables revenue outright instead of making investors constantly cross-reference the Fortune 500. With as important as that business is becoming, more transparent disclosures would be a welcome move.