Apple (AAPL -0.35%) has grown revenue and profit into the billions of dollars over the years thanks to its top technology products -- from the Mac to the iPhone. And recently, the company even reached a record number of active installed devices -- more than 2.2 billion -- indicating consumers continue flocking to Apple's products.
This could allow Apple to grow revenue yet another way, and this revenue source actually may become the company's next billion-dollar growth driver. The trend has already gotten started. Let's take a closer look.
Image source: Getty Images.
So, what may drive Apple's revenue moving forward? The company's services. From digital content to cloud storage, Apple offers users of its devices plenty of options. And users have signed up, helping the company grow its services revenue to record levels quarter after quarter last year.
As you can see in the chart, below, Apple's services revenue has taken off over the past few years, and in the recent quarter reached a new record of more than $23 billion.
Data source: Statista.
Apple's recurrent revenue source
This is great news because it means Apple's revenue from its devices doesn't stop once the company sells them to customers. Instead, these devices represent a source of recurrent revenue. And the fact that Apple already has an enormous installed base, and continues to increase product sales, suggests this recurrent revenue will keep on growing. On top of this, services are higher margin than products, meaning they are more profitable for the tech giant.
Of course, Apple still generates most of its revenue from the sales of its market-leading products. In the latest quarter, product sales totaled more than $96 billion. But services clearly are becoming a key part of Apple's business, and one that could drive growth moving forward.
All of this means investors shouldn't worry about this well-established tech company running out of steam. If you're looking for growth, Apple still represents a top long-term buy.
