Earlier last week, Apple (NASDAQ: AAPL) announced its third quarter results that surpassed market expectations. As physical stores shut down and consumption of digital services increases, Apple is focusing its efforts on growing its services segment. The market is pleased with Apple and its stock is touching record high levels.

Apple’s Financials

Apple’s third-quarter revenue grew 11% to $59.69 billion, significantly ahead of the market’s forecast of $52.56 billion. EPS grew 18%to $2.58, surpassing the Street’s forecast of $2.07.

By segment, iPhone revenue fell 9% to $26.4 billion. Mac sales grew 31.1% to $7.08 billion, and iPad sales grew 50% to $6.6 billion. Revenue from Wearables grew 2.4% to $6.45 billion. The services segment revenue grew 11% to $59.69 billion.

Apple now has over 550 million paid subscribers across its Services portfolio, up by 35 million over the quarter and 130 million over the year. Apple expects to grow its subscriber base to 600 million paid subscriptions before the end of calendar 2020.

Given the current uncertainties, Apple did not provide any forecast for the fourth quarter.

Apple’s Service Upgrades

Apple is not immune to the current crisis. During the quarter, it saw closure of its retail stores, thus hurting its device sales and AppleCare revenue. However, it claims that online sales are on the rise. The supply chain continues to build back up slowly and Apple expects the supply of iPhones to be delayed for the next few weeks.

The digital transformation across the globe is helping Apple as well. It delivered a strong performance in its digital services with revenue records in the App Store, Apple Music, video, and cloud services. It also saw significantly high levels of engagement on iMessage, Siri, and FaceTime. To attract more customers, Apple had also released several new offerings and content such as Apple News Today – its daily audio briefing; and Greyhound – its summer blockbuster starring Tom Hanks. Its streaming service Apple TV+ hit a record quarter as well with 95 awards nominations and 25 wins and accolades.

The App Store is also helping small businesses with their digital commerce initiatives. To help continue to drive this focus, Apple recently acquired Montreal-based Mobeewave, a softPOS organization, for an estimated $100 million. Set up in 2011, Mobeewave is known for its cashless payment solution for mobile phones that allows users to make secure, contactless payments. Users can add cash to their mobile wallets and conduct transactions by tapping a smartphone containing an NFC chip against either a smartphone or a credit card that also has an NFC chip.

The acquisition will help Apple compete with other contactless payment solutions like those offered by Square and PayPal. Some believe that Apple will use Mobeewave’s technology to help convert iPhones into mobile payment terminals. Integrating Mobeewave with Apple’s devices will allow users to accept payments anywhere without requiring any additional hardware. Prior to the acquisition, Mobeewave had raised $26.6 million in funding from investors including Samsung Ventures, Forestay Capital, NewAlpha Asset Management, MasterCard, Venbridge, and FortRoss Ventures.

Besides services, Apple continues to work on its device roll-out. The market is waiting for Apple’s latest iPhone 12 for the year. But the launch has been delayed. Reports now suggest that the phone may be released in phases. In the first phase, it is expected to release two 6.1-inch models, followed by the 6.7-inch and 5.4-inch models. The delay and the phased-out launch is expected to be a result of the supply chain issues the company faced due to the lockdown conditions.

Its stock is trading at $435.75 with a market capitalization of $1.87 trillion. It touched a 52-week high of $446.55 earlier this week. The stock was trading at 52-week low levels of $193.82 in August last year.