Apple’s Passport Ambitions, Possible Maps Monetization and Upcoming Earnings
We like Apple’s efforts to stickify its ecosystem, but here's what upcoming earnings are all about.
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As we get ready for Monday’s Portfolio Office Hours and quarterly results from Waste Management (WM) after the market close, let’s recap some recent headlines and fresh developments for the third-largest holding in the S&P 500, Apple (AAPL) .
When it comes to Apple, it seems like there are always a number of stories making the rounds, but the ones we’re examining here are tied to the company’s efforts to expand the reach of Apple Wallet and Apple Pay. We also discuss the potential for Apple to expand its advertising business in 2026.
First, regarding Apple’s earnings after Thursday’s market close, the market expects EPS of $1.77 on revenue of $102.2 billion for the September quarter, and guidance for EPS of $2.52 on $124.3 billion in revenue for the current quarter. Heading into that report, data points show Apple’s iPhone business benefiting from its newest model introductions, and the PC market rebounding nicely as well. We’ll also have our eye on the growing Services business and the higher margins that it brings. Based on what we see, we’ll revisit our $275 price target as necessary.
Apple Confirms U.S. Passport Feature Coming Soon
At the Money20/20 fintech event over the weekend, a keynote from Jennifer Bailey, Apple's Vice President of Apple Pay and Apple Wallet, confirmed that folks will “soon” be able to add a digital version of their U.S. passport to their iPhone. While it will not replace one’s physical U.S. passport for international travel and border crossing purposes, it can be used in person at TSA checkpoints in select U.S. airports for identity verification purposes during domestic travel, as it will also be compliant with REAL ID. The digital ID will also be used for age and identity verification in apps, online, and in stores.
We see this as Apple continuing to work on replacing the physical wallet, something it set out to do with Apple Wallet and Apple Pay. We also see it as the company continuing to find ways to increase the sticky factor in and around the iOS and larger Apple ecosystem.
As a user, we look forward to this rollout, but as an investor, we would say it lands squarely in the “nice feature to have” category. And when we say “feature,” we’re thinking like Steve Jobs in that a feature is a component that can be integrated into a larger product. A product, per Jobs, should be a complete solution for a customer’s needs.
The Latest Apple Pay Facts and Figures
In addition to confirming the above, Bailey also shared quite a few updated figures for Apple Wallet and Apple Pay, which are now supported by 90% of retailers in the U.S. compared to just 3% when it was launched back in 2014:
- Apple Pay is available in 89 countries and regions.
- Tap to Pay on iPhone is live in 48 countries and regions and is being used by ~15 million merchants.
- Apple Wallet's car key feature is available in more than 300 vehicle models across 29 brands.
- Transit features are available in 250 regions and 800 cities around the world.
- Over 2 million hotel room keys have been provisioned through Apple Wallet. There are more than 65,000 hotel rooms with support for Apple Wallet keys.
While many folks have been focused on iPhone volumes and Apple’s AI efforts, the above figures remind us that Apple has been quietly building the sticky factor of its wallet and payment platform.
We have yet to utilize the car key feature, but we are frequent users of Apple Pay and the Wallet’s ticketing and room key capabilities. Again, we see these as nice-to-use features that help keep us contentedly trapped in the Apple ecosystem.
What we wonder about is where Apple will take Apple Pay and Apple Wallet next.
Reporting indicated Apple started exploring a built-in iPhone stock-trading feature during the early pandemic (2020) alongside Goldman Sachs (GS) , with an internal target to launch in 2022. That project was shelved in 2022-2023, but it could be something that comes back to fruition when Apple finds a new partner for Apple Card.
In early August, headlines indicated JPMorgan Chase (JPM) was the frontrunner to replace Goldman, and in our view, Apple’s stock trading app linked with JPMorgan trading accounts would be a powerful combination. It would also be one that could benefit its Services revenue stream.
And just in case he’s reading this, hey Tim Cook, we have ideas!
Ads May Be Coming to Apple Maps Next Year
Another potential revenue driver that Apple is considering is bringing advertising to Apple Maps search beginning in 2026. That was reported by Bloomberg’s Power On newsletter, authored by noted Apple follower Mark Gurman.
Per Gurman, the internal iOS advertising effort is ‘gaining traction’, and Apple now has a plan to bring advertising to Apple Maps sometime next year. Soon enough, businesses will be able to pay for more prominent appearances within search on Apple Maps. Gurman goes on to say it is "quite similar" to how advertising works on the App Store, where developers can target key words for search.
Research firm eMarketer pegs Apple’s advertising revenue for 2024 around $10 billion, and it sees that growing to $11 billion this year. While those sound like big figures, for Apple, it equates to a business that accounts for around 2.5% of its annual revenue. Small potatoes, but likely very profitable ones. We’ll see if this rolls out, but our thinking is that if it does, it will likely be done across all of Apple’s software platforms, as well as the browser version of Apple Maps.
At the time of publication, TheStreet Pro Portfolio was long AAPL.
