Apple Services Revenue Misses Expectations Amid Gaming Slowdown and App Store Changes
In its fiscal third quarter, Apple reported $30.74 billion in services revenue, below the expected $31.22 billion from analysts. The company attributed this shortfall to a slowdown in mobile gaming and changes to the App Store's business model, including court-mandated payment flexibility for developers outside of Apple’s platform. Despite these challenges, Apple highlighted record growth in paid subscriptions—now over 1.5 billion—and strong performance across several services like Apple Ads, AppleCare, and cloud offerings. Apple CFO Kevan Parekh noted that foreign exchange rates also played a role in the revenue miss, along with comparisons to prior quarters where its F1 theatrical release boosted income. The App Store still set a June quarter record but included increased contributions from Apple Ads and Apple Maps. Looking ahead, Apple emphasized potential growth opportunities through new services like Creator Studio subscriptions and bill-splitting features for Apple Cash. The company also launched the Apple Upgrade program with Klarna to potentially boost device sales and associated service revenue.
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Topics: App Store performance Apple stock reaction foreign exchange impact services revenue