In its recent fiscal third-quarter report, Apple revealed that its services division, which encompasses offerings like the App Store, AppleCare, music, video, and cloud services, now boasts over 1.5 billion subscribers globally, a significant increase from 1 billion in January 2025. However, this growth in subscribers did not translate into expected revenue, as the segment reported $30.74 billion, falling short of Wall Street's $31.22 billion forecast. This shortfall, coupled with a dip in performance in the Chinese market, led to a more than 4% drop in Apple's stock during after-hours trading.
Kevan Parekh, Apple's CFO, identified several factors contributing to the services revenue miss. A notable influence was a general deceleration in the mobile gaming sector. Additionally, alterations to the App Store's operational framework in specific regions, particularly in the U.S., played a role. These changes stem from a court order compelling Apple to permit app developers to process customer payments independently of the App Store, thereby bypassing Apple's commission. Although Apple did not quantify the exact impact of this policy shift, it reminded investors that the Supreme Court is slated to issue a final ruling on the matter.
Beyond the App Store's dynamics, foreign exchange rates were cited as a primary factor affecting the services revenue. Furthermore, comparisons to previous quarters, which benefited from the successful theatrical release of 'F1,' also presented a challenging benchmark. Despite these headwinds, Apple emphasized that the App Store still achieved a record revenue for the June quarter, partly bolstered by the increasing contribution from Apple Ads, which have recently expanded to platforms like Apple Maps.
Amidst these challenges, Apple remains confident in the future potential of its services business. The company highlighted record-breaking revenue figures in developed markets and robust growth in emerging markets for the June quarter. Parekh noted that the services sector experienced double-digit revenue growth across the majority of markets tracked by Apple, affirming that both transacting and paid accounts reached unprecedented levels. Looking ahead, Apple anticipates new revenue streams from initiatives such as Creator Studio subscriptions and the forthcoming bill-splitting functionalities in Apple Cash, which are expected to deepen user engagement within its payments ecosystem. The recent launch of the Apple Upgrade program, a collaboration with Klarna, is also projected to stimulate further growth in services revenue by encouraging iPhone and other Apple device purchases.
