Revenue from Apple’s (AAPL) App Store surged by 13% in the fiscal third quarter, according to a new estimate, despite growing concerns over its market share in China and new European Union regulations that could impact its services.
App Store Revenue and Downloads See Growth
Bank of America analysts, referencing data from Sensor Tower, reported a 3.2% increase in downloads across iPhones and iPads compared to the same period last year. This uptick pushed App Store revenue to an estimated $7.5 billion for the quarter. Despite these positive figures, Apple does not disclose specific App Store sales in its total services revenue reports. Analysts, however, generate estimates based on available data.
Bank of America maintained a “buy” rating on Apple stock with a $230 price target, reinforcing confidence in the company’s market performance.
Rebound in China and Growth in Gaming Revenue
After facing challenging sales figures in China earlier this year, Apple experienced a rebound in April. Sensor Tower data indicated that App Store revenue in China increased by 10% in June. Gaming revenue, a significant component of App Store sales, is estimated to have risen to $3.9 billion, accounting for 51% of total App Store sales. This is a slight decrease from 54% in the same quarter last year. Apple News, though only representing 1% of total App Store revenue, saw the most significant year-over-year growth at 42%.
The analysts project a 14% increase in total services revenue when Apple releases its earnings next month, with an additional 15% year-over-year growth expected in the fourth quarter.
Impact of EU’s Digital Markets Act
The European Union’s Digital Markets Act (DMA), which aims to enhance competition and limit the dominance of major tech companies like Apple, Amazon (AMZN), and Alphabet (GOOGL), took effect earlier this year.
In compliance with the DMA, Apple has allowed EU users to access alternative app stores or download apps directly from third parties, thereby bypassing the commissions Apple typically collects. However, European regulators have criticized these measures as insufficient.
Bank of America analysts observed that consumer behavior remained “largely unchanged,” with few downloads occurring through alternative app stores. The option for users to select default browsers other than Safari had a noticeable impact, with Google Chrome downloads nearly tripling year-over-year to over 10 million. Nevertheless, this figure represents only a small portion of the estimated 200 to 300 million Apple devices in Europe.
