Apple services revenue falls short of forecasts amid gaming slowdown and App Store changes
Apple's fiscal third-quarter services revenue missed analyst expectations despite surpassing 1.5 billion paid subscribers. The company cited slowing mobile gaming, App Store model changes, and currency headwinds.
Apple said it has surpassed 1.5 billion subscribers for its services business, up from 1 billion in January 2025. The services unit, which includes the App Store, AppleCare, music, video, and cloud services, was the only miss in an otherwise record-breaking quarter for hardware sales.
In the fiscal third quarter, Apple reported $30.74 billion in services revenue, below the $31.22 billion expected by Wall Street. Combined with a weaker performance in China, Apple’s stock dropped more than 4% in after-hours trading.
CFO Kevan Parekh attributed the decline to several factors. The most notable involved the App Store, Apple’s most profitable business. During the quarter, mobile gaming slowed, and App Store business model changes took effect in some countries, including the U.S. This follows a court order requiring Apple to let developers process customer payments outside the App Store, avoiding Apple’s commission. Apple did not disclose the exact impact on revenue, but reminded investors that the case is headed to the Supreme Court.
The company also pointed to foreign exchange as the main driver, as well as comparisons with previous quarters that benefited from the theatrical release of “F1.” Even so, the App Store posted a June quarter revenue record, though that figure includes Apple Ads, which have grown in importance and recently expanded to Apple Maps.
Despite the headwinds, Apple highlighted growth potential. Services set an all-time revenue record in developed markets and a June quarter record in emerging markets, with double-digit revenue growth in most markets it tracks. The company noted record quarters for Apple Ads, App Store, AppleCare, Apple Music, and Apple TV, while cloud and payment services reached all-time highs. Apple TV viewership also hit a high.
Looking ahead, Apple mentioned new revenue opportunities, including Creator Studio subscriptions, an upcoming bill-splitting feature in Apple Cash, and this week’s launch of the Apple Upgrade program with Klarna, which could boost device sales and services revenue.
