Apple Reports Decline in Services Growth Due to Gaming Slowdown and App Store Adjustments
Apple has announced that its services segment has reached 1.5 billion subscribers, an increase from 1 billion reported in January 2025. Despite this milestone, the services division—which includes offerings like the Apple Store, AppleCare, music, video, and cloud solutions—was the only area that underperformed in what was otherwise a record quarter for hardware sales.
In its fiscal third quarter report, Apple disclosed $30.74 billion in services revenue, which was below the $31.22 billion that analysts had anticipated. Coupled with disappointing results from China, the company’s stock experienced a decline of over 4% in after-hours trading.
When discussing the factors behind the decline in services revenue, Apple’s CFO, Kevan Parekh, identified several contributing elements. The most significant of these was the impact on the App Store, traditionally a major revenue source for the company.
One reason for the App Store’s underperformance this quarter was a noticeable slowdown in mobile gaming. Furthermore, changes in the App Store’s business model in various nations, including the U.S., were highlighted.
This issue stems from a court mandate requiring Apple to permit app developers to manage customer payments outside of the App Store, thus evading Apple’s commission fees. While Apple did not specify the extent of the effect this ruling has had on App Store revenues, it reminded stakeholders that the Supreme Court will soon weigh in on the matter.
Apple did not solely attribute the dip in services revenue to App Store challenges; they also pointed to foreign exchange impacts as a primary factor, as well as comparing this quarter’s performance to prior ones, which benefited from the release of their successful “F1” movie.
Despite the challenges, the App Store did set a revenue record for the June quarter, including figures from Apple Ads, which have increasingly become a vital part of Apple’s business and have recently been integrated into Apple Maps as well.
In light of these hurdles, Apple remains optimistic about the growth potential of its services sector moving forward. The company reported record revenues for services in developed markets and a June quarter high in emerging markets. They indicated that the total services revenue saw double-digit growth in most of the markets they monitor.
“Our services continue to bring in more customers, and we have now surpassed one and a half billion paid subscriptions. Both transactional and paid accounts reached all-time highs this quarter, with double-digit growth in emerging markets,” stated Parekh.
Apple also noted that certain areas are performing exceptionally well, including Apple Ads, the App Store, AppleCare, Apple Music, and Apple TV, all of which recorded successes during the June quarter. Cloud services and payment solutions also achieved all-time highs, with Apple TV seeing record viewership in the same period.
Additionally, Apple reminded its investors about potential new revenue streams, including the recently launched Creator Studio subscriptions and anticipated features for bill-splitting in Apple Cash, which may enhance user engagement within Apple’s payment system.
The introduction of the Apple Upgrade program in collaboration with Klarna this week could also bolster services revenue, particularly if it encourages more individuals to purchase an iPhone or another Apple device, thus incorporating services into their monthly payments.
