Apple’s (AAPL) App Store revenue grew by 12% in August, marking a slight improvement from the 11% growth seen in July, despite facing tougher comparisons.
"If App Store growth stays around these levels we could see growth come in towards the high end of Apple’s guidance for ~11-14% Services growth,” analysts wrote in a note.
Stability in China and Japan has played a key role in the App Store's recent strength, likely driven by the release of new gaming titles. In particular, European App Store revenues saw a significant 25% year-over-year increase in August, and a 4% rise quarter-over-quarter, even with changes stemming from the EU’s Digital Markets Act (DMA).
Growth in China surpassed expectations, coming in at 9%, above the anticipated mid-single-digit rate.
“The App Store and the Google Payment are likely the largest components of the Services business, so as long as we don’t see any unexpected slowdowns out of either business, the faster growing, newer Services should be enough to keep growth in double digits, with potential for upside from the mid-single digits,” analysts continued.
However, they also highlighted that comparisons are becoming increasingly difficult as the year progresses, which could lead to a slowdown, though this has not yet been observed.
Evercore maintained an Outperform rating on Apple (NASDAQ:AAPL) stock, with a price target of $250.
China, Japan, and the U.S. continue to drive App Store revenue, accounting for 70% of the global total.
In August, U.S. revenue growth accelerated to 15% year-over-year, slightly improving from 14% the previous month. Japan's performance showed signs of recovery, with revenue declining 3%, an improvement from the 7% drop in July.
Meanwhile, China's growth slowed to 9%, down from 11% the month prior. Among Apple’s other key markets, the U.K. posted a robust 17% growth, Canada grew by 13%, and Taiwan saw a 4% decline.
Category-wise, growth across App Store categories remained solid, with notable gains in entertainment, which surged by 32%, and social networking, which increased by 8%. Gaming, a key driver of the platform, grew by 4%, while music revenue rose 16% and lifestyle categories saw an 11% increase.
The "Other" category, which encompasses a variety of smaller segments, delivered 21% growth.