Apple Says Gaming Slowdown and App Store Changes Hurt Services Growth

Apple said its services business has now surpassed 1.5 billion paid subscriptions, up from 1 billion in January 2025. Even so, services was the only segment to miss Wall Street expectations during what was otherwise a record quarter for the company’s hardware business.

For its fiscal third quarter, Apple reported $30.74 billion in services revenue, below analysts’ expectations of $31.22 billion. Combined with weaker-than-expected results in China, the earnings report sent Apple shares down more than 4% in after-hours trading.

When asked about the weaker services performance, Apple CFO Kevan Parekh pointed to several factors, including slower App Store growth.

App Store faced multiple headwinds.

Parekh said one factor affecting App Store revenue during the quarter was a slowdown in mobile gaming, historically one of the marketplace’s largest revenue drivers.

He also cited business model changes affecting the App Store in certain markets, including the United States.

That refers to a court order requiring Apple to allow developers to process payments outside the App Store, enabling them to avoidApple’ss commission on those transactions.

Apple did not disclose how much the change affected App Store revenue, but reminded investors that the legal dispute is expected to reach the U.S. Supreme Court for a final decision.

The company said the App Store was not the only reason services revenue fell short of expectations.

Parekh said foreign exchange rates were the largest factor, while comparisons with previous quarters were also affected by revenue generated from the successful theatrical release of “F1.”

Services business continues to expand.

Despite those challenges, Apple said the App Store still delivered record June quarter revenue.

That figure also includes Apple Ads, which has become a growing part of thecompany’ss services business and recently expanded into Apple Maps.

Apple maintained that its long-term services business remains strong despite foreign exchange headwinds and recent App Store changes.

The company said services achieved an all-time revenue record across developed markets and a June quarter record in emerging markets.

It also reported double-digit revenue growth across the vast majority of markets it tracks.

“Our services continue to attract more customers, and we have now surpassed one and a half billion in paid subscriptions,” Parekh said.

He added that both transacting accounts and paid accounts reached record highs during the quarter, with double-digit growth in emerging markets.

Apple sees additional growth opportunities.

Apple highlighted several services that delivered particularly strong performance.

Apple Ads, the App Store, AppleCare, Apple Music and Apple TV all posted June quarter revenue records, while cloud services and payment services reached all-time highs.

Apple TV also recorded its highest viewership ever during the quarter.

Looking ahead, Apple pointed to several initiatives that could further expand services revenue.

Those include Creator Studio subscriptions, upcoming bill-splitting features in Apple Cash and the recently launched Apple Upgrade program, developed in partnership with Klarna.

The company believes those offerings could deepen customer engagement withApple’ss ecosystem while encouraging more users to purchase Apple devices and subscribe to additional services.