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Apple (NASDAQ:AAPL) posted 12% growth in App Store revenue during the month of August, despite facing challenges in certain regions of the globe.
“More stable growth in China and Japan has been a driver of App Store strength in recent months, likely driven by some new gaming title launches,” said Evercore ISI analysts, led by Amit Daryanani, in an investor note on Tuesday. “Notably, EU App Store revenues were up 25% y/y in the month of August and 4% q/q – despite implementation of EU DMA driven changes to the App Store.”
Apple implemented multiple changes last month to how its App Store operates in European Union nations to comply with the Digital Markets Act.
If the App Store continues to perform at this level, Evercore said Apple should hit the high end of its guidance for growth, which is 11% to 14%, in the Services segment.
“The App Store and the Google (GOOG)(GOOGL) 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,” Daryanani noted.
App Store revenue growth in the US during August increased 15% year over year, while climbing 9% in China, 17% in the UK and 13% in Canada. Year-over-year losses of 3% and 4%, were reported in Japan and Taiwan, respectively, according to Evercore data.
App Store growth for the month was mainly concentrated in the entertainment category, which surged 32% year over year.
Evercore maintains its Outperform rating for Apple and a target price of $250. Over the past year, Apple shares have ranged from $164 to $237 and have increased by about 16%.