Apple’s services business continued growing during its fiscal third quarter, but weaker mobile gaming activity, currency movements and changes to the App Store’s commission model prevented the division from meeting Wall Street’s expectations.
Apple generated $30.74 billion in services revenue, below analysts’ forecast of $31.22 billion. The result was still 12% higher than the $27.4 billion Apple recorded during the same quarter a year earlier.
Apple shares fell by more than 4% in after-hours trading as investors reacted to the services shortfall and weaker-than-expected performance in China.
Mobile Gaming Weighs on the App Store
Apple Chief Financial Officer Kevan Parekh identified weaker mobile gaming as one of the factors affecting the App Store’s quarterly performance.
MacRumors reported that Parekh pointed to “headwinds in mobile gaming” while explaining the results during Apple’s earnings call.
Slowing activity in mobile games affected the App Store, traditionally one of the most profitable parts of Apple’s services operation.
The slowdown matters because Apple typically collects a percentage of payments made through games, including purchases of digital items, subscriptions and other content. Lower spending or engagement can therefore weaken the revenue Apple receives without requiring a decline in the number of devices using the App Store.
Regulatory Changes Reduce Apple’s Control Over Payments
Apple’s changing App Store business model also affected the quarter.
TechCrunch reported that a US court order requires Apple to let developers direct customers toward payment options outside the App Store and beyond Apple’s traditional commission system. The company did not disclose how much revenue the external-payment requirement had cost, but reminded investors that the US Supreme Court had agreed to hear its appeal.
Apple currently collects no commission on payment links directing US users outside the App Store. The publication also noted that Apple has recently changed its App Store fees in Japan and Brazil, while apps distributed through alternative marketplaces in the European Union face lower charges.
These changes weaken Apple’s ability to collect the same fee from every transaction within its software ecosystem. They also show how court decisions and regulatory pressure are beginning to affect the financial performance of a business model Apple has defended for years.
Foreign Exchange and ‘F1’ Create Tough Comparison
App Store issues were not the only reason services revenue missed expectations.
Apple described foreign exchange as the principal factor affecting the quarterly result. The company faced a difficult comparison with the previous year, when revenue benefited from the theatrical release of “F1,” without an equivalent movie launch during the latest quarter.
Apple expects September-quarter services growth to remain similar to the June quarter after excluding an estimated 2.5-percentage-point foreign-exchange headwind.
Paid Subscriptions Pass 1.5 Billion
Despite the revenue miss, Apple continued expanding the number of customers paying for services across its platforms.
TechCrunch reported that Apple now has more than 1.5 billion paid subscriptions, compared with one billion in January 2025. Parekh said both paid and transacting accounts reached record levels during the quarter, with each category growing at double-digit rates in emerging markets, according to TechCrunch.
MacRumors reported that the App Store still achieved a June-quarter revenue record, while cloud services, video, payments and advertising delivered double-digit growth. Apple Ads, AppleCare, Apple Music and Apple TV also set June-quarter records, while cloud and payment services reached all-time highs.
Apple’s services division remains a major growth engine, but the quarterly miss reveals its increasing exposure to forces outside product demand. Gaming habits, currency fluctuations, court rulings and international App Store regulations are now shaping how much revenue Apple can extract from its large and expanding user base.
