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After analyzing Sensor Tower data for June, Morgan Stanley analyst Katy Huberty sees a risk of Apple (NASDAQ:AAPL) missing on App Store revenue growth consensus as far as the June quarter is concerned.
The analyst projects that the App Store net revenue growth decelerated to +2.5% Y/Y in June vs. 4% Y/Y in May, driven by a bigger-than-expected deceleration in China. This could imply App Store net revenue growth rose 5% Y/Y in the June quarter, below Morgan Stanley’s forecast of 6%.
“App Store net revenue growth in China inflected to 6% Y/Y declines in the month of June (slightly better than we previewed in mid-June) vs.3% Y/Y growth in May, accounting for more than 100% of the total App Store deceleration in June vs. May,” Huberty explained in a client note.
Assuming that other Apple Services segment estimates are unchanged, Huberty sees Apple Services revenue at $19.46 billion, below Morgan Stanley and Street’s consensus of $19.52 and $19.71 billion, respectively.
“We see a path for App Store growth to reaccelerate in C2H22, as Y/Y compares for the remainder of the year (and into CY23) ease each successive quarter, with 2-year stacked growth compares decelerating after 2Q as well. More cautious US Consumer spending survey data as well as a continued reopening of China post-COVID lockdowns will be the two key factors investors need to follow closely to track the trajectory of App Store performance in the September quarter, in our view,” Huberty concluded.
