BofA Securities analyst Wamsi Mohan reiterated a Buy rating on Apple Inc (NASDAQ:AAPL) with a price target of $265.
As per SensorTower data, App Store revenues in the second quarter of fiscal 2025 (after 36 days) increased to $3.4 billion (+17%, according to data on developer revenue from SensorTower), with total downloads (iPhone + iPad) +6.5% (3.7 billion) during the same period. For January, App store revenue increased by +18% globally and +17% in China.
In the second quarter of fiscal 2025 (after 36 days), Mohan noted an increase of app store dollars per download by +9.8%.
The rerating reflects stable cash flows, earnings resiliency and potential beneficiary of AI use on edge devices.
The Productivity category of Apps has been the fastest growing segment in the second quarter, with revenues rising +48% after 36 days. The growth in Productivity app revenue to Apple in the quarter has been driven by ChatGPT, which has seen daily active users grow from ~5.5 million in the first 36 days of the second quarter of fiscal 2024 to more than 15 million in the first 36 days of second-quarter of fiscal 2025.
So far, in the second quarter of fiscal 2025, App Store gaming revenue increased +12% to $1.7 billion, accounting for only 51% of total App Store revenue versus 53% a year ago. So far in the quarter, the second largest segment has been Entertainment (14%), Photo and video (7%), Social Networking (4%), Productivity (3%), and Other (21%).
Mohan noted strong diversification in app store revenue by category away from the Gaming segment as more developers from other categories monetize apps.
Apple noted that certain EU apps that do not conform to Apple’s standard of scrutiny over content are available to download. This ability to sideload apps is a result of the EU DMA restrictions, which might compromise user safety.
Mohan modeled services revenue growth of +12% for total services revenue in the second quarter of fiscal 2025 and +13% in fiscal 2025, which could be conservative if App Store strength persists.
Price Action: AAPL stock is up 1.64% at $231.75 at last check Tuesday.
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