Apple Analyst Says App Store Revenue Growth Decelerated Last Quarter

The 2020 Apple Inc. AAPL rally ran out of steam in September ahead of the highly anticipated launch of the iPhone 12. On Tuesday, Bank of America analyst Wamsi Mohan said Apple App Store data suggests a growth slowdown in Apple’s fiscal fourth quarter, but the numbers were still fairly strong.

The Numbers: Third-party data suggests Apple’s App Store revenue was up 31% in the most recent quarter to about $5.63 billion, down from a 36% growth rate in the previous quarter. Through so far year-to-date in fiscal 2020, App Store revenue is up 27%, downloads are up 14% and average sell price per download is up 12%, all solid trends for Apple investors.

Mohan said 67% of total App Store revenue in fiscal 2020 has come from games. The U.S. has accounted for 28.8% of App Store revenue this fiscal year, while China has accounted for 28.4%.

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Looking ahead Mohan said Apple still has a large opportunity to monetize its massive base of global device users.

“We believe a significant percent of the iOS installed base is still non-paying which provides opportunity for Services rev growth,” Mohan wrote in a note.

Mohan is bullish on Apple’s growth opportunities, but downgraded the stock from Buy to Neutral back in August after the stock had gained 44.7% through the first eight months of the year. Bank of America has a $140 price target for Apple.

Benzinga’s Take: The App Store download data should be good news to any long-term Apple investors given they show solid, steady growth in-app revenue. However, short-term Apple traders are likely concerned that the iPhone 12 launch could be a sell-the-news event after the stock has more than doubled in the past year in anticipation of a massive iPhone upgrade cycle.