Apple Services Revenue Misses Estimates Amid Gaming Slump and Regulatory Shifts

Apple reported a revenue miss in its services segment during the fiscal third quarter, bringing in $30.74 billion against Wall Street expectations of $31.22 billion, according to TechCrunch. While the company's hardware sales reached record levels, the services slump—compounded by a miss in China—contributed to a more than 4% drop in Apple's stock during after-hours trading.

Apple CFO Kevan Parekh attributed the services decline to several factors, most notably a slowdown in mobile gaming and regulatory changes affecting the App Store. TechCrunch reports that Apple is currently under a court order in certain countries, including the U.S., requiring the company to permit app developers to process customer payments outside the App Store, bypassing Apple's commission. Parekh noted that while the matter awaits a final Supreme Court decision, these model changes have impacted performance.

Other contributing factors cited by Apple included foreign exchange rates and a lack of repeat revenue from the "F1" theatrical release. However, Apple highlighted several growth areas to offset these challenges. The company now exceeds 1.5 billion paid subscribers, up from 1 billion in January 2025. Parekh stated that both paid and transacting accounts hit all-time highs, with double-digit growth in emerging markets.

Apple also noted that the App Store set a June quarter revenue record, bolstered by the expansion of Apple Ads into Apple Maps. Other segments reaching June quarter records included Apple TV—which saw all-time high viewership—Apple Music, AppleCare, and the App Store. To drive future growth, Apple pointed to the launch of the Apple Upgrade program with Klarna, upcoming Apple Cash bill-splitting features, and Creator Studio subscriptions.