From a note to clients by analyst Katy Huberty that landed on my desktop Friday:
App Store net revenue growth accelerated to +25.8% Y/Y in August from +18.9% in July, representing the strongest Y/Y growth since February 2018 and the third largest month-to-month acceleration in Y/Y growth since early 2015, according to data from Sensor Tower (1).
Click to enlarge.
In China, total App Store spend grew 31.8% Y/Y, a considerable acceleration from just 4.8% Y/Y growth 2 months ago, with total Gaming revenue in China growing 29.1% Y/Y in August vs. 21.0% Y/Y in July and 1.0% Y/Y in June (3). As a reminder, due to the gaming license suspension in China this time last year, comps will continue to ease into quarter-end in China, and September 2019 will be lapping a -4.1% Y/Y comp vs. a +4.9% Y/Y comp in August (China gaming, which represents 79% of China App Store spend, faces a -11.7% Y/Y comp in September vs. a -1.7% Y/Y comp in August).
Maintains Overweight rating and $247 price target.
My take: Analysts who look beyond the iPhone see a very different company than those who focus only on iPhone unit sales.