Evercore: App Store revenue grew 27% in September

From a note to clients by analyst Amit Daryanani that landed on my desktop Friday:

All You Need to Know: App Store growth returned to the high 20’s growth rate in the month of September after a modest deceleration in August. Our analysis suggests that App Store revenue grew 27% in September, an encouraging reacceleration driven by both the US and China. We estimate total App Store developer revenue grew to ~$4.2bn in September; up 27% Y/Y (vs. +21% in August, +29% in July). (emphasis his)

The App Store was one of four services (also Music, Video and Cloud Services) that hit all-time records in the June-qtr and helped offset declines in Apple Care. A major driver of the improvement this month was a return to growth in China after revenue was flat in August. The growth rate in the US also improved to 35% vs. 28% in August. Japan’s revenue growth slowed slightly to 31%, down from 41% in the August. That said this is the fifth straight month of high growth in Japan is particularly encouraging because the country had been in the low single-digits for most of 2019 and the beginning of 2020. The solid September brings the growth rate to 25% for the Sept-qtr well ahead of our expectations. We currently think the reported App Store growth in the mid-20s should support our services growth estimate of ~16% in the Sept-qtr.

Net/Net: The App Store continues to benefit from economic stimulus and social distancing and we do not expect the dynamic to change anytime soon, which should support a strong H2:20 for the services business. Overall we expect the stock to continue to work higher especially as demand for multiple AAPL products remains robust.

Maintains Outperform rating and  $135 target.

Cue Figures 1 and 2:

apple evercore app store september

apple evercore app store september

My take: Another set of positive data points ahead of Q4 earnings.


  1. Gregg Thurman said:
    From a post I made yesterday in response to evidence that Mac unit sales are accelerating above expectations:

    My revenue estimate for FQ4/20 is $67.242 Billion (posted on estimize.com). Eps estimate is $0.82

    Even though ~5% above consensus estimates I believe mine will prove conservative.

    October 2, 2020
  2. Jerry Doyle said:
    Apple is going to turn in some solid and impressive quarters in the coming year. This is a COVID-19 global world in which we live, work, play, relax and party.

    Most all activities will be carried out inside folk homes. As the cold winter months approach and the days grow shorter gone are the colossal sport stadium events. Gone are the large concert gatherings. Gone are the big movie crowds and the grand theatrical events. Gone are the large Holiday socials for workers, friends and relatives. Heck, even outdoor activities that invited at the close of the day patrons to those warm, cozy lodge gatherings are kaput.

    Most any work, social, play or celebratory event will evolve around the “home.” The result of all these changes is companies like Apple will be the go-to-company to facilitate our work lives, our social interactions, our (continuing) education, our entertainment and our daily activities of living.

    Apple will sell more new hardware, new accessories, new services, etc. This is going to continue for the rest of 2020 and for all of 2021. It’s a new world, and Apple plays a major role in this new world. If professional analysts do not see how their price targets are underwater, then they are going to be running even faster to stay abreast than they have in the past trying to stay up with Apple’s rising stock price.

    October 2, 2020
  3. Fred Stein said:
    Sarcasm alert.

    The high growth proves again that Apple stifles competition and innovation among App developers and streaming service providers.

    October 2, 2020
  4. Gregg Thurman said:
    Most all activities will be carried out inside folk homes

    This evening I’m hosting half a dozen friends for coffee and finger food. Then tomorrow mid afternoon I’m going to a different friend’s home for an early dinner and drinks with friends. Then Sunday I’m taking a special friend to a small, boutique kinda restaurant for a quiet dinner.

    This weekend mirrors many weekends since about April.

    I/we have learned to have more fun with smaller groups (that we know) vs prior large gatherings with people we don’t, or barely, know.

    October 2, 2020
    • Dan Scropos said:
      Wonderful analogy, Gregg. Quality over quantity. Sort of like buying 1 iPhone/Apple product for 5 years of use, as opposed to 2-3 non-iPhones/non-Apple products.

      October 2, 2020

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