Apple’s App Store had its strongest growth in over 2 1/2 years in April as lockdowns around the world caused customers to use more games and apps, according to Morgan Stanley analyst Katy Huberty in a report issued on Tuesday.
Based on preliminary data from Sensor Tower, Huberty estimated that App Store net revenue grew 31% year-over-year in April to $1.7 billion, the strongest annual growth since Sept. 2017 and an increase from 19% growth in Apple’s March quarter. Total App Store downloads grew 40% year over year, the strongest growth in downloads since Morgan Stanley began tracking the data in 2015. Services revenue has become an increasingly important part of Apple's revenues as iPhone growth rates slow.
Based on the easing of lockdown restrictions, Huberty expects April to mark the peak of App Store revenue growth, although she sees a growing chance that June quarter App Store results will outperform her estimates of 18% growth.
Huberty found that April’s strength was broad based across Apple’s 10 largest App Store countries, which account for close to 90% of total App Store spend. All but one of those countries — Australia — saw an acceleration in App Store net revenue growth in April compared to the March quarter. April marked the fourth consecutive month of accelerating downloads growth, according to Morgan Stanley.
"These results continue to confirm that the app economy is healthy and that the App Store will remain a beneficiary of social distancing and increased mobile engagement," Huberty wrote.
Morgan Stanley maintains an overweight rating on Apple and a $326 price target. Shares of Apple were rising 1.7% to $302.70 on Wednesday morning.