Apple app store FX headwinds should moderate in June quarter – UBS

Apple (NASDAQ:) App Store growth in the June quarter tracked in line with UBS’s App Store and Services forecast, the firm said in a note Wednesday,

Analysts said revenue growth for the App Store in the quarter rose by 5.9% year-over-year, in line with their 6% forecast.

“Although Apple reports GAAP results including swings in FX rates, we believe adjusting for FX volatility is a better indicator of underlying demand,” wrote analysts.

“In addition, given Covid impacts, we believe growth over a 2-year period is a more robust indication of durable growth,” they added.

Furthermore, adjusting for FX, UBS estimates App Store revenue increased by 7% YoY in the June quarter compared to 5% in the March quarter and 4% in the December quarter.

However, analysts noted that “while the sequential acceleration is a modest positive, the improvement is largely due to easier comps in June-22 relative to March-22.”

UBS believes FX headwinds should moderate ~100bps in the June quarter from March. In addition, the firm forecasts 10% services growth in the September quarter, which they state “should be reasonable.”