EFTA02634595

From: Richard Kahn Sent: Wednesday, April 3, 2019 10:30 PM To: Jeffrey Epstein Subject: Fwd: Apple, Inc.: App Store Trends Remain Stable Ahead of New Services Ramp Richard Kahn HBRK Associates =nc. 575 Lexington =venue, 4th Floor New York, NY =0022 tel fax cell Begin forwarded message: From: =/b>"Morgan Stanley' < Subject: =/b>Apple, Inc.: App =tore Trends Remain Stable Ahead of New Services Ramp Date: =/b>April 3, 2019 at 6:24:41 PM =DT To: =Ala Reply-To: =/b><[email protected]> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> Wealth =anagement <http://www.morganstanley.com/> <http://www.morganstanley.com/img/cs/spacer.gif> Apple, Inc.: App =tore Trends Remain Stable Ahead of New Services =amp <http://www.morganstanley.com/img/cs/spacer.gif> EFTA_R1_01859586 EFTA02634595 Katy L. Huberty, CFA =E2 Morgan Stanley April =, 2019 10:19 PM GMT March Q App Store net =evenue of $3.7B was slightly lower than our forecast but in-line with =onsensus. Going forward, we expect China to drive an acceleration in =2H gaming app revenue while the slowdown in entertainment-related app =evenue is important to monitor. App Store growth decels 1 =oint. According to data from Sensor Tower, estimated March quarter App =tore net revenue was $3.7B, up 15% Y/Y, a 1 point deceleration from revised December quarter growth of 16% Y/Y (1). Using Sensor Tower= revised historical App Store revenue totals (2), our 17% Y/Y revenue =rowth forecast would imply $3.8B in March quarter App Store net revenue, a 2% miss vs. reported results. Keeping the rest of our Apple =ervices forecasts unchanged, this would imply March quarter Services =evenue of $11.50B (+17% Y/Y), slightly below our current estimate of =11.608 (+18% Y/Y) but largely in-line with consensus Services revenue =f $11.46B (3). Going forward, we model an acceleration in Services =rowth in F2H19 and FY20 as Apple ramps new Service launches, which have =istorically contributed 1 point to Services growth in their launch =ear, and 3 points in the first full year following launch. This is vs. = backdrop where consensus is modeling a 6 point Services growth =eceleration in FY19, with growth slightly accelerating in FY20, =uggesting there is upside risk to consensus Services estimates. Below =e present our 4 key takeaways from the March quarter App Store data.(+) =n a directional basis, the growth slowdown was in-line with our =xpectations and doesn't change our Services thesis. On pre-revised App =tore results, we forecasted a 1 point growth deceleration in the March =uarter, from 18% Y/Y in C4Q18, to 17% Y/Y in C1Q19. While the absolute =ate of March quarter net revenue growth was lower at 15% Y/Y (due to =ensor Tower's revision of historical data), the 1 point deceleration =rom December quarter growth of 16% Y/Y directionally aligns with the 1 =oint March quarter slowdown we e This alert is sent from: Andrew Atlas, [email protected] You received this because you requested =hat you receive content and reports from: APPLE =NC. Please contact your FA if you want to unsubscribe from the rlerts. <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> Disclosures: Please see =he full report for risks, disclosures and other important =nformation. Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley =esearch and Morgan Stanley Wealth Management research are available on =he Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures. Morgan Stanley Wealth Management Not Acting as Municipal =dvisor Morgan Stanley Wealth Management is not acting as a municipal =dvisor to any municipal entity or obligated person within the meaning =f Section 158 of the Securities 2 EFTA_R1_01859587 EFTA02634596 Exchange Act (the "Municipal Advisor =ule") and the opinions or views contained herein are not intended to =e, and do not constitute, advice within the meaning of the Municipal =dvisor Rule. Copyright The =opyright in materials provided by Morgan Stanley is owned by Morgan =tanley & Co. LLC. Morgan Stanley Wealth Management is the trade =ame of Morgan Stanley Smith Barney LLC, a registered broker-dealer in =he United States. © 2019 Morgan Stanley Smith Barney LLC. Member =IPC. <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> 3 EFTA_R1_01859588 EFTA02634597