Apple App Store earnings update shows slowing growth

every January, apple announces the total amount App Store developers have earned since 2008. This data point will give the analyst and his Apple investors an idea of ​​how much the App Store is making.

This year’s disclosures suggest that Apple’s App Store growth has plateaued.

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On Tuesday, Apple announced it had paid developers $320 billion. This is an increase of $60 billion from his $260 billion last year. The developer receives from his 70% to his 85% of total sales, depending on whether he is eligible for Apple’s discount rate.

If all developers paid Apple 30%, Apple’s App Store would generate more than $85 billion in revenue in 2022, according to CNBC’s analysis. If Apple’s fees were all 15%, the estimated total value of the App Store would be as low as about $70 billion.

That’s the same revenue implied in last year’s data point that said Apple paid developers $60 billion in 2021.

That’s a rough estimate, it’s unclear how many developers are paying the lower 15% cut for the 30% cut, and Apple’s share price is rounded, so it’s subject to change. I have.

Apple says attempts to extrapolate the size of the App Store business from developer revenue are inaccurate. Fees range from 15% to 30%, as the majority of developers pay lower fees under the App Store Small Business Program. Reduction for app makers with less than $1 million in annual revenue.

In its release, Apple revealed that 2022 will be a “record” year for the App Store, up from 745 million last year to 900 million. Apple’s statistics include everyone who subscribes to services through Apple’s App Store, as well as their own services such as Apple TV+ and Music.

But Tuesday’s data point highlights that App Store growth slowed last year. This is important for investors because the App Store is a major part of Apple’s services business and the company’s revenue engine.

Apple’s services business grew 14% in fiscal 2022, up 14% to $78.1 billion. However, this was a significant slowdown from his 27% growth rate recorded by the division in fiscal 2021.

Apple is dealing with a tough comparison between 2021 and 2020 app usage and sales growth. This is because people bought games and software while weathering his Covid pandemic. Apple is also facing consumer uncertainty around the world as interest rates rise and economists fear a possible recession.

Morgan Stanley analyst Erik Woodring tracks slowing growth in the App Store. According to his data, App Store net revenue fell for six straight months from June to November, before rising again in December.

Woodring wrote in a note this month that app sales will increase in 2023. This is because it makes year-over-year comparisons easier, and app prices started to rise in international markets late last year, which started to benefit Apple.

“App Store growth is near all-time lows and we recognize that consumers around the world are still facing challenges, but we hope the growth trajectory will continue to improve after bottoming out in September. We do,” Woodring wrote.