Apple App Store revenue update shows slow growth

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Tim Cook at WWDC21 on June 7, 2021.

Source: Apple

Every January, Apple releases the total amount of money that App Store developers have earned since 2008, a data point that allows Apple analysts and investors to get an idea of ​​how much money the App Store is making .

This year’s release shows that the growth of Apple’s App Store has increased.

On Tuesday, Apple said it has paid $320 billion to developers, up from $260 billion as of last year, a jump of $60 billion. Developers receive between 70% and 85% of gross sales, depending on whether they qualify for Apple’s reduced rate.

If all developers paid Apple a 30% cut, Apple’s App Store would collect more than $85 billion in 2022, based on a CNBC analysis. If Apple’s commissions were all at 15%, the total value of the App Store would come in lower, around $70 billion.

This is the same amount of sales that Apple suggested with its data point last year, when the company said that it paid $ 60 billion to developers in 2021.

This is a rough estimate that may vary because it is not clear how many developers will pay the lower 15% cut, compared to the 30% cut, and because the stats that Apple shares round.

Attempts to derive the size of the App Store business from developer earnings are inaccurate, Apple said, because the commission is between 15% and 30%, and most developers pay ​the lowest commission under the App Store Small Business Program that provides cash. a lower cut for app makers who make less than $1 million a year.

Apple said in its announcement that 2022 was a “peak” year for the App Store, and it revealed 900 million subscribers, up from 745 million subscribers in 2021. first-party services such as Apple TV + and Music .

But Tuesday’s data points to App Store growth slowing last year, which is important to investors because the App Store is a key part of Apple’s services business, and is a profit engine for the company.

Apple’s services business grew in fiscal 2022 to $78.1 billion, an increase of 14%. But that was a significant drop from the 27% growth rate the sector posted in fiscal 2021.

Apple is facing tough comparisons with increased app usage and sales in 2021 and 2020 as people buy games and software while riding the Covid pandemic. Apple is also facing consumer uncertainty around the world as interest rates rise and economists worry about a possible recession.

The Morgan Stanley analyst, Erik Woodring, has been following slow growth in the App Store. App Store net revenue declined for six straight months from June to November, according to its data, before growing again in December.

Woodring wrote in a note this month that app sales will grow in 2023 because year-over-year comparisons will be easier and because there are some increases in app prices in international markets late in the year. -last year is starting to benefit Apple.

“While App Store growth is still near historic lows, and we acknowledge that challenges remain for global consumers, we are encouraged to see a growth path that ‘continue to improve after declining in September,’ Woodring wrote.

Correction: Apple said in its announcement that 2022 was a “peak” year for the App Store, and it showed 900 million subscribers, up from 745 million subscribers in 2021. An earlier version posted the declared a wrong year.

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