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Apple’s App Store revenue update shows slowing growth

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every January, an Apple publishes the total amount of money App Store developers have earned since 2008, a data point that gives Apple analysts and investors an idea of ​​how much money the App Store is making.

This year’s disclosure indicates that Apple’s App Store growth has stabilized.

On Tuesday, Apple said it paid out $320 billion to developers, up from $260 billion last year, a jump of $60 billion. Developers receive between 70% and 85% of all sales, depending on whether or not they qualify for a discounted rate from Apple.

If all developers paid Apple a 30% rebate, Apple’s App Store would have generated more than $85 billion in 2022, according to CNBC analysis. If Apple’s commissions were all 15%, the total App Store estimate would drop by about $70 billion.

That’s the same sales volume that Apple suggested with last year’s data point, when the company said it would pay developers $60 billion in 2021.

This is a rough estimate that may vary because it’s unclear how many developers pay 15% less versus 30%, and because Apple stock stats are rounded.

Apple said attempts to extrapolate the size of the App Store business from developer profits are inaccurate because commission ranges from 15% to 30%, and the vast majority of developers pay less than commission under the App Store Small Business program which gives less commission. Lower discount for app makers with gross income below $1 million per year.

Apple said in its statement that 2022 was a “record year” for the App Store, revealing 900 million subscriptions, compared to 745 million in 2021. Apple’s statistics include anyone who signs up for a service through the ‘Apple’s App Store, not just the private service. with her. Proprietary services like Apple TV+ and music.

But Tuesday’s data point confirms that App Store growth has slowed over the past year, which is important for investors because the App Store is an important part of Apple’s services business, and it is a profit engine for the company.

Apple’s services business in fiscal year 2022 reached $78.1 billion, up 14%. But that’s a significant slowdown from the 27% growth rate the division saw in fiscal 2021.

Apple deals with tough app usage comparisons and high sales in 2021 and 2020 as people buy games and software amid the Covid pandemic. Apple also faces consumer uncertainty around the world as interest rates rise and economists worry about a possible recession.

Morgan Stanley analyst Eric Woodring tracked the slowing growth of the App Store. App Store net revenue fell for six consecutive months from June to November, its data showed, before growing again in December.

Woodring wrote in a note this month that app sales will increase in 2023 because year-over-year comparisons will be easier, and with app prices rising in international markets at the end of last year, Apple will begin to take advantage of it.

“While App Store growth remains near an all-time low and we recognize that the global consumer continues to face challenges, we are encouraged to see the growth trajectory continue to improve after bottomed out in September,” Woodring wrote.

Correction: Apple said in its statement that 2022 was a “record year” for the App Store, and disclosed 900 million subscriptions, compared to 745 million in 2021. An earlier version contained errors a year earlier.

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