App Store sales fell, but Apple services revenue will still grow overall

Revenue from the App Store has reportedly taken a hit in the last quarter due to a decline in revenue from games, but Apple's services growth overall will continue.

Analyst Erik Woodring from investment firm Morgan Stanley reported on Monday that net revenue from the App Store dropped 5% in September. He based his report on data from Sensor Tower, a company that tracks app downloads and sales.

For reasoning behind the drop, Woodring cited that Apple customers may be spending less on soft goods like software due to inflation and other economic concerns. Primarily, gaming revenue is said to have fallen by 14%, and the overall decline of 5% is the largest since Morgan Stanley began tracking the data in 2015.

"We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near-term as discretionary income is reallocated to areas of pent-up demand," Woodring said in the note.

Apple doesn't report App Store sales individually, but includes it as part of its Services business. The company takes 15% to 30% of app purchases and in-app purchases made on its devices.

In the June 2022 quarter, Services brought $19.6 billion in revenue, up year-over-year from $17.4 billion.

As has been typical during the pandemic, Apple did not provide formal revenue guidance for the upcoming September quarter. However, Luca Maestri, Apple's Chief Financial Officer, said the company doesn't expect Services to grow more than 12% in the quarter.

Morgan Stanley expects Apple's total revenue from Services to increase by 8% in the quarter that ended on September 30, 2022.

Apple Services includes a wide range of products, such as AppleCare, repairs, the Apple One subscription, Apple Music, Apple TV+, Apple Card, and more.

6 Comments

DAalseth 3033 comments · 6 Years

About 2 years ago

We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near-term as discretionary income is reallocated to areas of pent-up demand,
Translation: We all is broke and want to buy food before a new game.

Ofer 269 comments · 8 Years

DAalseth said:

We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near-term as discretionary income is reallocated to areas of pent-up demand,

Translation: We all is broke and want to buy food before a new game.

Yup 😞

davidw 2112 comments · 17 Years

DAalseth said:

We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near-term as discretionary income is reallocated to areas of pent-up demand,

Translation: We all is broke and want to buy food before a new game.

To be more clear, most of Apple App Store game revenue do not come from the sale of games. They come from IAP made in games that are free. When paying for food, gas and electricity are more important, these gamers just have to suffer playing their free games with the likes of the same $10 cool virtual outfit or fancy pick axe that they've already purchased and will not be breaking out in any new victory dance moves.

jimh2 661 comments · 8 Years

These app download guesses are meaningless since Apple has never reported these sales. Unfounded speculation based on guesstimates that will never be substantiated is fake news. AI there is no need to give this garbage credibility by publishing it.

FileMakerFeller 1561 comments · 6 Years

jimh2 said:

These app download guesses are meaningless since Apple has never reported these sales. Unfounded speculation based on guesstimates that will never be substantiated is fake news. AI there is no need to give this garbage credibility by publishing it.

Wish I could upvote this more than once. These estimates are probably more correct than those from some random internet user, but not by much.