Tim Cook at WWDC21 on June 7, 2021.
every january, Apple publishes the total amount App Store developers have earned since 2008, a data point that allows analysts and Apple investors to get an idea of how much money the App Store is making.
This year’s release suggests that Apple’s App Store growth has reached a plateau.
On Tuesday, Apple said it paid $320 billion to developers, up from $260 billion last year, a jump of $60 billion. Developers get 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 have grossed more than $85 billion by 2022, according to a CNBC analysis. If Apple’s commissions were all 15%, the app store’s estimated gross amount would be about $70 billion.
It’s the same amount of revenue Apple suggested with its data point last year when the company said it paid developers $60 billion in 2021.
That’s a rough estimate that could vary because it’s unclear how many developers are paying the lower 15% cut versus the 30% cut, and because the state’s Apple stock is rounded.
Attempts to extrapolate App Store business size from developer revenue are inaccurate, Apple said, because the commission ranges from 15% to 30%, and the vast majority of developers pay the lower commission under the App Store Small Business program lower cut for app makers making less than $1 million per year.
Apple said in its release that 2022 was a “record” year for the App Store, announcing 900 million subscriptions, up from 745 million subscriptions last year. Apple’s stats include anyone subscribing to a service through Apple’s App Store, not just its own first-party services like Apple TV+ and music.
But Tuesday’s data point underscores that the App Store’s growth has slowed over the past year, which is important to investors since the App Store is a big part of Apple’s services business and a profit driver for the company.
Apple’s services business grew 14% to $78.1 billion in fiscal 2022, a 14% increase. But that was a significant slowdown from the 27% growth rate the division saw in fiscal 2021.
Apple has struggled to make comparisons with increased app usage and sales in 2021 and 2020 as people bought games and software while weathering the Covid pandemic. Apple is also facing consumer uncertainty around the world as interest rates rise and economists worry about a possible recession.
Morgan Stanley analyst Erik Woodring has been tracking the App Store’s slowing growth. App Store net income fell for six straight months from June to November, according to its data, before picking up again in December.
Woodring wrote in a note this month that app sales will rise in 2023 as year-on-year comparisons will be easier and some app price increases in international markets late last year will benefit Apple.
“While App Store growth remains near its lowest level in history and we recognize that the global consumer remains challenged, we are encouraged that the growth trajectory continues to improve after the September trough,” Woodring wrote.