Apple’s App Store revenue fell in September, Morgan Stanley says


Apple’s App Store net revenue fell about 5% in September, according to Morgan Stanley, the biggest drop for the company since the bank began modeling the data in 2015.

The App Store saw declines in markets including the United States, Canada and Japan, Morgan Stanley analyst Erik Woodring wrote in a report Monday. Its analysis was based on data from Sensor Tower, a company that tracks app downloads and sales.

Morgan Stanley said the main culprit for the decline was gaming revenue, which fell 14% in September, the data showed. Apple customers may be spending less due to economic issues, Woodring wrote. In much of the world, consumers are facing runaway inflation and the risk of recession.

“We believe the recent App Store results clearly show that the global consumer has somewhat dampened App Store spending in the near term as discretionary income is reallocated to areas of pent-up demand,” Woodring writes in the note.

Morgan Stanley analysts also expect lower sales on Google Play, the main Android app store. They estimate that revenues there fell 9% in September.

Apple takes between 15% and 30% of app purchases and in-app purchases made on iPhones and other Apple devices. Apple does not report App Store sales, but includes them as part of the Services business, which also includes warranties and subscriptions such as Apple One. Morgan Stanley expects Apple’s total services revenue to show an 8% increase in the September quarter.

Apple’s services unit has been a focal point for investors, who want to see iPhone and Mac customers spend more after purchasing their devices. In the June quarter, Apple reported a 12% increase in services revenue to $19.6 billion.

Luca Maestri, Apple’s chief financial officer, said in July that the company expects services growth of less than 12% in the September quarter due to the macroeconomic environment and the strength of the US dollar.

Maestri also blamed tough comparisons on high service results during the Covid-19 pandemic.

“A year ago our service business grew a lot and so the comparison is a bit difficult. So we don’t have a very precise number to give today,” Maestri said. “Of course, we expect to grow.”

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