Tim Cook at WWDC21 on June 7, 2021.
every january, an Apple releases the total amount of money 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 disclosure indicates that Apple’s App Store growth has leveled off.
Apple said on Tuesday it paid $320 billion to developers, up from $260 billion last year, an increase of $60 billion. Developers receive between 70% and 85% of all sales, depending on whether they qualify for a discounted rate from Apple.
If all developers paid Apple a 30% discount, Apple’s App Store would have generated more than $85 billion in 2022, based on a CNBC analysis. If Apple’s commissions were all 15%, the App Store’s total estimate would drop, by about $70 billion.
It’s the same sales volume Apple suggested with its data point last year, when the company said it paid developers $60 billion in 2021.
This is a rough estimate that can vary because it’s unclear how many developers pay a 15% lower cut, versus a 30% cut, and because the stats Apple contributed are rounded.
Apple said that attempts to extrapolate the size of the App Store’s business from the developers’ profits are inaccurate, because the commission ranges from 15% to 30%, and the vast majority of developers pay less commission under the App Store Small Business program that gives less commission. Lower cut for app makers with gross income of less than $1 million per year.
Apple said in its release that 2022 was a “record” year for the App Store, revealing 900 million subscriptions, up from 745 million last year. Apple’s stats include anyone who signs up for a service through the Apple App Store, not just first-party services like Apple TV+ and music.
But Tuesday’s data point confirms that App Store growth slowed last year, which is important to investors because the App Store is a major part of Apple’s services business, and it’s a profit engine for the company.
Apple’s services business grew 14% in fiscal 2022 to $78.1 billion, an increase of 14%. But that was a significant slowdown from the 27% growth rate the division recorded in fiscal 2021.
Apple is grappling with tough comparisons of high app usage and sales in 2021 and 2020 as people bought games and software during the Covid pandemic. Apple also faces consumer uncertainty around the world as interest rates rise and economists worry about a potential recession.
Morgan Stanley analyst Eric Woodring has been tracking slowing App Store growth. App Store net revenue fell for six consecutive 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 with app prices rising in international markets late last year, Apple will start to take advantage.
“While App Store growth remains near all-time lows, and we acknowledge that the global consumer continues to face challenges, we’re encouraged to see the growth trajectory continue to improve after bottoming out in September,” Woodring wrote.