On an annual basis, Apple publishes the total earnings of App Store developers since 2008. This provides analysts and investors with a comprehensive picture of how profitable the App Store really is.
It seems that Apple's App Store growth has stabilized, judging by this year's reveal.
This Tuesday, Apple proudly announced that it had paid out a staggering $320 billion to its developers since last year! That represented a 23% increase in the total amount of money Apple has disbursed. Developers receive between 70% and 85% of gross sales, depending on whether they qualify for Apple’s reduced rate.
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According to a CNBC analysis, if all developers paid Apple's 30% commission rate in 2022, the App Store would generate over $85 billion. In contrast, reducing its commissions to 15% could lead to an estimated gross revenue of about $70 billion.
Similar to Apple's figure last year, the company has paid out a total of $60 billion in developer compensation in 2021 – an incredibly impressive number!
As the statistics provided by Apple are rounded and it is not known how many developers are paid 15% or 30% of their profits, this estimate may be off by a few points.
Apple clarified that any attempt to estimate the size of its App Store business from developer earnings is inaccurate because developers have access to a commission that ranges between 15-30%, and most take advantage of the Small Business Program. This provides lower rates for those who make fewer than one million in gross sales each year.
Apple announced that 2022 was an unprecedented year for the App Store, reaching a total of 900 million subscriptions – representing an increase from 745 million subscriptions in 2021. Apple's number includes all subscriptions to any service procured from its App store, including both first-party services, such as Apple TV+ and music, and others.
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On Tuesday, it became apparent that App Store growth had slowed over the previous year. This is notable for investors, as the services sector and its earnings are heavily influenced by App Store performance. As such, this data point serves as a reminder to pay attention to Apple's success with the App Store going forward.
Apple's services business saw a notable 14% growth in 2022, expanding to $78.1 billion - however, this growth rate was significantly lower than the 27% seen in 2021.
As the world has embraced games and software to pass the time during the Covid-19, Apple has struggled with tough year-over-year comparisons. To add fuel to the fire, global economic concerns surrounding rising interest rates have left many consumers feeling uncertain about their financial futures – further impacting Apple’s success.
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After poring over the data, Morgan Stanley analyst Erik Woodring found that App Store net revenue had declined for six straight months from June to November. However, that worrying trend was reversed in December thanks to a spike in growth.
Information source: cnbc.com
