January 31, 2023

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

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Markets including the US, Canada and Japan saw declines in the App Store, Morgan Stanley analyst Eric Woodring wrote in a report on Monday. Their analysis was based on data from Sensor Tower, a firm that tracks app downloads and sales.

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Morgan Stanley said the main culprit for the decline was gaming revenue, which according to the data was down 14% in September. Apple customers may be spending less due to economic concerns, Woodring wrote. Worldwide, consumers are faced with rising inflation and the risk of recession.

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“We believe that recent App Store results make clear that global consumer has overestimated App Store spending in the near term to some extent as discretionary income is reallocated to areas of demand,” Woodring noted. is written in.

Morgan Stanley analysts also expect sales to decline on Google Play, the primary Android app store. He estimates that revenue declined 9% in September.

Apple charges between 15% and 30% of in-app purchases and in-app purchases made on the iPhone and other Apple devices. Apple does not report sales of the App Store, but does include it as part of its Business of Services, which also includes warranties and subscriptions, such as the Apple One. Morgan Stanley expects Apple’s total services revenue to rise 8% in the September quarter.

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

Apple’s finance chief, Luca Maestri, said in July that the company expected services to grow less than 12% in the September quarter due to the macroeconomic environment and a stronger US dollar.

Maestri also attributed the difficult comparison to the results of advanced services during the COVID-19 pandemic.

“Our services business grew a lot a year ago and so the comparison is also a bit challenging. So we don’t have very specific numbers to give today,” Maestri said. “Of course, we expect to grow.”

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