App Store sees sharpest revenue decline in September, Morgan Stanley reports

In a report published on Monday, Morgan Stanley analyst Erik Woodring said that Apple saw a 5% Y/Y decline in its net App Store revenue in September, the sharpest decline ever since the financial services firm first began monitoring the iPhone-maker’s statistics in 2015.

Woodring based his analysis on data from digital and mobile intelligence platform Sensor Tower, which recently reported that global app spending fell 5% Y/Y to $31.6 billion in the third quarter of this year.

He said that the primary cause of the decrease in the App Store revenue was gaming which generated 14% less revenue than last year. This could be because of customers spending less money due to the rising prices and the economic downturn, according to the analyst.

‘’We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near-term as discretionary income is reallocated to areas of pent-up demand,” Woodring wrote.

He said that growth in the App Store’s top 10 markets, which drive nearly 87% of total App Store revenue, slowed down except for China, Taiwan and South Korea, where it either went up or remained stable.

Per report, the App Store’s overall net revenue was $6.4 billion, down 2.1% from 2021.

Sensor Tower, on the other hand, told TechCrunch that Apple’s September revenue came in at close to $6.9 billion, compared to last year’s $7.2 billion. It said that rounding is probably to blame for the percentage difference between its own analysis and that of Morgan Stanley.

The analytics company added that Google Play’s revenue plunged by 8% Y/Y as Android users’ spending on games also dropped by 14%. 

Morgan Stanley expects Apple to produce better results in the fourth quarter thanks to the extra selling week and the increased costs as a result of the currency fluctuations.

Last month, the iPhone-maker raised App Store prices in European and Asian markets, likely due to the depreciation of foreign currencies against the US dollar. Just a few days prior to the announcement, Apptopia reported that Apple’s in-app purchase prices have grown 40% Y/Y since July 2021.

Meanwhile, Woodring estimates that Apple will report $19.71B in sales revenue for the quarter ended September 30. While that represents a 7.9% Y/Y growth, it doesn’t meet Wall Street’s $20.25 billion projection.