Apple’s senior vice president of Services, Eddy Cue recently shared achievements of the company’s services in 2022 in an open letter. Saying that 2022 was the “groundbreaking year for entertainment”, the letter stated that Apple services hit 900 million paid subscriptions and App Store paid $320 billion to developers offering digital services and goods since the platform launched in 2008.
Based on the stats provided by Apple, analyst David Vogt from UBS estimates that App Store revenue declined by 7% to 8% Y-o-Y in December 2022.
App Store accounts for 25% of Apple Services
Apple claimed that App Store entertains over 650 million visitors across 175 regions weekly and provides developers of all sizes to offer ” most creative and cutting-edge apps and games” in a safe and trusted environment, creating a $320 billion digital economy in 14 years.
However, the company did not offer earnings per year and gave a rounded figure of earnings since the App Store’s launch in 2008 which has led Vogt to believe that the report shows an up to 8% decline in App Store’s earnings in December 2022 “based on a flat take rate year-over-year.” He also estimated that the company’s blended take rate in the App Store was between 22% to 24%.
Vogt forecasts revenue from Apple’s Services business to be approximately $20 billion, in line with the consensus of $20.3 billion and estimates the App Store accounts for almost 25% of Services.
The report predicts that macroeconomic factors and foreign exchange rates will continue to impact Apple Services’ growth.
Apple Insider notes that Vogt’s estimations are not based on data other than the press release and might be thrown off if the company is rounding figures.
Despite a possible December decline in App Store earnings, UBS is maintaining its price target for AAPL at $180. It’s based on a 25x earnings-per-share multiple of $6.55 for the calendar year 2024.
It’s not clear what else Vogt is basing his assumptions on, other than a press release outside of investor’s channels, which have historically been vague and imprecise. If Apple is rounding down in the letter — and it likely is, as it has done so in the past — this may throw off Vogt’s calculations.