Katy Huberty: Springtime for Apple's App Store

"April App Store Accelerates To +8% Y/Y With Green Shoots Emerging"

From a note to Morgan Stanley clients that landed on my desktop Tuesday:

April App Store net revenue growth accelerated to 8% Y/Y, as strength in China offset weaker trends in the US. Based on the latest disclosures from Sensor Tower, we estimate App Store net revenue growth accelerated to +8% Y/Y in the month of April, a 2 point acceleration from March quarter growth of 6% Y/Y (Exhibit 1).

While the acceleration in growth is slightly weaker than we expected given the easing Y/Y compares, we see green shoots emerging in important markets and regions.

For example, App Store net revenue growth in China, which accounts for 26% of total T12M App Store spend, accelerated from +1% Y/Y in C1Q to +11% Y/Y in April despite an 4 point more challenging Y/Y compare, likely aided by renewed COVID lockdowns in major metropolitan cities...

In total, 4 of the 10 largest App Store markets saw growth in April accelerate from C1Q22. Importantly, China gaming net revenue grew 6% Y/Y in April, an 18 point acceleration from 12% Y/Y declines in the month of March, which we believe was aided by the approval of new video game licenses in April, the first since July 2021.

The improved positioning in these regions more than offset weaker growth in the US, where App Store net revenue growth decelerated 3 points from March to 6% Y/Y in April, even off an 18 point easier compare.

By category, only 3 of the 10 largest categories saw net revenue growth accelerate in April. However, Gaming – the most important App Store segment at 60% of net revenue – saw growth accelerate 5 points from the March quarter to 4% Y/Y in April, which we see as encouraging (Exhibit 7). Lastly, we'd point out that App Store downloads grew 3% Y/Y and net revenue per download grew 5% Y/Y, showing increased monetization of the App Store.

Cue Exhibits 1 and 7.

My take: Year over year App Store compares are tough, given how much time people were spending indoors in April 2021. As usual, Hubert's got the data.


  1. Jerry Doyle said:
    I always enjoy Ms. Katy’s analyses. Would someone be so kind as to answer a question often on my mind when I view so many Apple analysts giving their spiel on business news programs about Apple? Why does Ms. Katy not appear on these programs? Just curious.

    May 4, 2022
    • Fred Stein said:
      Good question. Just a guess here, Jerry –

      Morgan Stanley has strict rules. For them clients, both investors and companies seeking IPOs, come first, not the masses.

      IMO, it’s a slippery slope. Once people start to ‘feed the beast’, i.e. clicks, it has impact.

      May 4, 2022
    • Charles A. said:
      She actually does usually come on CNBC several times a year.

      May 4, 2022
  2. Robert Paul Leitao said:
    As Morgan Stanley references in this note, it’s estimated games represent about 60% of App Store revenue. Growth in China may reflect some easing of regulatory pressure in the country on game licensing as the government sought to reduce the pace of growth in gaming activity among children. The App Store is estimated to represent close to one-third of Services revenue for Apple. While I don’t see the App Store as the primary revenue growth driver for the services revenue segment going forward, it’s good to see growth in any of Apple’s revenue segments and sub-segments.

    May 4, 2022
  3. 1st approvals of new App Store games since July 2021, apparently some or many went viral. Some of these customers were stuck at home in Shanghai but the new games will travel with them on future commutes and holidays. Serious revenue to the game developers for the popular, sticky games. Ads all over most games. Another Fortune 100 company within a company.
    Relevant recent market data from a trusted source? Priceless!

    May 4, 2022
  4. John Konopka said:
    Can someone explain Exhibit 1 to me? I’m missing something.

    It shows Net Revenue Growth with appreciable Y/Y growth, yet the actual Net Revenue seems to be flat at about $2.2B. This is contradictory.

    May 4, 2022

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