Key facts
- Apple CFO Kevan Parekh said the company sees opportunities across third-party apps and partnerships as well as first-party opportunities.
- Parekh said Apple had a record number of paid subscriptions, with double-digit growth for third-party apps on the App Store.
- Parekh said Apple expects services growth of 8% to 9% in the December quarter, including third-party licensing and FX headwinds.
- Third-party estimates in August suggested an 18% drop in US App Store commission revenue, with declines also in Brazil and Japan.
Apple said on an earnings call that it sees opportunities in third-party apps and partnerships as well as first-party opportunities, without saying what those opportunities are. Chief Financial Officer Kevan Parekh made the comment while discussing how artificial intelligence could contribute to revenue growth over time.
Parekh said AI offers a reason for customers to upgrade and switch to get the latest capabilities. He did not elaborate on what opportunities might be available through third-party apps. Reuters reported that investors are wondering whether Apple could profit by distributing third-party AI agents through the App Store and taking a cut of the revenue they generate.
Apple's services business remains at record levels but faces pressure. The App Store, the central part of that business, has faced regulatory scrutiny and a decline in mobile gaming. Regulatory and legal changes have reduced App Store commission revenue in some markets. Third-party estimates in August suggested an 18% drop in US commission revenue, with declines also in Brazil and Japan after those countries introduced new regulations.
Apple has traditionally tightly controlled payments within its app marketplace, taking a cut of all App Store transactions. A lawsuit by Epic Games ultimately forced the company to allow apps to redirect users to outside payment systems. Other legal challenges around the world have further affected the business.
On the call, Parekh said App Store performance in the September quarter was similar to the prior year and that Apple had a record number of paid subscriptions, with double-digit growth for third-party apps on the App Store. He said the company saw headwinds in mobile gaming and expected them to continue into the summer quarter.
Parekh said Apple expects services growth of 8% to 9% in the December quarter. That outlook includes the company's best estimates of sequential headwinds, primarily from third-party licensing and an additional half percentage point of foreign exchange.