Report: BofA Seeing Slower Growth for Apple App Store Revenue

Bank of America is reportedly seeing “muted” growth in Apple’s App Store revenue.

In a note to clients Thursday, BofA analyst Wamsi Mohan wrote that revenue has grown just 1% year over year in the company’s second quarter.

His findings, reported by Seeking Alpha, showed App Store revenue growing to $2.7 billion through Feb. 6, while downloads for iPhones and iPads were down 0.7% year over year.

“We continue to worry about an overall decline in consumer demand,” Mohan wrote.

He added that the company’s services revenues, 60% of which are believed to come from the App Store, could be at an “incremental risk” of slowing further.

However, Mohan said he expects that pace to pick up again in the third quarter, assuming the economy picks up as well. PYMNTS has reached out to Apple for comment but has not yet received a reply.

Last week, Apple reported that revenues for its first quarter were down 5% year over year as COVID restrictions and global disruptions slowed shipments of hardware such as the latest iPhone iteration. However, subscriptions and services were mostly unaffected by these issues, the company said.

“We set an all-time revenue record of $20.8 billion in services, which was better than what we had expected,” CEO Tim Cook said during an earnings call.

“We achieved double-digit revenue growth from App Store subscriptions and set all-time revenue records across a number of categories, including cloud and payment services. All told, Apple now has more than 935 million paid subscriptions.”

CFO Luca Maestri added that Apple’s installed base of more than 2 billion active devices drove up services and subscriptions, leading to record service revenues in America, Europe and the Asia-Pacific region. He added that these revenues grew “in spite of a difficult foreign exchange environment and macroeconomic headwinds impacting certain categories such as digital advertising and mobile gaming.”

Maestri also noted that the company’s Apple Pay is now available in nearly 70 countries, with “a record-breaking number of purchases made using Apple Pay globally during the holiday shopping season,” though he did not detail the volume or value of those purchases.

As PYMNTS wrote earlier this week, Apple is set to debut Apple Pay Later, its buy now, pay later (BNPL) service, sometime this year, although it’s not clear what impact it will have.

“Clearly, the dry kindling is there, so to speak, as determined by merchant acceptance and the consumers having the actual tools in hand with which to pay,” PYMNTS wrote.

As noted here late last year, more than 75% of major U.S. retailers accept Apple Pay and close to half of American consumers are iPhone users. Nevertheless, Apple Pay accounts for just 2.4% of overall in-store purchases.