Apple Targets 8 to 9% Growth in Services, Mentions Third-Party AI

Key Takeaways

1Apple expects an 8 to 9% growth in its services for the December quarter

2App Store commissions are declining in several markets, by up to 18% in the United States

3The company mentions opportunities related to AI through third-party applications, without specifying the scope

Why it matters : Apple must navigate regulatory pressure and declining commissions while seeking new growth drivers for its services.

Apple is forecasting an 8 to 9% increase in its services revenue for the December quarter. This trajectory comes as App Store commissions decline in several markets, and the company mentions opportunities related to AI through third-party applications, without detailing their nature.

Apple anticipates 8 to 9% growth in services for the December quarter

Apple expects its services to grow between 8 and 9% for the December quarter, according to its chief financial officer. This estimate incorporates sequential headwinds, primarily attributed to third-party licenses and an additional percentage point related to currency exchange. The company also indicates that the challenges observed in mobile gaming are expected to continue into the summer quarter.

App Store commissions decline, with up to 18% drop in the United States

Regulatory and legal changes have led to a decrease in commissions collected by the App Store in certain countries, while overall services growth continues. In August, external sources reported an 18% drop in commissions in the United States, accompanied by similar declines in Brazil and Japan following the implementation of new regulations. Historically, Apple tightly controlled payments on its marketplace and took a cut from each transaction. However, a lawsuit filed by Epic Games forced it to allow redirects to external payment systems, and other litigations worldwide have further hindered operations.

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AI opportunities via third-party apps mentioned, without specifics

Apple indicated that it may seek to increase its services revenue through third-party applications, a field that is not precisely defined at this stage. The chief financial officer states that AI can support revenue growth by giving customers a reason to upgrade, and that there are opportunities through third-party applications, partnerships, and in-house offerings. The exact types of opportunities have not been detailed. Investors are particularly questioning the possibility for Apple to monetize the distribution of third-party AI agents in the App Store by taking a commission on their revenues.

Record paid subscriptions and stable App Store performance

In the September quarter, the performance of the App Store remained similar to the previous year, according to the chief financial officer. Apple mentions a record number of paid subscriptions, with double-digit growth for third-party applications on the App Store. Services activity is at record levels but remains under increased pressure. The core of this activity, the App Store, is affected by regulation and the decline in mobile gaming, which weighs on growth dynamics.