Apple Hints at Revenue Growth Through Third-Party AI Apps
Apple CFO Kevan Parekh pointed to opportunities in third-party apps and partnerships related to AI during the company's earnings call, without giving details. Its services business faces regulatory pressure and a slump in mobile gaming.
Apple, the US consumer technology company, signaled on Monday during its quarterly earnings call with analysts that it may seek to lift services revenue through third-party apps. Chief financial officer Kevan Parekh, discussing how artificial intelligence (AI) could contribute to revenue growth over time, referred to "opportunities across third-party apps and partnerships" but did not say what they might be. The comments matter because Apple's services business, whose central part is the App Store, remains at record levels yet is under growing pressure.
What Apple's management said
Parekh said Apple believes AI gives customers a compelling reason to upgrade or switch devices in order to get the latest capabilities. He also mentioned opportunities in the company's own, first-party offerings.
Reuters reported that investors are wondering whether Apple could profit by distributing third-party AI agents through the App Store and taking a share of the revenue they generate. Apple has not confirmed this.
Pressure on the App Store
Regulatory and legal changes have cut App Store commission revenue in some markets. Third-party estimates in August suggested an 18% drop in U.S. commission revenue, with declines also in Brazil and Japan after those countries introduced new regulations. Apple has traditionally controlled payments in its marketplace tightly, taking a cut of all transactions, but a lawsuit by Epic Games ultimately forced it to allow apps to redirect users to outside payment systems.
Parekh said App Store performance in the September quarter was similar to the prior year, with a record number of paid subscriptions and double-digit growth for third-party apps. At the same time, mobile gaming faced headwinds that he expects to continue into the summer quarter.
Outlook
For the December quarter, Apple expects services growth of 8% to 9%. The outlook reflects the company's best estimates of sequential headwinds, primarily from third-party licensing, plus an additional half percentage point from foreign exchange. TechCrunch has asked Apple for comment.
