Apple said on its Monday earnings call that third-party apps could help it grow services revenue. The company did not explain what that plan would look like.
The comments came from Kevan Parekh, Apple’s chief financial officer. He was speaking about how artificial intelligence could “contribute to revenue growth over time.”
Apple’s services business remains at record levels. However, it is facing growing pressure from several directions.
The App Store sits at the center of that business. It has faced regulatory pressure and a slump in mobile gaming, and both have hurt services growth.
What Apple Said About AI
Parekh said AI gives customers a reason to buy new Apple devices. “On the product side, you know, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities,” he said.
He also pointed to other possible sources of revenue. He said Apple sees “opportunities across third-party apps and partnerships as well as first-party opportunities.”
Parekh did not give details on what the third-party app opportunities might be. TechCrunch reported that the meaning of his comments was not clear.
Reuters reported on Monday that investors are asking how Apple could profit from AI. One idea is that Apple could distribute third-party AI agents through the App Store and take a cut of the revenue they generate.
App Store Revenue Under Pressure
Regulatory and legal changes have reduced App Store commission revenue in some markets. Even so, Apple’s services business as a whole has continued to grow.
Third-party estimates in August suggested Apple saw an 18% drop in U.S. commission revenue. Declines were also seen in Brazil and Japan after those countries introduced new regulations.
Apple has long kept tight control over payments in its app marketplace. The company takes a cut of all App Store transactions.
A lawsuit by Epic Games forced Apple to let apps send users to outside payment systems. Other legal challenges around the world have also hurt the business.
During the call, Parekh spoke about the App Store’s recent results. He said its performance in the September quarter was similar to the prior year.
He also said Apple had a record number of paid subscriptions. Third-party apps on the App Store saw double-digit growth, he added.
Parekh noted that weakness in mobile gaming has not gone away. “We did see some headwinds in mobile gaming that we’ve talked about before, and expect to see those continue,” he said.
For the December quarter, Apple expects services growth of 8% to 9%. Parekh said the outlook includes expected headwinds, mainly from third-party licensing and an extra half percentage point of foreign exchange pressure.
He described the forecast as Apple’s best estimate of those sequential headwinds. TechCrunch said it has reached out to Apple for more information and will update its report if the company responds.
