Apple reported stronger-than-expected revenue and earnings for its fiscal fourth quarter, supported by solid iPhone and Mac sales. However, weaker iPad revenue and a disappointing gross margin forecast raised concerns among investors, sending shares down approximately 3% in after-hours trading.
According to LSEG, Apple reported earnings per share of $2.10, exceeding analysts’ expectations of $1.99. Revenue reached $114.48 billion, surpassing the consensus estimate of $113.39 billion. Despite beating both major financial expectations, the company’s forward guidance introduced uncertainty about its ability to maintain profitability amid rising component costs and supply constraints.
Apple’s Quarterly Revenue Exceeds Expectations
Apple’s latest financial results reflected continued demand across several major product categories. Revenue increased 12% year over year, rising from $102.5 billion in the same quarter last year to $114.48 billion.
The iPhone remained Apple’s largest revenue contributor, generating $57.58 billion compared with the $56.54 billion analysts had anticipated. Mac revenue also performed strongly, reaching $10.79 billion against expectations of $9.61 billion.
However, not every product category delivered positive surprises. iPad revenue totalled $6.23 billion, falling short of the $6.7 billion forecast. Revenue from Wearables, Home and Accessories reached $8.3 billion, below the expected $9.06 billion. Other Products revenue came in at $31.57 billion, essentially matching analysts’ estimates of $31.58 billion.
Apple’s gross margin reached 47.9%, slightly exceeding the 47.5% expected by analysts. Nevertheless, its outlook for the upcoming quarter was less encouraging, becoming a key concern for investors following the announcement.
New CEO Faces First Earnings Test
The quarterly report represents Apple’s first earnings announcement under CEO John Ternus, who assumed leadership on September 1 after succeeding Tim Cook. The results provide an early indication of the company’s financial performance under its new leadership.
During the earnings call, Apple projected revenue growth of between 7% and 10% year over year for the December quarter. This forecast exceeds the average analyst expectation of 6.1%, suggesting management remains confident in its near-term sales outlook.
However, Apple’s gross margin guidance of 45% to 46% fell below the 46.3% expected by analysts. The weaker projection suggests that increasing production expenses and component costs could put pressure on profitability in the coming months.
The company’s ability to sustain revenue growth while protecting margins will be an important consideration for investors. Strong product demand remains encouraging, but the difference between revenue expansion and profit growth could become increasingly significant.
Memory Shortages and Rising Production Costs
Apple continues to navigate a challenging global supply environment, particularly as demand for memory components increases across the technology industry. The company confirmed that memory costs were higher during the September quarter than during the preceding June period.
These pressures have contributed to Apple’s pricing decisions. In June, the company increased prices across its product lineup, including a $100 increase for iPhones, as it responded to rising component expenses and uncertainty surrounding memory supplies.
The latest quarter also included a full period of sales at the revised prices. However, the reported iPhone revenue reflected only eight days of sales for the new iPhone 18 Pro. Apple’s latest flagship device, the iPhone Duo, became available after the reporting period had ended.
Management acknowledged that the price increases were implemented reluctantly but helped offset higher component expenses. Apple also reported that tariff refunds contributed approximately five cents to earnings per share.
Apple Maintains Confidence in Future Growth
Despite supply constraints, rising production costs and a mixed performance across product categories, CEO John Ternus described the company’s latest results as part of Apple’s best fiscal year ever.
Speaking to CNBC’s MacKenzie Sigalos, Ternus emphasized that Apple had continued growing despite foreign exchange headwinds and limitations affecting its supply chain. He also expressed confidence in the company’s longer-term growth opportunities, stating that management believes its strongest performance is still ahead.
For investors, the latest results present a mixed picture. Apple’s ability to exceed revenue and earnings expectations demonstrates continued business resilience. However, weaker-than-expected iPad sales and the lower gross margin forecast highlight potential challenges ahead.
Attention will now turn to the December quarter, when investors will assess whether Apple’s revenue growth expectations translate into stronger operating performance while the company manages rising memory prices and broader supply chain pressures.
