Apple closed its fiscal year with record September-quarter revenue, but investors focused on what comes next. The company’s first earnings report under Chief Executive John Ternus, released after the market closed on Monday, beat expectations on sales and profit and still sent the shares lower, because a cautious margin forecast overshadowed the headline numbers.
The numbers behind the beat
Revenue for the quarter ended September 26 reached $114.48 billion, up 12% from $102.5 billion a year earlier and ahead of the roughly $113.4 billion analysts had expected. Earnings per share came in at $2.10, above forecasts of about $2.00.
The iPhone remained the engine. Revenue from the device rose 17% to $57.58 billion, about half of Apple’s total sales and another September-quarter record. That figure included only eight days of sales of the new iPhone 18 Pro models, which suggests the full effect of the launch has yet to show up. Apple also highlighted its new iPhone Duo in its results statement.
Mac was the fastest-growing product line, climbing 24% to $10.79 billion and comfortably beating estimates. Services reached a new all-time high. Not everything shone: iPad revenue of $6.23 billion fell short of forecasts, and demand for wearables was softer.
For the full fiscal year, Apple reported record revenue of $479 billion and $145.1 billion in operating cash flow. In the quarter alone it returned $28 billion to shareholders, and it declared a quarterly dividend of 27 cents per share.
China grows, but not enough
Greater China sales rose 21% from a year earlier to $17.54 billion, a September-quarter record that Ternus drew attention to on the earnings call. Even so, the figure came in below analysts’ expectations, which were in the range of $18.5 billion to $18.75 billion. It is a reminder of how closely the market watches this region. Growth that would look healthy for most companies can still read as a miss when expectations are high.
Why the margin forecast matters
The real tension in the report lay in profitability. Apple’s gross margin for the quarter was 47.9%, within its guided range. The company said about one percentage point of that came from tariff refunds, which means the underlying figure was closer to 47%.
Looking ahead, Apple guided gross margin for the December quarter to between 45% and 46%, below the 46.3% analysts had forecast and well under the 50.1% reported in the previous quarter, which was also flattered by tariff refunds. Executives pointed mainly to higher memory costs tied to the rollout of the company’s new Siri AI features. Operating expenses also rose sharply, by about 21%.
The logic is straightforward even if the numbers are technical. Artificial-intelligence features need more memory, memory prices have been climbing, and Apple has to absorb part of that cost or pass it on to customers. A difference of half a percentage point in margin on more than $100 billion of quarterly sales translates into hundreds of millions of dollars in gross profit, which is why investors treat small shifts so seriously.
A new chapter under Ternus
Monday’s report was also a milestone. John Ternus took over as chief executive from Tim Cook in September, and this was his first quarterly call in the role. He framed the results as the culmination of the company’s strongest year, pointing to the new iPhone lineup and strong demand across Mac and Services.
Leadership transitions at companies of Apple’s scale are watched for continuity as much as change. So far the message is one of steady execution, with the same financial discipline and a continued push into on-device AI. The open question is how Apple balances those investments against the profit margins that investors have come to expect.
How the market reacted
Apple shares fell by roughly 2% to 3% in after-hours trading and were lower in premarket trade on Tuesday. The reaction came during a tough week for technology stocks, as concerns about the cost and return of AI investment have weighed on chip and software shares.
What to watch next
The December quarter is traditionally Apple’s biggest, covering the holiday shopping season, so supply, pricing and memory costs will be under the microscope. Analysts will also look for signs that the new iPhone lineup is sustaining demand in China and that Services continues to expand. For consumers, the main practical issue is whether rising component costs eventually show up in device prices. This article is for information and is not investment advice.
