Apple reported fourth-quarter financial results on Monday, and Chief Executive John Ternus led his first Apple earnings call with Chief Financial Officer Kevan Parekh to review the period. The company posted quarterly sales of $114.48 billion and earned $2.10 per share, moving past average estimates compiled by Wall Street analysts [3, 4]. However, conservative margin projections for the upcoming holiday period sent the stock lower in extended trading [4].
Financial Highlights From the Apple Earnings Call
The live conference call opened at 2 p.m. Pacific Time on Monday, streaming freely to investors through the official Apple website. It was the first quarterly earnings appearance for Ternus since he succeeded Tim Cook as chief executive on September 1, concluding a succession that Cook told David Phelan of The Independent at Battersea Power Station had “started years ago”. The transition left Cook focused on global policy as executive chairman [1]. The corporate change followed an earlier Apple CEO transition that shifted executive duties across Cupertino. Investors tuning into the Apple earnings call heard Ternus highlight an intense rollout schedule, describing the September period as the conclusion of Apple’s “best fiscal year ever” in prepared remarks [3].
Net income for the three months ending September 26 climbed 12% to reach $30.71 billion, up from $27.46 billion, or $1.85 per share, a year earlier [4, 5]. That profit topped the average estimate of $1.99 per share tracked by LSEG, with tariff refunds adding five cents. Total revenue reached $114.48 billion, beating the $113.39 billion consensus forecast and $113.4 billion FactSet poll [3, 5]. Apple had previously projected revenue between $111.69 billion and $113.74 billion [2].
Mike Wheatley of SiliconANGLE reported that Ternus stepped into a role defined by Steve Jobs and Tim Cook [4]. Emarketer analyst Jacob Bourne said, “Apple’s strong earnings come in the wake of a recent tech sell-off, as investors question the enormous cost and uncertain returns of the AI boom driven by Apple’s big tech counterparts”. Bourne said solid iPhone demand in Greater China helped preserve cash flow [5].
iPhone Revenue and Component Costs
Smartphones remained the main revenue driver for the company, generating $57.58 billion during the quarter to surpass the average consensus target of $56.54 billion. Handset sales expanded more than 17% over prior-year numbers, making up slightly more than half of all money taken in by Apple. That growth materialized even though the period included only eight days of sales for the iPhone 18 Pro and Pro Max after their September 18 debut [2, 3]. The upcoming iPhone Duo didn’t add any revenue, because customer pre-orders for the new foldable handset didn’t open until October 16 [1]. Demand for older models like the iPhone 17 family stayed solid [3].
The quarter gave Apple its first full look at buyer behavior after a $100 price increase on iPhones in June. Ternus told CNBC that Apple “reluctantly” raised prices to help offset higher procurement expenses for computer memory. Higher chip prices pushed component budgets higher during the summer [3].
Greater China revenue rose 21% from a year earlier to $17.53 billion, showing resilient buyer interest across mainland China, Taiwan, and Hong Kong. Even with that performance, Needham analyst Laura Martin told CNBC that Apple had “bet the farm” on traditional phone hardware while competitors build different device forms. Martin said, “Almost every other AI company is going to try to change that form factor” [3].
Mac Hardware and iPad Results
Personal computer sales provided the biggest percentage increase among hardware categories, surging nearly 24% to $10.79 billion and beating the Street target of $9.61 billion [3, 4]. Strong customer interest in the lower-cost MacBook Neo and current MacBook Pro laptops helped propel the segment forward. Apple also updated its Mac Studio and Mac Mini desktops with new chips in August [3].
Apple recently introduced its first laptop with a touchscreen display, adding touch capability to the MacBook Pro while keeping the trackpad as the primary control [1, 3]. Ternus said in an interview with Wired, “The Mac is first and foremost an indirect input device, built around the trackpad and keyboard. But I think there’s times when it’s comfortable and handy to” use touch. Before stepping into the chief executive seat, Ternus led hardware engineering teams where he reshaped Apple design teams to build multiple lines of Mac and mobile devices. He also told TIME that earlier folding phones from rivals like Samsung felt “kind of cheap and crappy,” which convinced Apple to take more time developing the hinge on the iPhone Duo. Display creases on the final folding model are barely noticeable in person [1].
By contrast, tablet shipments fell sharply, dropping more than 10% year over year to $6.23 billion according to CNBC, or $6.3 billion in SiliconANGLE data, trailing the $6.7 billion expected. The line didn’t receive a major update during the period, following an updated iPad Air in March and iPad Mini last month [3, 4]. Ternus said supply constraints and difficult year-ago comparisons caused the miss [3].
Holiday Guidance on the Apple Earnings Call
Services revenue rose to $31.57 billion during the quarter, landing just under the Street forecast of $31.58 billion and growing less than 10%. That single-digit growth represented the slowest rate of quarterly expansion for the services unit since late 2022. The unit bundles subscriptions like iCloud storage, AppleCare maintenance agreements, App Store downloads, and default search placement fees paid by Google to keep its search engine on Safari. Ternus said Apple achieved all-time records in video, cloud services, and advertising, with an all-time September quarter record in Apple Music streaming subscriptions [3, 4]. Payment processing services also set an all-time revenue high during the three-month run [3].
Wearables, Home, and Accessories revenue fell nearly 8% to $8.3 billion, falling short of the $9.06 billion estimate from analysts. Apple plans to address the home category with its new HomeView device announced in August to display an AI-upgraded Siri. Ternus told CNBC that Apple is establishing a new home plan [3].
Holiday margin guidance triggered immediate selling among investors after the closing bell. Chief Financial Officer Kevan Parekh forecast holiday gross margins between 45% and 46%, trailing the 46.3% Street consensus and falling from the 47.9% margin recorded in the September quarter, which had benefited from tariff refunds. Parekh projected overall revenue growth between 7% and 10%, while analysts polled by SiliconANGLE were looking for 11.4% growth [3, 4]. Parekh said rising memory procurement costs will pressure profitability in December [3].
Artificial Intelligence Spending Strategy
When analysts on the Apple earnings call asked about software monetization, Ternus pointed to hardware sales [3, 4]. Apple launched an updated Siri virtual assistant during the quarter as a free download for supported hardware. Investors wanted details about possible future software subscription models [3].
Ternus said on the call, “One example is on the hardware side, right? It offers a compelling reason for upgrading or switching” to newer models [3, 4]. The company spent $2.24 billion on capital expenditures during the period, staying far below the $3.33 billion estimate from LSEG and spending less than rivals on server farms [3]. Jacob Bourne of Emarketer said that this “tepid approach” protects free cash flow, though SiliconANGLE reported that critics find the current Siri update less capable than autonomous agents like Dots and Muse [4, 5]. Oppenheimer analyst Martin Yang said Apple traded at 36 times next year’s earnings despite expected earnings growth of only 1%. That premium valuation relies on capital returns like share buybacks rather than aggressive infrastructure spending [4].
Apple shares fell almost 3% in extended trading on Monday evening. The pullback left Apple with a market valuation near $4.91 trillion, keeping the company neck and neck with chipmaker Nvidia while still preserving a 24% year-to-date gain against a 10% advance for the S&P 500 index [3, 4]. Ternus said he remains confident that the best is yet to come [3].
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