Step on up to the earnings plate, John Ternus.
The Apple executive with buzz for being a “product guy” oversaw his first earnings report as CEO on Monday.
“It’s a privilege to be with you for the first time as Apple CEO,” Ternus said on a call with analyst following the results. “This is an amazing time at Apple. We just completed one of the most prolific launch periods in our history. It’s been a remarkable time for innovation across all of our categories,” he added.
Revenue for the third quarter — Apple’s fiscal fourth quarter — was $114.5 billion, surpassing Wall Street’s estimates of $113.46 billion. Earnings per share came in at $2.10, topping analysts’ estimates of $2.
Spoiler alert: Apple continues to sell a ton of iPhones. Revenue for the segment was $57.58 billion, compared to analysts’ estimates of $56.48 billion.
The company’s highly watched gross margin was 47.9%. That metric got a lift from tariff refunds.
“When you remove the tariff refunds from both the June and September quarter, both company and products gross margin would be down about 1 point sequentially, primarily driven by higher memory costs,” CFO Kevan Parekh told analysts on the call.
China revenue of $17.54 billion missed analysts’ estimates of $18.75 billion. Sales of its iPad were also light, coming in at $6.23 billion compared to Wall Street’s estimates of $6.83 billion. Mac sales were $10.79 billion, topping estimates by more than $1 billion. Apple’s Services business came in largely in line with estimates at $31.57 billion.
Ternus shouted out iPhone and Mac performance on the earnings call while acknowledging “supply constraints.”
The stock was trading roughly flat after hours following the report.
While Apple doesn’t break out detailed guidance for its holiday quarter, it did provide some color. Its anticipated operating expenses of $20.4 billion to $20.8 billion are slightly higher than the $20.37 billion that analysts estimated.
“Greater China came in about $1 billion below forecast; that’s not a rounding error, it’s a worrying pattern,” Investing.com senior analyst Jesse Cohen said in a note. “Wearables, Home and Accessories also missed, so the story isn’t just China, it’s that Apple’s businesses beyond the iPhone aren’t pulling their weight.”
Ternus, who took over for Tim Cook on September 1, has already taken the stage to announce multiple major new products for Apple: its first folding smartphone, the iPhone Duo, the company’s first smart home hub, the Apple HomeView, and the first-ever touchscreen MacBook Pro.
While the iPhone Duo didn’t go on sale until October, meaning it won’t show up in Apple’s results for the previous quarter, Wall Street will be looking for any color on how early orders are pacing.
The quarter does include roughly a couple of weeks of iPhone 18 Pro sales. Importantly, Apple has yet to announce any non-Pro variants of the new iPhone lineup, which are expected early next year.
Ternus is beginning his CEO tenure at a time when Apple faces soaring memory costs — a key component for its iPhones, iPads, and Macs — and other supply chain constraints that have led it to boost hardware prices.
