Apple posts a record quarter, but memory costs cloud the holiday outlook in Ternus's first report
Revenue topped $114.5 billion and iPhone sales jumped 17%, yet Apple guided to its thinnest profit margin in about three years as the AI-driven memory shortage pushes component prices higher.
Apple reported its first earnings under CEO John Ternus on Monday
Apple's first earnings report under CEO John Ternus delivered a record September quarter and a warning in the same breath. The company said Monday that revenue rose 12% to $114.5 billion. Then its chief financial officer guided to a gross margin of 45% to 46% for the holiday quarter, below the 46.3% analysts expected, and blamed a global shortage of memory chips that has pushed component prices sharply higher, CNBC reported. Ternus took over from Tim Cook on Sept. 1.
Most of the headline numbers were strong. iPhone revenue grew 17% to $57.6 billion, ahead of the roughly $56.5 billion analysts were looking for, and Apple said Services reached an all-time high. Net income was $30.7 billion, and earnings per share of $2.10 beat the roughly $2.00 forecast. Mac revenue climbed to $10.8 billion from $8.7 billion a year earlier despite supply limits, MacRumors reported. For the full fiscal year, revenue reached a record of about $479 billion, up 15%. Apple's release credited the iPhone 18 Pro lineup and the new iPhone Duo.
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There were soft spots. iPad sales fell short of estimates, and Greater China revenue rose 21% to $17.54 billion, a September-quarter record that still came in below the $18.75 billion Wall Street had expected, Yahoo Finance said.
The memory problem was the main event of the call. Ternus described current memory pricing as "unprecedented" and said Apple expects costs to rise again in the December quarter and keep climbing after that. The shortage comes as AI data centers compete with consumer electronics makers for the same chips. Apple raised some prices in June and September to offset part of the pressure, and it benefited from older, cheaper inventory and lower costs on other components.
The margin math is blunt. Apple's 47.9% gross margin in the September quarter included about one percentage point from tariff refunds, and without them the company said margins would have fallen by about a point from June, mostly because of memory. CFO Kevan Parekh said the December forecast also includes costs tied to the rollout of the upgraded Siri AI. At the midpoint, Quartz noted, that margin would be Apple's weakest since the fiscal fourth quarter of 2023.
The sales outlook was still upbeat. Apple expects revenue to grow 7% to 10% in the December quarter, which it said would be the best quarter in its history, with Services growing 8% to 9%. Parekh added that the forecast reflects constrained supply, and Apple expects shortages on the Mac, the iPad and the iPhone Duo because demand has been stronger than planned.
Investors focused on the margin. Apple shares fell about 4% in premarket trading Tuesday, according to Quartz, and Yahoo Finance's market wrap listed the iPad miss and the weak margin outlook among the reasons the stock lost ground. For shoppers, the more practical takeaway may be about availability: if Apple's own supply estimates hold, some Macs, iPads and iPhones could be hard to find this holiday season even if demand stays strong.