Apple reported a mixed fiscal fourth-quarter performance, revealing better-than-expected overall revenue but disappointing iPad sales and a weaker margin forecast. The company's stock experienced a decline in extended trading following the announcement.
This earnings report was led by John Ternus, who assumed a prominent role in the earnings call. During the earnings call, Apple projected a revenue increase of 7% to 10% for the December quarter. However, the gross margin forecast of 45% to 46% fell short of the 46.3% expected by analysts.
For the past quarter, Apple's revenue rose 12% year-over-year to $102.5 billion. The iPhone, a critical product line, saw revenue growth despite only eight days of sales for the new iPhone 18 Pro being included. The iPhone Duo, Apple's latest flagship device, was not available during this period.
Apple's recent price hikes, including a $100 increase on iPhones, were attributed to challenges with memory supply and other components. The company faced a global memory crunch, leading to higher memory costs compared to the June quarter. Despite these challenges, Ternus expressed confidence in Apple's future, stating that the company had just completed its best fiscal year ever.
On the services front, Apple anticipated sales growth of 8% to 9%, indicating a slowdown. The services segment, which includes iCloud storage, App Store fees, and AppleCare warranties, grew less than 10% in the September quarter, marking its slowest expansion since 2022. Ternus highlighted strong performance in video, cloud services, payment services, and advertising, with a record in music for the September quarter.
Apple's capital expenditures for the quarter were $2.24 billion, significantly lower than the $3.33 billion estimated by analysts. This spending is modest compared to its megacap peers, who are investing heavily in AI. Apple introduced a new home product, HomeView, in August, signaling a potential focus on home accessories under Ternus' leadership.
In Greater China, Apple's sales grew 21% annually to $17.53 billion, driven by strong iPhone and Mac sales. The Mac division experienced the highest growth among Apple's product categories, with revenue surging nearly 24% to $10.79 billion. This growth was attributed to strong sales of the MacBook Neo and MacBook Pro.
However, the iPad division struggled, with sales contracting over 10% annually to $6.22 billion. Ternus cited supply constraints and challenging comparisons to the previous year as reasons for the decline.
Apple's gross margin, a key focus due to rising component prices, was reported to be lower than the previous quarter's 50.1% gross margin. Ternus noted that higher memory costs were partially offset by lower costs on non-memory components.
Unusually, Apple reported its earnings on a Monday, a departure from its typical Thursday schedule. The last time Apple reported earnings on a Monday was in April 2015.
