Apple Posts Record $114.5 Billion September-Quarter Revenue in John Ternus's First Report as CEO, but Shares Slip on a Weaker Margin Outlook

Apple delivered record results in John Ternus's first earnings report as chief executive, with strong iPhone sales and a rebound in China, but investors focused on a weaker profit margin forecast that sent the shares lower in after-hours trading.

The company reported revenue of $114.5 billion for its fiscal fourth quarter, which ended in late September, up 12% from $102.5 billion a year earlier, according to results released on Monday, November 2. Net profit rose to $30.7 billion from $27.5 billion, and diluted earnings per share rose 14% to $2.10 from $1.85, according to MacRumors.

Revenue exceeded Apple's own outlook of 9% to 11% growth, which implied revenue of roughly $111.7 billion to $113.7 billion, according to 9to5Mac, and beat Wall Street forecasts.

"Today, Apple is proud to report a September quarter revenue record of $114.5 billion, up 12 percent from a year ago," Ternus said. "We're closing the year with our most ambitious lineup yet."

The margin worry

Despite the strong results, Apple's shares fell after the company issued guidance for the December quarter, its biggest of the year, according to CNBC, which reported that the stock dropped on a weak margin forecast.

Apple expects revenue to grow 7% to 10% in the December quarter, with services revenue up 8% to 9%, according to MacRumors. It forecast a gross margin of 45% to 46%, below the 47.9% it reported for the September quarter. Operating expenses are expected to be $20.4 billion to $20.8 billion.

Analysts had expected rising memory chip costs to weigh on Apple's profits. Prices of DRAM and NAND memory have surged this year as demand from artificial intelligence data centres has strained supply, raising costs for smartphone and computer makers.

iPhone and Mac lead

iPhone revenue rose 17% to $57.6 billion, reflecting strong demand for the latest models launched in September. Mac revenue rose 24% to $10.8 billion, one of its strongest performances in recent years, according to MacRumors.

Services revenue, which includes the App Store, iCloud, Apple Music, Apple TV and payments, rose 10% to a record $31.6 billion. Services has become an increasingly important profit driver for Apple, with a gross margin of about 76%, far higher than the 37.2% margin on products.

However, iPad revenue fell 10% to $6.2 billion, and revenue from wearables, home and accessories, which includes the Apple Watch and AirPods, fell about 8% to $8.3 billion.

China rebounds

Revenue from Greater China rose 21%, the strongest growth of any region, according to MacRumors. China has been a challenging market for Apple in recent years, as it has faced intense competition from domestic brands such as Huawei, Xiaomi and Vivo, as well as government restrictions on the use of foreign phones by some officials. The rebound suggests that Apple's latest products have been well received by Chinese consumers.

Revenue from the rest of Asia-Pacific rose 15%, Europe 11.5% and the Americas 10.2%, while Japan declined 1.4%.

A record year

For the full fiscal year 2026, Apple's revenue rose 15% to a record $478.8 billion, from $416.2 billion, and net income reached $132.2 billion, according to MacRumors. Earnings per share rose 20% to $8.98.

The company generated $28.1 billion in operating cash flow during the quarter and returned $28 billion to shareholders, including $3.9 billion in dividends and $24 billion in share buybacks. Apple declared a quarterly dividend of $0.27 per share, payable on November 16. It ended the quarter with $137 billion in cash and marketable securities and $80 billion in debt.

"Apple delivered September quarter records for net income and EPS," said chief financial officer Kevan Parekh. "We generated $28 billion in operating cash flow during the quarter, allowing us to return $28 billion to shareholders."

The Ternus era begins

Ternus, a long-time Apple hardware engineering executive, succeeded Tim Cook as chief executive in September. The results are the first under his leadership, although they largely reflect strategy and products developed under Cook. Investors will look for signs of how Ternus plans to shape Apple's future, particularly in artificial intelligence, where Apple has been seen as lagging rivals such as Google, Microsoft and OpenAI.

Apple's shares had outperformed other Big Tech stocks this year, rising about 27% before the results, partly because it has spent far less than its rivals on AI infrastructure. While companies such as Microsoft, Alphabet, Amazon and Meta are spending hundreds of billions of dollars on data centres, Apple has taken a more cautious approach, partnering with other companies for some AI capabilities.

The India angle

India has become an increasingly important market and manufacturing base for Apple. The company has expanded iPhone production in India through partners such as Foxconn and Tata Electronics, and a growing share of iPhones sold in the United States are now made in India, as Apple diversifies its supply chain away from China amid US-China trade tensions.

Apple has also expanded its retail presence in India, opening company-owned stores in Mumbai, Delhi, Bengaluru, Pune and other cities, and India has become one of its fastest-growing markets for iPhone sales. Apple has reported record revenue in India in recent quarters.

The market backdrop

Apple's results came at the start of a pivotal week for Wall Street, following a sharp sell-off in technology stocks on Friday, October 30, led by Intel and Alphabet. Investors are also awaiting the US midterm elections on Tuesday, November 3, and the October jobs report on Friday.

With concerns growing about the returns on massive AI investments, Apple's relatively capital-light strategy and strong cash generation have made it attractive to some investors, but the margin outlook highlights the pressure from rising component costs.

Services under scrutiny

Apple's services business faces regulatory challenges in several markets, including rules in Europe that require it to allow alternative app stores and payment methods, and legal and regulatory scrutiny in the United States over App Store fees and its search arrangement with Google. Any changes could affect one of Apple's most profitable revenue streams.

Despite these pressures, services revenue continued to grow at 10%, supported by Apple's large installed base of more than two billion active devices worldwide.

What comes next

The December quarter, which includes the holiday shopping season, is the most important of the year for Apple. Investors will watch iPhone demand, the impact of memory costs on margins, Apple's progress in AI and the performance of its services business. Ternus's strategic vision, which he is expected to set out over the coming months, will shape the company's direction as it seeks to sustain growth in an increasingly AI-driven technology industry.