Apple’s first quarterly results under new CEO John Ternus topped Wall Street expectations, with strong iPhone sales helping lift revenue and earnings. Revenue in China and iPad sales came in below forecasts, however. Apple shares were little changed in after-hours trading as investors looked for more detail on product demand, rising costs and supply constraints during Ternus’s earnings call.
Revenue and earnings top forecasts
Apple reported quarterly revenue of $114.5 billion, above analysts’ estimate of $113.46 billion. Earnings per share came in at $2.10, compared with expectations of $2.00. Gross margin was 47.9%.
The iPhone remained the company’s main revenue driver. Sales in the category reached $57.58 billion, ahead of the $56.48 billion forecast. Services revenue was $31.57 billion, broadly in line with market expectations.
China revenue and iPad sales miss estimates
Revenue in China was $17.54 billion, below analysts’ estimate of $18.75 billion. iPad revenue totaled $6.23 billion, short of the $6.83 billion forecast. The two figures were the main weak spots in an otherwise better-than-expected quarter.
Apple shares were roughly flat in after-hours trading following the results. Investors are looking to management’s comments on regional demand and product sales for context on the gaps between actual results and forecasts.
Ternus launches new products after taking over
Ternus succeeded Tim Cook as Apple CEO on September 1. Since taking the role, he has overseen the launch of several major products, including Apple’s first foldable phone, the iPhone Duo; the Apple HomeView smart-home hub; and the first MacBook Pro with a touchscreen.
The iPhone Duo went on sale in October, so its sales are not included in the quarter’s results. Analysts will be watching early order trends for the new device. The quarter did include about two weeks of sales following the launch of the iPhone 18 Pro. Apple has not yet announced the non-Pro models in its latest iPhone lineup; those are expected early next year.
Memory costs and supply constraints remain in focus
Ternus is taking charge as memory costs rise. Memory is a key component in the iPhone, iPad and Mac, while supply-chain constraints have prompted Apple to raise prices on some hardware. Changes in component costs and product availability could affect margins in the hardware business.
Ternus is scheduled to host his first earnings call with analysts at 5 p.m. Eastern time. Investors will be listening for updates on iPhone Duo orders, performance in China, memory costs and supply constraints—factors whose full effects are not yet reflected in the quarter’s results.