Apple Posts $114.5bn Revenue as New CEO John Ternus Faces Rising Memory Costs and...

Apple delivered better-than-expected quarterly revenue and earnings in John Ternus' first financial results presentation as chief executive, but weaker sales in China and iPads, alongside rising memory costs, exposed the pressures facing the company as it enters the crucial holiday shopping season.

The company reported revenue of $114.5 billion for its fiscal fourth quarter, beating analysts' average estimate of $113.46 billion. Earnings per share reached $2.10, above the Wall Street forecast of $2. The results were supported by continued demand for iPhones and stronger Mac sales, although performance across other product categories was less consistent.

The earnings report marked Ternus' first as Apple CEO after taking over from Tim Cook on September 1. His appointment has attracted attention because of his reputation as a product-focused executive, with investors watching how he will manage Apple's hardware business, product development, and competitive position in an industry undergoing rapid technological change.

"It's a privilege to be with you for the first time as Apple CEO," Ternus told analysts. "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."

The strong headline figures provide an early indication that Apple's established product ecosystem continues to generate substantial revenue. However, the details reveal a company facing different pressures across its major markets and product lines, at a time when the cost of essential components is rising.

iPhone and Mac Lead Sales

The iPhone remained Apple's largest revenue contributor, generating $57.58 billion, compared with analysts' expectations of $56.48 billion. The performance reinforces the importance of the smartphone business to Apple's financial results, even as the company expands into new hardware categories and services.

Mac revenue also exceeded expectations, reaching $10.79 billion, more than $1 billion above Wall Street's forecast. Services generated $31.57 billion, broadly in line with estimates, providing another source of revenue beyond hardware sales.

The weaker areas included China, where revenue came in at $17.54 billion, below analysts' expectations of $18.75 billion. iPad sales also disappointed, reaching $6.23 billion against an estimated $6.83 billion.

The China shortfall is especially notable because the market remains a major battleground for Apple. The company faces competition from domestic smartphone manufacturers, while demand conditions and consumer preferences in the country can influence its ability to maintain market share. A revenue miss in the region raises questions about the consistency of Apple's performance across one of its most important international markets.

Investing.com senior analyst Jesse Cohen described the result as a concern extending beyond China.

"Greater China came in about $1 billion below forecast; that's not a rounding error, it's a worrying pattern," 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."

The weakness in iPads and other non-iPhone categories matters because Apple has spent years expanding its ecosystem to generate more revenue from devices and services beyond its flagship smartphone. Services has become a significant contributor, but hardware diversification remains important to reducing the company's dependence on iPhone sales.

Apple's gross margin, another closely watched measure of profitability, stood at 47.9%. However, the figure received a boost from tariff refunds, making the underlying cost position less favorable than the headline margin suggests.

Chief Financial Officer Kevan Parekh told analysts that removing tariff refunds from the June and September quarters would leave both company and product gross margins about one percentage point lower sequentially, primarily because of higher memory costs.

Tariff refunds provided temporary support to profitability, while rising component prices are creating a more persistent challenge. Without the refunds, Apple's margins would have faced greater pressure from the cost of manufacturing its devices.

Ternus' Product Expansion and a Rising Cost Challenge

Ternus begins his tenure with an unusually active product cycle. Since taking over from Cook, he has overseen announcements including Apple's first folding smartphone, the iPhone Duo, its first smart home hub, the Apple HomeView, and the company's first touchscreen MacBook Pro.

The timing of those launches limits their contribution to the reported results. The iPhone Duo did not go on sale until October, placing its sales outside the fiscal fourth quarter. The quarter included only about two weeks of sales of the iPhone 18 Pro.

Apple has also yet to announce non-Pro versions of its latest iPhone lineup, which are expected early next year. Their eventual launch could broaden the reach of the new generation of devices, although the company will need to manage demand and production capacity as it expands the lineup.

Ternus acknowledged supply constraints during the earnings call and highlighted the performance of the iPhone and Mac. The more immediate concern, however, is the cost of memory, a critical component used across Apple's smartphones, tablets and computers.

"What we're seeing with memory pricing right now is unprecedented," he told analysts.

The increase in memory prices creates a difficult trade-off for Apple. The company can absorb higher component costs and accept lower margins, raise device prices and risk weakening demand, or seek efficiencies elsewhere in its supply chain. Ternus said price increases across the iPhone and Mac lineup had helped offset rising component expenses, but warned that memory costs were expected to increase further in the holiday quarter.

That timing is crucial because the holiday period is one of Apple's most significant sales windows. Higher prices could support revenue per device, but they could also affect purchasing decisions, particularly in markets where consumers are already facing economic pressure. The company's ability to maintain sales volumes while protecting margins will be closely watched.

Apple did not provide detailed guidance for the holiday quarter, but projected operating expenses of between $20.4 billion and $20.8 billion. The midpoint is above analysts' estimate of $20.37 billion, suggesting that spending will remain elevated as the company pursues product development and other business priorities.

The stock traded roughly flat in after-hours trading following the results, indicating that the revenue and earnings beats were not enough to produce an immediate positive reassessment of the company's outlook.

For Ternus, the first earnings report offers a mixed starting point. Apple's core iPhone business remains strong, Mac sales exceeded expectations, and Services continues to provide a substantial revenue stream. But weakness in China and iPad sales, together with mounting memory costs, show that product innovation alone will not insulate the company from market and supply-chain pressures.

His early challenge will be to turn an ambitious product pipeline into sustained sales growth while protecting profitability.