Apple Looks to Strong December Quarter

Image Source: TradingView

By Brian Nelson, CFA

On October 30, Apple (AAPL) reported better than expected fiscal fourth quarter results, with both revenue and GAAP earnings per share exceeding the consensus forecast. Quarterly revenue of $102.5 billion was up 8% year-over-year, while adjusted diluted earnings per share of $1.85 was up 13% year-over-year. Management had the following to say about the results:

Today, Apple is very proud to report a September quarter revenue record of $102.5 billion, including a September quarter revenue record for iPhone and an all-time revenue record for Services. In September, we were thrilled to launch our best iPhone lineup ever, including iPhone 17, iPhone 17 Pro and Pro Max, and iPhone Air. In addition, we launched the fantastic AirPods Pro 3 and the all-new Apple Watch lineup. When combined with the recently announced MacBook Pro and iPad Pro with the powerhouse M5 chip, we are excited to be sharing our most extraordinary lineup of products as we head into the holiday season.

Our September quarter results capped off a record fiscal year, with revenue reaching $416 billion, as well as double-digit EPS growth. And thanks to our very high levels of customer satisfaction and loyalty, our installed base of active devices also reached a new all-time high across all product categories and geographic segments.

Apple’s products net sales in the quarter reached $73.7 billion, up from $70 billion in the year-ago quarter, while revenue in its Services business reached $28.8 billion, up from $25 billion in the year-ago quarter. Operating income expanded to $32.4 billion from $29.6 billion in last year’s quarter. Revenue expanded in all geographic regions, with the lone exception of Greater China, where revenue fell modestly. Sales of the iPhone reached $49 billion in the quarter, up from $46.2 billion in last year’s period. Wearables, Home and Accessories was the only category that didn’t grow over last year’s mark. At the end of the quarter, Apple’s cash and marketable securities totaled $132.4 billion, while term debt and commercial paper totaled $98.7 billion.

For the 12 months ended September 27, Apple generated $111.5 billion in cash from operations, while it spent $12.7 billion in property, plant, and equipment, resulting in free cash flow of $98.8 billion. Looking to the December quarter, total company revenue is expected to grow 10%-12% year-over-year, resulting in its best quarter ever. Apple expects iPhone revenue to grow double-digits year-over-year, which would be its best iPhone quarter ever. Services revenue is targeted to grow at a similar year-over-year pace to what it reported in 2025. Gross margin is expected between 47%-48%, which includes an estimated impact of $1.4 billion of tariff-related costs. We continue to like Apple as an idea in the newsletter portfolios.

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