Apple reported fiscal third-quarter revenue of $109.42 billion, beating the $108.65 billion consensus, but shares dropped more than 4% in after-hours trading. Net income rose to $29.79 billion, with diluted earnings per share of $2.02 — above the $1.89 analysts expected. Revenue grew 16% year over year.
Mac and iPhone shine
Mac revenue hit $10.35 billion, far exceeding the $8.74 billion estimate and up 29% from a year ago. iPhone sales reached $54.25 billion, also above the $53.86 billion forecast, climbing 22% year over year. The strong performance in those core categories helped offset weakness elsewhere.
Services and China disappoint
Services revenue totaled $30.74 billion, below the $31.22 billion analysts had expected, though still up 12% from last year. Greater China revenue came in at $18.82 billion, missing the $19.67 billion forecast, but it was up 22% year over year. iPad revenue fell 6% to $6.19 billion, while Wearables, Home and Accessories generated $7.88 billion, matching expectations.
Gross margin gets tariff boost
Gross margin was 50.1%, well above the expected 47.9%. The company credited about 2 percentage points of that to tariff refunds. EPS included a $0.07 favorable impact from those refunds. The higher margin helped offset the services and China shortfalls.
What investors are watching
Incoming CEO John Ternus will take over in September. Investors will look for updates on AI initiatives, supply chain, pricing, and demand heading into the September product cycle. The after-hours selloff suggests the market wanted more from services and China, even as the headline numbers beat.
