Ternus’ first scorecard: Apple’s Q4 results test the new CEO’s playbook

For years, Apple’s product calendar under Tim Cook followed a familiar rhythm. Under new CEO John Ternus, that playbook is already looking different. In his first two months at the helm, Apple has rolled out a string of new products, including its first foldable iPhone, the iPhone Duo, a new smart-home device and touchscreen Macs, while also breaking up the traditional annual iPhone launch with a staggered lineup.

That makes Ternus’ first earnings call more than a routine results update. It comes as Apple enters a quarter in which several of those new products will have their first full impact on sales, even as the company grapples with higher memory costs, supply constraints and questions around the durability of its $1,999 foldable.

Apple reported record September-quarter revenue of $114.5 billion, up 12% year-on-year, while net profit rose 12% to $30.7 billion. Diluted earnings per share increased 14% to $2.10. iPhone revenue climbed 17% to a September-quarter record of $57.6 billion, while Services revenue rose 10% to $31.6 billion. For the full fiscal year, revenue reached a record $478.8 billion, up 15%, with EPS rising 20% to $8.98.

“Today, Apple is proud to report a September quarter revenue record of $114.5 billion, up 12% from a year ago, with iPhone reaching a September quarter record and Services reaching an all-time high, capping off our best fiscal year ever,” Ternus said.

Duo demand exceeds supply, but screen issue stays outside earnings call

Ternus described the initial response to the iPhone Duo as strong, with Apple saying the device remains supply constrained. COO Sabih Khan said Apple was working to increase production but could not predict when supply and demand would come into balance. “We are thrilled with the initial response on the iPhone Duo. iPhone Duo is constrained as of today. The ramp is going well, and we are working hard to get this revolutionary new product into the hands of our customers as quickly as possible,” Khan said. “At this time, it is really hard to predict when supply and demand will be in balance.”

The earnings call did not, however, address reports of some Duo units developing cracks or display problems along the fold. Ternus addressed the issue separately in a Reuters interview, saying a “very small percentage” of Duos had been returned because of the problem and that Apple was replacing affected devices. 

The bigger immediate expectation from the new product range is therefore centred on how much the Duo can add to Apple’s December-quarter revenue, alongside the first full quarter of sales for the iPhone 18 Pro and Pro Max. Apple itself expects December-quarter revenue to grow 7% to 10% year-on-year and said it expects the quarter to set another company revenue record.

The company also expects the new products to help it navigate higher component costs. Ternus said Apple had already raised prices on Mac and iPad in June and on iPhone in September, providing some offset to rising memory costs. “What we’re seeing with memory pricing right now is unprecedented,” Ternus said. “For the December quarter, we expect even higher memory costs.”

He added that Apple expects memory prices to continue increasing beyond the December quarter, making pricing and product mix important factors for the company’s margins.

India records another milestone for Apple

Ternus also highlighted India during his first earnings call, saying Apple had achieved an all-time revenue record in the country during the September quarter. India also recorded a September-quarter record for iPhone upgraders. “We grew strong double digits in the U.S. and greater China to achieve September quarter revenue records. We also set a September quarter record for upgraders worldwide as well as in the U.S., China mainland, and India,” Ternus said.

Apple has also expanded its services presence in India, with Ternus pointing to the recent launch of Apple Pay with Axis Bank. “In India, we recently launched Apple Pay with Axis Bank, bringing the seamless, safe, secure way to pay to one of the biggest markets in the world,” he said. 

China rebounds as Apple leans on new lineup

Greater China revenue rose 21% year-on-year to a quarterly record, with iPhone and Mac driving the growth. Ternus said Apple also recorded its best year for iPhone upgraders in mainland China.

The recovery comes after a period in which Apple faced pressure from local smartphone makers and a more challenging Chinese market. The September quarter’s performance gives the company a stronger base as it enters the first full quarter of sales for its latest products.

AI remains part of the next phase

Beyond hardware, Ternus positioned AI and intelligence as another long-term opportunity for Apple, alongside the company’s installed base of more than 2.5 billion active devices. “We think intelligence is going to be another opportunity as well,” Ternus said, adding that Apple remained confident about its long-term services opportunity. 

The company expects operating expenses of $20.4 billion to $20.8 billion in the December quarter, with spending including the continued development and rollout of its AI capabilities.

Apple shares fall in after-hours trade

Despite the revenue and profit beat, Apple shares fell in after-hours trading as investors digested the company’s margin outlook. Apple expects December-quarter gross margin of 45% to 46%, with higher memory costs expected to account for most of the sequential pressure. Shares fell more than 3% at one point in extended trading before paring some of the decline.