Key Highlights

  • Shares fell 3.77% pre-market to $325.57 from a $338.32 close.
  • Fiscal Q4 Revenue of $114.5 billion rose 12%, with EPS of $2.10.
  • December quarter gross Margin is guided to 45% to 46%, from 47.9%.

Apple (NASDAQ:AAPL) shares fell 3.77% in pre-market trading on Tuesday to $325.57, from a Monday close of $338.32. The decline came after a fiscal fourth quarter beat that was overshadowed by a softer margin outlook.

September Quarter Beats on iPhone and Mac

Revenue was a September quarter record of $114.5 billion, up 12% year over year, against an estimate near $113.4 billion. Diluted EPS was $2.10, versus $1.98 expected. Fiscal year revenue was $478.8 billion, up 15%, with EPS of $8.98, up 20%.

iPhone revenue was $57.6 billion, up 17%, and Mac was $10.8 billion, up 24%. iPad was $6.2 billion, down 10%, and Wearables, Home and Accessories was $8.3 billion, down 8%. Services reached a record $31.6 billion, up 10%.

Memory Pricing Pressures the Margin Guide

Company gross margin was 47.9%, including about a 1 point benefit from Tariff refunds, and products gross margin was 37.2%. Services gross margin was 76%.

December quarter guidance calls for gross margin of 45% to 46%, below a consensus near 46.3%. Management described memory pricing as unprecedented and expects costs to keep rising. Operating expenses are guided to $20.4 billion to $20.8 billion, and Siri AI cloud costs are expected to pressure services cost of sales.

Revenue Guide Tops Estimates Despite Supply Limits

Total revenue is expected to grow 7% to 10% in the December quarter, which would be the best quarter in company history, while Services growth is guided to 8% to 9%. Supply constraints on Mac and iPad driven by memory are expected to continue.

Capital Return and Valuation Data

Apple returned $28 billion to shareholders and ended the quarter with $137 billion in cash and securities against $80 billion in debt. It no longer targets net cash neutral. Manufacturing purchase obligations rose to $33 billion.

At $325.57, the shares sit about 7% below the 52-week high of $351.73 and about 34% above the 52-week low of $243.42. Market Capitalization is about $4.94 trillion, with a forward price-to-earnings ratio of 36.01 and a Dividend Yield of 0.31%.

Component Costs and iPad Demand to Follow

Investors will track memory cost trends, the Mac and iPad supply picture, and Services growth against the 8% to 9% guide.