According to Woofun AI, Apple (AAPL.US) new CEO John Ternus delivered his first earnings report after taking office, setting a new September-quarter revenue record for the company. Although the market's initial reaction was muted, causing the stock to fall during the earnings call, the report clearly outlined a dual-track structure of hardware growth running alongside services revenue, while also exposing that profit margins are facing a double squeeze from rising storage costs and Siri AI-related spending.
Deconstructing the business mix from a micro perspective, Apple's total revenue for the fiscal fourth quarter ended September 26 reached $114.477 billion, up about 12% year over year. This growth was not evenly distributed but was driven primarily by iPhone's strong performance. Based on the consolidated financial statements, iPhone revenue rose by $8.558 billion year over year, and this absolute increase accounted for roughly 70% of the company's net revenue gain. In other words, for every additional $10 in revenue Apple generated, about $7 came directly from iPhone's year-over-year growth. By comparison, although Mac's revenue growth rate for the quarter was higher than iPhone's, its absolute contribution was limited due to a smaller base; meanwhile, iPad as well as Wearables, Home and Accessories posted revenue declines, offsetting some of the overall growth momentum.
It is worth noting that the services business holds a far greater position in the gross profit statement than its share of the revenue statement suggests. Data compiled by Woofun AI shows that services contributed about 27.6% of the company's revenue but about 43.7% of gross profit. However, services revenue grew 9.8% year over year, the slowest since the second quarter of 2023, further decelerating from about 12% in the third fiscal quarter and slightly below market expectations. This disparity stems from the sharply different cost-of-sales structures of the two business types: services gross margin reached 76% this quarter, while product gross margin was only 37%. This means that out of every $100 in gross profit, the services business retained nearly $44, while the hardware business contributed only about $56. Although services' gross profit share is significant, it must be made clear that gross profit is not final net profit; research and development, selling, and administrative expenses are not separately allocated to specific business lines in the chart, so services' gross profit share cannot simply be equated with its contribution to net profit.
The core variable weighing on profit lies in the deterioration of the cost structure and the downward revision of future guidance. Apple explicitly stated in its announcement that its gross margin guidance for the next quarter is 45% to 46%, below the reported figure for this quarter. This downward revision is mainly attributed to rising storage costs and increased Siri AI-related spending. In addition, this quarter's gross margin included a special effect: a tariff refund benefited the company's overall gross margin by about 1 percentage point. This positive impact has already been included in the reported results, and the financial statements did not separately break it out between products and services, so it should not be arbitrarily allocated to specific businesses. Actual results and guidance belong to different periods and are affected by factors such as the tariff refund, so the difference cannot be entirely attributed to any single cost item.
From a structural perspective, the rigid rise in storage costs and the diminishing marginal returns on AI investment are eroding Apple's traditional profit moat, making the high-margin services business a key weight in balancing overall profitability. Divergence in regional markets further reveals the geographic characteristics of growth drivers. Greater China became the fastest-growing reported region with year-over-year growth of about 21%, reaching $17.539 billion in quarterly revenue, about 9 percentage points higher than Apple's overall revenue growth rate. However, this figure was below the roughly $18.75 billion widely expected by the market and fell about 6.8% quarter over quarter from $18.82 billion in the third fiscal quarter. Nevertheless, in absolute dollar terms, the Americas remained Apple's largest reported region, followed by Europe, and Greater China's revenue scale was still smaller than these two mature markets. Japan was the only reported region with a year-over-year revenue decline this quarter, a result heavily affected by exchange-rate changes, so it cannot be directly concluded that local consumer purchase volumes changed. It should be emphasized that Greater China, as Apple's regional reporting scope, covers mainland China, Hong Kong, and Taiwan, and is not a single mainland China market. Regional revenue and product revenue are two different breakdown methods, and the financial statements did not cross-disclose how many iPhones were sold in each region, so the growth data reflects the combined performance of all products and services in that region, rather than the sales heat of a single hardware category.
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