According to Woofun AI, Apple (AAPL.US)'s new CEO John Tenus established the company's new September quarterly revenue record in the first report card handed over after taking office. Although stock prices fell during the conference call due to an initial lackluster market reaction, this financial report clearly outlines a two-track structure where hardware growth and service revenue go hand in hand, while also revealing that profit margins are facing a double squeeze from rising storage costs and Siri AI-related expenses.
Deconstructed from a microscopic perspective of business composition, up to the fourth fiscal quarter of September 26, Apple's total revenue reached US$114.477 billion, an increase of about 12% over the previous year. This increase was not evenly distributed, but was driven by the strong performance of iPhones. According to the consolidated financial statements, iPhone revenue increased by 8.558 billion US dollars year-on-year, and this absolute increase accounts for about 70% of the company's net revenue increase. In other words, for every additional $10 in revenue, Apple earns about $7 directly from the year-on-year growth in the iPhone business. In contrast, although the revenue growth rate of the Mac business was higher than that of the iPhone during the quarter, the absolute increase was limited due to its small size base; while revenue from iPad and wearables, home and accessories declined, offsetting some of the overall growth momentum.
Notably, the service business's position in the gross profit table far exceeds its share in the income statement. According to data compiled by Woofun AI, services contributed about 27.6% of the company's revenue, but about 43.7% of gross profit. However, service revenue increased 9.8% year over year, the lowest since the second quarter of 2023. It is a further slowdown from about 12% in the third fiscal quarter, and is also slightly lower than market expectations.
This difference is due to the very different sales cost structures of the two types of businesses: the gross margin for services was as high as 76% for the quarter, while the gross margin for products was only 37%. This means that of every $100 gross profit, the services business left close to $44, while the hardware business only contributed about $56.
Although service gross profit accounts for a significant share, it is important to be clear that gross profit is not the final net profit, and expenses such as R&D, sales, and management are not separately distributed to specific business lines in the chart, so the service gross profit share cannot simply be equated with the net profit contribution ratio.
The core variables that are putting pressure on profits are the deterioration of the cost structure and the reduction in future guidance. Apple clearly stated in the announcement that the gross margin guideline for the next quarter is 45% to 46%, which is lower than the reported value for this quarter. This projected downturn is mainly due to rising storage costs and increased Siri AI-related spending.
In addition, this quarter's gross margin also included a special impact: tariff rebates benefited the company's overall gross margin by about 1 percentage point. This positive impact was included in the published results, and the earnings report did not split this revenue separately between products and services, so it is inappropriate to allocate it to specific businesses on its own. The actual results and guidelines are for different periods, interfered with by factors such as tariff refunds, and the difference cannot be directly attributed to a particular cost.
From a structural point of view, the rigid rise in storage costs and the declining marginal effects of AI investment are eroding Apple's traditional profit moat, making the high-margin service business a key weight for balancing overall profitability.
Regional market differentiation further reveals the regional characteristics of growth drivers. Greater China became the fastest growing region with a year-on-year growth rate of about 21%. Revenue for the quarter reached 17.539 billion US dollars, which is about 9 percentage points higher than Apple's overall revenue growth rate. However, this figure was lower than the market's general forecast of about US$18.75 billion, and fell by about 6.8% month-on-month from US$18.82 billion in the third fiscal quarter.
However, in absolute terms, the US is still the largest reporting region for Apple, followed by Europe, and the revenue scale of Greater China is still smaller than these two mature markets. Japan, on the other hand, is the only region that reported a year-on-year decline in revenue this quarter. This result was greatly affected by changes in exchange rates, and changes in the number of purchases made by local consumers cannot be directly determined. It should be emphasized that the Greater China region, as Apple's regional reporting caliber, covers mainland China, Hong Kong, and Taiwan, and is not a single mainland Chinese market. Regional revenue and product revenue are two different ways to split. Financial reports do not cross-disclose how many iPhones are sold in each region, so the growth data reflects the overall performance of all products and services in the region, rather than the popularity of a single hardware.