Apple beats forecasts but expects a lower gross margin
· BehindLines newsroom · Updated
Apple published its results for the fourth quarter of fiscal 2026, which ended on September 26, on November 2. The group reports revenue of $114.5 billion, up 12% from a year earlier, and diluted earnings per share of $2.10. It is the first quarter presented under John Ternus, chief executive since 1 September when he succeeded Tim Cook, alongside chief financial officer Kevan Parekh.
Results above forecasts
According to Apple, this is a record for a September quarter. Earnings per share rose 14%. For the whole of fiscal 2026, revenue reached $479 billion, a level the company had never reported. For this quarter, the group says it generated $28 billion in operating cash flow and returned $28 billion to shareholders; the specialist site investingLive specifies that share buybacks accounted for $24 billion. A dividend of $0.27 per share will be paid on November 16.
According to investingLive and CNBC, analysts had expected about $113.4 to $113.5 billion in revenue and $1.99 to $2.00 per share. The iPhone brought in nearly $57.6 billion even though the quarter includes only a little over a week of sales of the iPhone 18 Pro and Pro Max, which went on sale on September 18 according to the site iThinkDifferent. The Mac beat expectations (about $10.8 billion), while the iPad ($6.2 billion) and the wearables, home and accessories category ($8.3 billion) fell short. Greater China, at about $17.5 billion, disappointed against the $18.6 to $18.8 billion hoped for, depending on the source.
The margin, a point of vigilance
The quarter's gross margin stands at 47.9%, including about one point from tariff refunds, according to Apple; those refunds also added 5 cents to earnings per share. For the October-December quarter, management expects a margin of 45% to 46%, against the 47% to 48% guided for the quarter just ended. Kevan Parekh explained, according to investingLive, that memory purchase prices should keep rising and that this forecast also includes spending on Siri's artificial intelligence. John Ternus said that Apple had raised some prices to offset higher component costs. The group is counting on revenue growth of 7% to 10%, and 8% to 9% for services.
What is old and what is new
The pressure on memory prices is not new: at the previous presentation, management was already mentioning it, and iThinkDifferent recalls that former chief executive Tim Cook spoke of a "hundred-year flood" in prices. Another marker: purchase commitments to manufacturers rose by $33 billion between June and September. Six Colors' transcript attributes to Ternus an aim of improving supply, without establishing that prices were locked in.
Why it matters
For consumers, these costs may translate into higher prices for devices. For investors, the question is whether demand for the iPhone 18 will offset the pressure on margins, while China remains a weak spot. The year-end results will help track sales and margins, without isolating the effect of each factor on their own.