Apple Inc. shares slid more than 6% in after-hours trading on Wednesday after the company reported fiscal third-quarter results that beat top and bottom-line estimates but disappointed investors with weaker-than-expected performances in its critical China and services segments, combined with a cautious supply-constrained forecast for the current period.
The iPhone maker posted revenue of $109.42 billion for the three months ended June 27, a 16.4% increase from a year earlier and above analyst expectations of $108.65 billion. Earnings per share came in at $2.02, boosted by an 11-cent per share benefit from U.S. tariff refunds linked to a Supreme Court ruling. Even without that one-time item, profit exceeded Wall Street's estimates.
iPhone revenue surged 21.7% to $54.25 billion, marking Apple's strongest June-quarter performance for the product and beating forecasts. Mac sales jumped 28.7% to $10.35 billion, driven by the new entry-level MacBook Neo and high-end MacBook Pro. Chief Executive Officer Tim Cook said, “We’re having an incredibly strong product cycle beyond our expectations, and the advanced chipmaking supply chain just fundamentally has less flexibility to meet the high levels of demand.”
However, two high-profile categories fell short. Greater China revenue rose 22.4% to $18.82 billion but missed the roughly $19.6 billion analysts expected. Services revenue—a key growth engine including the App Store, iCloud, and subscriptions—grew 12.1% to $30.74 billion, below the $31.22 billion forecast. Executives noted that currency fluctuations abroad dented the services result.
iPad revenue declined 5.9% to $6.19 billion, also missing estimates, while wearables rose 6.5% to $7.88 billion, slightly above consensus. Gross margin hit an all-time high of 50.1%, though two percentage points were attributable to the tariff refunds.
The stock’s post-earnings decline was exacerbated by Apple’s outlook: the company said it expects sales to grow 9% to 11% this quarter due to supply constraints in advanced chips and memory components. Cook called it a “tough situation” and noted that shortages have already forced price increases on Macs and iPads, with analysts anticipating higher iPhone prices later this year.
Cook also highlighted that Apple now has 1.5 billion paid subscriptions, covering iCloud and App Store offerings, and teased an upcoming AI-powered Siri update expected with new iPhone hardware in September. The call marked Cook’s last earnings appearance before hardware chief John Ternus takes over as CEO on September 1.
