Apple achieves record revenue as services business offsets iPhone challenges
What's the story
Apple posted a revenue of $124.3 billion and net profit of $36.3 billion during the December quarter, in comparison to $119.6 billion revenue and $33.9 billion profit in the year-ago quarter.
The company achieved record-breaking results, with all-time highs in total revenue, earnings per share, and services revenue. Revenue increased 4% year-over-year, and earnings per share grew by 10%.
Apple's shares rose some 3% after hours on the back of a forecast suggesting better revenue growth for the March quarter.
Financial performance
Apple surpasses earnings per share and revenue estimates
Apple's earnings per share for the quarter ending December 28, 2025, stood at $2.40, beating the LSEG consensus estimate of $2.35.
However, iPhone revenue missed estimates at $69.14 billion versus a forecasted $71.03 billion, marking Apple's biggest miss in the category since fiscal Q1 2023.
The December quarter marked the first full quarter of iPhone 16 sales, coinciding with the launch of Apple's Apple Intelligence AI suite for the devices.
Revenue breakdown
Apple's services division and other products outperform expectations
Apple's Services division, covering subscriptions, warranties, and licensing deals, generated $26.34 billion against an estimated $26.09 billion. This is 14% higher than the year-ago period.
The company also witnessed strong performance from its Mac and iPad categories with revenues of $8.99 billion and $8.09 billion respectively, both exceeding estimates.
However, the "other products" category saw a slight 2% dip in sales to $11.75 billion YoY.
Profit margin
Apple's gross margin hits record high
Apple also reported a gross margin of 46.9% for its first fiscal quarter, the highest on record and above the estimated 46.5%.
This is higher than the previous record of 46.6% set in March 2024.
For the upcoming March quarter, Apple expects a gross margin between 46.5% and 47.5%.
The company also declared a dividend of $0.25 per share and spent $30 billion on dividends and share repurchases during this period.
Growth indicators
Apple's net income and active devices base increase
Apple's net income for the quarter stood at $36.33 billion, up 7.1% from $33.92 billion in the same period last year.
The company also reported an active base of 2.35 billion active devices, up from the 2.2 billion figure it had provided a year ago.
These numbers highlight continued growth despite challenges in some market segments like iPhone sales and China operations due to channel inventory changes and regional availability of Apple Intelligence software.