Apple Sets June-Quarter Records on Strong iPhone Sales and Revenue

Apple set June-quarter records across revenue, iPhone, Mac and Services, reporting total revenue of $109.4 billion, up 16% year over year, with earnings per share of $2.02 and net income of $29.8 billion. iPhone revenue of $54.3 billion, up roughly 22%, was the standout line and came in above the roughly $53.9 billion analysts expected. Mac was the larger surprise in percentage terms at $10.35 billion, up 29% against an $8.7 billion consensus.

AAPL shares nonetheless fell roughly 4% in after-hours trading, and the reason is worth separating carefully because two distinct misses have been widely conflated into one. Services revenue of $30.7 billion came in under the roughly $31.2 billion consensus. Separately, Greater China revenue of about $18.8 billion missed the roughly $19.5 billion expected, even though the region grew 22% and delivered a June-quarter record for iPhone. The shortfall was in Services, and it was in China, but they are not the same miss.

Guidance carried a supply note that may matter more than either miss. Apple guided September-quarter revenue growth to 9% to 11% year over year, and flagged that it has less flexibility than normal on supply, tied to availability of advanced-node semiconductors affecting iPhone, Mac and iPad. In a quarter where demand plainly was not the constraint, a supply-side caution is a different kind of risk for investors to price.

This was also Tim Cook's final earnings call as chief executive, with John Ternus due to take over on September 1 and Cook moving to executive chairman. Cook noted double-digit revenue growth in every geographic segment. What to watch next quarter is whether the Services line reaccelerates and whether the flagged component constraints show up as a revenue cap rather than a margin issue.