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Apple (AAPL -9%) reported strong Q3 (Jun) results that topped expectations, with revenue climbing 16.4% yr/yr to a JunQ record $109.4 bln, near the high end of guidance despite supply constraints and FX headwinds. However, shares are trading sharply lower after management guided Q4 (Sep) revenue growth to just 9-11% yr/yr, a disappointment following last quarter's stronger outlook. The weaker guidance reflects a larger FX headwind and significantly worsening supply constraints, even as underlying demand remains robust. The earnings call also marked Tim Cook's final quarterly call as CEO before John Ternus assumes the role on Sept. 1.

• iPhone powers growth: iPhone revenue jumped 21.7% yr/yr to a JunQ record $54.3 bln, topping the $53.8 bln street estimate despite supply constraints. Management said demand remained exceptionally strong across most global markets, driven by the iPhone 17 family, with double-digit sales growth in the vast majority of regions.
• Mac and Services shine: Mac revenue surged 29% yr/yr to $10.35 bln on strong demand for MacBook Neo and MacBook Pro, while Services revenue increased 12% to a JunQ record $30.7 bln despite meaningful FX headwinds. Apple also set JunQ records across advertising, the App Store, AppleCare, Music, and Video.
• Mixed hardware performance: iPad revenue declined 6% yr/yr to $6.2 bln due to a difficult comparison against last year's product launch, although the installed base reached a record high. Wearables, Home and Accessories revenue increased 6% yr/yr to $7.9 bln, supported by continued strength in wearables and accessories.
• Guidance disappoints: Apple expects Q4 (Sep) revenue growth of 9-11% yr/yr, with results pressured by an approximately 2.5 percentage-point FX headwind and significantly higher supply constraints affecting iPhone, Mac, and iPad. Management emphasized that demand is exceeding expectations, particularly for iPhone and Mac, with CEO Tim Cook attributing the shortages to limited availability of advanced semiconductor nodes rather than weak execution or slowing consumer demand.

Briefing.com Analyst Insight

Apple delivered an impressive JunQ, posting record revenue for iPhone, Mac, and Services while significantly exceeding expectations across its core hardware businesses. However, investors looked past the strong Q3 results and focused squarely on the softer Q4 (Sep) outlook. Management's explanation that supply constraints are demand-driven rather than demand-related offers some reassurance, as Apple simply underestimated the strength of iPhone and Mac demand and is running into capacity limits for advanced chip manufacturing. Still, the expectation that supply constraints will worsen sequentially raises concerns that Apple will be unable to fully capitalize on elevated demand during the important SepQ. What was particularly troubling was Apple saying it expects supply constraints to "increase significantly" sequentially and CEO Tim Cook said Apple will be "scrambling on the supply side" in SepQ.