Image Source: TradingView
By Brian Nelson, CFA
On January 29, Apple (AAPL) reported first quarter fiscal 2026 (December quarter end) results that came in better than expectations. The iPhone maker put up all-time records for total company revenue and earnings per share. Its iPhone and Services revenue reached all-time highs as well. Apple’s quarterly revenue of $143.8 billion was up 16% year-over-year, beating consensus expectations of $138.5 billion, while diluted earnings per share was $2.84, up 19% year-over-year, beating the consensus estimate of $2.67 per share.
Management had the following to say about the results:
Today, Apple is proud to report a remarkable, record-breaking quarter, with revenue of $143.8 billion, up 16 percent from a year ago and well above our expectations. iPhone had its best-ever quarter driven by unprecedented demand, with all-time records across every geographic segment, and Services also achieved an all-time revenue record, up 14 percent from a year ago. We are also excited to announce that our installed base now has more than 2.5 billion active devices, which is a testament to incredible customer satisfaction for the very best products and services in the world.
During the December quarter, our record business performance and strong margins led to EPS growth of 19 percent, setting a new all-time EPS record. These exceptionally strong results generated nearly $54 billion in operating cash flow, allowing us to return almost $32 billion to shareholders.
Apple leveraged its strong growth in net sales into $50.9 billion in operating income in the quarter, up from $42.8 billion in the year-ago period. Net income was $42.1 billion in the quarter, up from $36.3 billion in last year’s quarter. Sales increased across all core geographies and advanced 37.9% in Greater China year-over-year. Net sales of the iPhone came in at $85.3 billion in the quarter, up from $69.1 billion in the same period a year ago. Apple ended the quarter with $144.8 billion in cash and marketable securities versus $88.5 billion in term debt. In the quarter, cash generated by operating activities was $53.9 billion, while capital spending was $2.4 billion, resulting in free cash flow of $51.6 billion.
Looking to the March quarter, management expects total company revenue to grow by 13%-16% year-over-year and for Services revenue to grow at a year-over-year rate similar to what it reported in the December quarter. The executive team expects gross margin to be between 48%-49% in the March quarter and operating expenses to be between $18.4-$18.7 billion, a level similar to what it reported in the December quarter. Apple declared a quarterly cash dividend of $0.26 per share and sports a forward estimated dividend yield of 0.4%. We continue to like Apple in the newsletter portfolios.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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