On July 30, Apple disclosed its latest fiscal quarter, reporting revenue of $109.4 billion for the first time, which the company called its strongest June quarter ever. According to the company's press release, iPhone, Mac, and services all set records for the period.
What truly deserves to be unpacked are the two diverging curves: revenue increased by 16.4% year-over-year, while EPS rose by 28.7%. The former reflects Apple selling more products, while the latter also includes a tariff refund. According to Apple’s earnings press release issued the same day, this refund was separately disclosed in the explanations for gross margin and earnings per share.
How was the trillion-dollar threshold crossed?
The last blue bar in the chart is visibly separated from the previous four June quarters. Apple did not reach this point along a straight upward trajectory. Revenue during the same period of FY2023 even experienced a slight decline before accelerating year over year. According to Apple’s consolidated quarterly financial statements, this quarter’s growth rate was the fastest among these five comparable periods.
According to Apple’s FY2026 Q3 financial report, the significance of $109.4 billion lies not in crossing a round numerical threshold, but in elevating Apple’s quarter most often labeled as a “product lull” to a scale approaching that of its traditional peak season. This scale itself has reshaped people’s intuitive understanding of where the June quarter stands within Apple’s fiscal year.
Revenue growth was not limited to a single market. Apple’s regional breakdown shows double-digit growth across all five regions. Europe contributed the largest absolute increase, while Greater China posted the highest year-over-year growth rate, tying with Europe. Taken together, these regions provided Apple with a broader base of growth this quarter than the Americas alone.
Who pushed the increment onto the iPhone?
According to Apple’s consolidated financial statements for the quarter, the company generated $15.4 billion more in revenue compared to the same period last year. iPhone accounted for nearly two-thirds of this increase, which is represented by the longest blue bar in the chart. This explains why the pace of this quarter’s earnings report has been faster than in previous June quarters.
The services and Mac categories also did not recede into the background. The former contributed the second-highest increase in revenue, followed closely by the latter. iPad was the only category to decline. The bar chart paints a straightforward picture: Apple did not rely on a single product category to drive these numbers this quarter, but the iPhone’s contribution was particularly strong.
This distinction is important. If the services business alone were driving growth, readers would see a company gradually reducing hardware volatility. The current combination is more like two engines accelerating simultaneously: hardware provides a longer runway for growth, while services continue to fill the high-margin segments. According to Apple’s earnings report, the iPhone, Mac, and services businesses all set new records for the June quarter.
Beyond the product table, the regional table adds another layer of insight. According to Apple’s regional breakdown for this quarter, Europe recorded the highest absolute revenue increase, while revenue in Greater China grew by 22.4% year-over-year. Although these market shifts do not alter the fact that the iPhone remains the largest contributor to growth, they mean the answer to “where is growth coming from” is no longer limited to just one region.
The service has made every dollar of revenue more valuable.
Apple’s consolidated financial statements include a detail rarely highlighted in news headlines: they separately list the cost of goods sold for products and services. This allows the gross profit beyond revenue to be broken down and examined individually.
According to Apple’s latest quarterly earnings, services accounted for only 28.1% of the company’s revenue but contributed 42.4% of its gross profit. In simpler terms, for every $100 in revenue Apple generates, services make up less than $30—but they deliver nearly half of the gross profit.
The gross margin for the service business is 75.6%, and for the product business, it is 40.1%. The former acts like a thick base plate that continues to support the entire company even as more devices are sold. This structure also explains why service revenue, despite not generating the largest increase in revenue, remains an essential part of analyzing the financial statements. According to Apple’s consolidated financial statements, these percentages are derived by subtracting the respective cost of sales from the corresponding revenue.
The majority of the additional gross profit this quarter still came from product sales. According to Apple’s consolidated financial statements, product sales contributed 77.2% of the additional gross profit. This aligns with the rebound in iPhone and Mac sales shown in the previous chart—services did not take over from hardware; instead, they allowed hardware volume growth to generate even higher profits.
What did that refund change in the profit curve?
Apple disclosed in its press release that the tariff refunds had a positive impact of approximately 2 percentage points on the gross margin for the quarter and increased EPS by $0.11. This figure is not immediately apparent in the main financial report, yet it is sufficient to alter the interpretation of profit growth.
Approximating the impact disclosed by Apple, the year-over-year growth rate for EPS this quarter is approximately 21.7%. The reported figure differs from this approximation by about 7 percentage points. The light blue bar in the chart is not Apple’s published non-GAAP metric; it simply removes the refund impact already provided in the press release from the reported number.
This split does not erase Apple’s operational performance. After excluding refunds, EPS still grew faster than revenue. It simply separates two things: the growth driven jointly by iPhone, Mac, and services, and the one-time refund that added a slope to the profit curve.
The outline of Apple’s earnings report is now clear: a rebound in hardware is reigniting growth, services are increasing the profitability of every dollar in revenue, and a refund reminder underscores that profit margins must be examined more closely.