Apple shares fell 3% in after-hours trading after the iPhone maker warned that rising memory chip costs would squeeze its profits over Christmas.
The company expects its gross margin, the share of sales left after production costs, to fall to between 45% and 46% in the December quarter.
That compares with 47.9% in the three months to September and 50.1% in the quarter before.
Kevan Parekh, chief financial officer, said the decline was mainly due to higher memory costs linked to the rollout of Apple's new AI-powered Siri.
The warning overshadowed record results in John Ternus's first quarter as chief executive.
Record quarter
Revenue rose 12% to $114.5 billion in the three months to the end of September, ahead of analysts' forecasts of about $113.4 billion.
Earnings came in at $2.10 a share, beating expectations of $1.99.
iPhone sales rose 17% to a September-quarter record of $57.6 billion, helped by early demand for the iPhone 18 Pro.
Services revenue, which includes the App Store and subscriptions, reached an all-time high of $31.6 billion.
Apple made revenue of $479 billion over the full financial year, its best ever.
However, sales in Greater China fell about $1 billion short of analysts' forecasts, and iPad sales also missed.
Margin squeeze
The September margin was flattered by tariff refunds, which added about 1 percentage point.
Without them, it would have fallen short of analysts' forecasts.
Ternus said memory costs had risen compared with the June quarter, partly offset by cheaper stock bought earlier and lower prices for other components.
Apple has raised the price of iPhone 17 models by $100 and increased some MacBook prices to help cover the cost.
Memory chips have become more expensive as AI data centres absorb more of the world's supply.
Outlook
Apple expects revenue to grow by 7% to 10% in the December quarter, ahead of analysts' forecasts of 6.1%.
But it said Services growth would slow to 8% to 9%, citing licensing and currency headwinds.
Operating expenses are expected to rise to between $20.4 billion and $20.8 billion.
Ternus said supply of the iPhone Duo, Apple's first foldable phone, was constrained.
He said the new Siri was now handling 2.5 billion requests a day.
The shares had already fallen 1.8% to $338.32 during Monday's regular session.
