Apple Inc. — Call Transcript 2026

Good afternoon, welcome to the Apple Q2 fiscal year 2026 earnings conference call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple CEO Tim Cook. John Ternus will be joining after that for a brief set of remarks, and he'll be followed by CFO Kevan Parekh. After that, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures, and legal and regulatory proceedings. For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-Q for the quarter ended March 28th, 2026 to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements which speak only as of the date they are made. I'd now like to turn the call over to Tim for introductory remarks. Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Before we get into the quarter, I wanted to take a moment to talk about the transition we recently announced. I just celebrated my 28th anniversary of being here at Apple, 15 years as CEO. In fact, this will be my 89th earnings call. I'll always be proud of the impact Apple has had on our users' lives, and I can't begin to express how grateful I am for our amazing teams. It's because of them that there is no company like Apple, and I truly believe there never will be. This moment for the transition is the right one for a number of reasons. First, our business has been performing extremely well. The first half of this year was very strong, growing double digits year-over-year. Second, our roadmap is incredible. Most importantly, we have the right leader ready to step into the role. As I have said, there is no 1 on this planet I trust more to lead Apple into the future than John Ternus. John is a brilliant engineer, a deep thinker, a person of remarkable character, and a born leader. I know he will push us to go further than we think is possible in order to deliver the greatest products and services for our users. I have been so proud to call him a colleague and a friend, and I will be even more proud to call him Apple's CEO. Over the coming months, John and I will be working closely together to make sure this transition is perfectly smooth. I very much look forward to stepping into the role of Executive Chairman on September 1st. As I've told John, I will be here to support him in any way he needs and in any way I can. I am incredibly optimistic about Apple's future, and I know we have the right team in place to deliver on the promise of this company. I also want to take just a moment to share my profound gratitude for our shareholders, especially our long-term shareholders, for believing in Apple and for your support over the years. It means a great deal to all of us. With that, I'd like to bring John on the call for a moment to say a few words. John? Thanks, Tim, and thanks to everyone on the call. In my view, Tim is one of the greatest business leaders of all time. Stepping into the role of CEO is an incredible honor, and it means a great deal to me to have Tim's trust and confidence. I want to echo Tim's sentiment about our shareholders, especially those who have been with us for many years. Thank you so much for your confidence in our company. As you know, one of the hallmarks of Tim's tenure has been a deep thoughtfulness, deliberateness, and discipline when it comes to the financial decision-making of the company. I want you to know that is something Kevan and I intend to continue when I transition into the role in September. This is an especially exciting moment for Apple. As Tim mentioned, we have an incredible roadmap ahead. While you're not going to get me to talk about the details of that roadmap, suffice it to say this is the most exciting time in my 25-year career at Apple to be building products and services. There are so many opportunities before us, and I couldn't be more optimistic about what's to come. For now, let me simply say I am deeply grateful to Tim, to the executive team, and to everyone at Apple, and I look forward to all of the important work ahead. With that, let me turn it back over to Tim. Thanks, John. Let me turn to the quarter. Today, Apple is proud to report $111.2 billion in revenue, up 17% from a year ago, and a March quarter record, which was above the high end of our guidance range despite supply constraints. Customer enthusiasm for iPhone has been extraordinary, with revenue growing 22% year-over-year to achieve a March quarter record. Services reached an all-time revenue record, growing 16% from a year ago, while EPS set a March quarter record of $2.01, up 22% year-over-year. We set March quarter revenue records and grew double digits in every geographic segment, including strong double-digit growth in Greater China and the rest of Asia Pacific. We also achieved March quarter revenue records in both developed and emerging markets and saw double-digit growth in nearly every emerging market we track, including India. We recently marked Apple's 50th anniversary with celebrations in our retail stores and with users around the world. It was a special moment for us to reflect on the incredible journey we've shared with our users, to thank everyone who's been a part of it, and to look forward to writing the next chapter in our story of innovation. We have always believed that people who think different can change the world, and we have been proud to build tools and technologies that allow them to do just that. In March, we put an amazing showcase of human creativity and ingenuity in action with updates across iPhone, iPad, and Mac. Through an unforgettable week of innovation, we also unveiled MacBook Neo, giving us an opportunity to bring the power of Mac to more people than ever before. I'll have more to say on that and all the incredible things we delivered for our customers over the last few months. Let's take a closer look at results from across our product line, beginning with iPhone. As I mentioned earlier, iPhone had an excellent quarter with $57 billion in revenue, a March quarter record despite supply constraints. During the quarter, we welcomed iPhone 17e, the newest addition to what is already the strongest iPhone lineup we've ever had. It brings outstanding performance and core iPhone experiences at a remarkable value for everyone from enterprise teams to consumers. Across the lineup, this is the most powerful, capable, and versatile iPhone family we've ever created. That starts with the latest in Apple silicon for iPhone, A19 and A19 Pro, which include neural accelerators in the GPU to deliver a huge boost to AI performance. With incredible performance and battery life and deep integration of Apple Intelligence, iPhone continues to set the standard for what a smartphone can be. Customers are capturing stunning photos and videos with our most advanced camera system ever on iPhone 17 Pro and Pro Max, including an 8x optical quality zoom and the all-new Center Stage front camera, unlocking entirely new ways to frame, create, and share their moments. In fact, during their recent mission, Artemis II astronauts captured some truly otherworldly images of Earth and space using iPhone 17 Pro Max. Meanwhile, iPhone Air users are tapping into the pro-level performance in our slimmest iPhone ever. With iPhone 17, we're seeing a strong response, not only from customers upgrading from previous generations, but also from people choosing iPhone for the very first time. We've been enormously pleased with how the entire lineup has been received. In fact, the iPhone 17 family is now the most popular lineup in our history when looking at the launch through the March quarter. According to IDC, we gained market share during the quarter. Mac revenue was $8.4 billion for the March quarter, up 6% from a year-ago, despite supply constraints driven by higher-than-expected levels of demand. We're delighted with the reception of what is the most advanced Mac lineup in our history. We set March quarter records for upgraders and customers new to Mac. According to IDC, we gained market share in the quarter. From Mac mini to MacBook Pro and everything in between, Mac is the best platform for AI, with Apple silicon delivering exceptional performance, industry-leading efficiency, and the ability to run advanced models locally in ways that simply weren't possible before. It's so exciting to see how strongly users are embracing Mac for these capabilities. There's tremendous enthusiasm for MacBook Neo, which made its debut during the March quarter, opening up an entirely new way to experience Mac at a breakthrough price. We've also further improved MacBook Air, already the world's most popular laptop, with M5, making everyday tasks faster and more responsive than ever. MacBook Pro reaches new heights with M5 Pro and M5 Max, delivering extraordinary performance and dramatically advancing what users can do with AI on a portable system. For desktop users, Studio Display pairs beautifully with Mac, while the all-new Studio Display XDR takes things even further, bringing unmatched image quality and an extraordinarily immersive experience to pro workflows. Turning to iPad, revenue was $6.9 billion, up 8% from a year ago. iPad continues to be a great choice for students, small business owners, artists, and so many others because it empowers entirely new ways to work, learn, create, and connect. It's not just about mobility. It's about versatility, delivering a uniquely flexible experience that adapts to whatever users want to accomplish. Today, our iPad lineup is stronger than ever, led by the arrival of the M4-powered iPad Air. With a remarkable leap in performance, it raises the bar for what users can do on iPad, from advanced creative workflows to powerful productivity and immersive learning. With the addition of our latest Apple silicon, along with the N1 wireless networking chip and C1X modem, users can stay seamlessly connected wherever they are. Across wearables, home, and accessories, revenue for the March quarter came in at $7.9 billion, up 5% from a one year ago. Apple Watch Ultra 3, Apple Watch Series 11, and Apple Watch SE continue to play an essential role in users' lives, going far beyond fitness tracking to deliver meaningful insights and support for their health and well-being. From helping users stay active and reach their fitness goals to delivering powerful, science-backed health insights that can prompt meaningful conversations with care providers, Apple Watch is with them every step of the way. It's tremendously meaningful to see how Apple Watch continues to empower users to better understand their health, make more informed decisions, and in many cases change and even save lives. During the quarter, we introduced customers to a new level of audio experience with AirPods Max 2, delivering stunning sound quality and our most advanced active noise cancellation yet. At the same time, AirPods Pro 3 combine an incredibly immersive listening experience with intelligent features that adapt to how users move, train, and live. Whether it's a call across town or a conversation across continents, AirPods make it effortless to stay connected. AirPods can bridge languages too, thanks to live translation powered by Apple Intelligence. In addition to live translation, Apple Intelligence brings together dozens of powerful capabilities from visual intelligence to cleanup in photos that are seamlessly integrated into the moments that matter most to our users every day. We look forward to bringing a more personalized Siri to users coming this year. What truly sets Apple apart is how Apple Intelligence is woven into the core of our platforms, powered by Apple silicon and designed from the ground up to deliver intelligence that is fast, personal, and private. This is not AI as a standalone feature, but AI as an essential, intuitive part of the experience across our devices. It builds on years of innovation, from the neural engine to advanced on-device processing, enabling capabilities that are not only incredibly powerful, but also respectful of user privacy. Increasingly, that same foundation is drawing developers and researchers to our products as powerful platforms for building and running agentic AI, thanks to the unique combination of performance, efficiency, and on-device capabilities. When you combine this level of integration with our relentless focus on the customer experience, it becomes clear why Apple platforms are the best place to experience AI. Now let's turn to services, which set an all-time revenue record with $31 billion. We saw double-digit growth in both developed and emerging markets and set new all-time revenue records across most of the services categories. There's no better place to find celebrated storytellers than Apple TV. Audiences are applauding the return of shows like Your Friends & Neighbors, Shrinking, and For All Mankind, while discovering new favorites like Widow's Bay. Apple TV has also earned its place among the most decorated names in entertainment, with more than 800 wins and more than 3,400 nominations in the six years since launch. This is a great time for sports fans on Apple TV too. Formula One season kicked off in March, and Apple TV subscribers in the U.S. have one of the best views of the track. The new MLS season is also well underway, and subscribers in more than 100 countries and regions can watch every match with no blackouts. Friday Night Baseball returned for its fifth year on Apple TV with a full season of marquee matchups. In retail, we had a March quarter revenue record and saw very high levels of store traffic throughout the quarter. From New York to Chengdu to Paris, it was wonderful to see stores around the world at the center of Apple's 50th anniversary celebrations. We were also thrilled to open the doors to our sixth store in India. It has been wonderful to see how we've continued to grow in India in recent years, part of our larger efforts to connect with even more customers in emerging markets all over the world. At Apple, we believe powerful innovation and uncompromising quality can go hand in hand with sustainability. Over the last year, we've reached new milestones in the environment, including the use of recycled content in 30% of the materials in all of our products shipped in 2025, the most we've ever had. That includes the use of 100% recycled cobalt in all Apple-designed batteries and 100% recycled rare earth elements in all magnets. We've also achieved our goal of removing plastic from packaging with every Apple product now shipping in fiber-based packaging. All of this is a testament to the outstanding forward-thinking and innovative work of our teams. We're also making great progress in advancing American supply chain innovation. As part of our $600 billion commitment to the U.S., we were pleased to share recently that Mac mini production is coming to America later this year, expanding our factory operations in Houston with a brand-new facility. In March, we were thrilled to welcome four new companies to our American manufacturing program to help manufacture essential materials and components for Apple products sold worldwide. These include sensors that support key iPhone features like camera stabilization and integrated circuits essential for features like crash detection and activity tracking. These efforts build on the progress we've made in the American manufacturing program, including the work we're doing to advance an end-to-end silicon supply chain across the U.S. At TSMC's Arizona facility, for example, Apple is on track to purchase well over 100 million advanced chips. We're accelerating our long-standing support for U.S. innovation, we're also investing in America's workforce. We're looking forward to opening the doors to an all-new advanced manufacturing center in Houston later this year, which will provide hands-on training led by Apple experts and tailor-made for students, supplier employees, and American businesses. Whether around the world or in our own backyard, we're proud of the difference Apple has made to enrich lives and support the communities we serve. Looking ahead, we're delighted to welcome developers back to Apple Park for WWDC 2026. We can't wait to share what we've been working on, from AI advancements to exciting new software and developer tools. It's going to be an incredible week. As always, we remain in relentless pursuit of even more powerful innovations guided by our North Star, our users. As we celebrated 50 years of Apple, we are even more excited and more optimistic about the next 50 years and beyond. With that, I'll turn it over to Kevan. Thanks, Tim. Good afternoon, everyone. Our revenue of $111.2 billion was up 17% year-over-year, a March quarter revenue record. We saw strong performance around the world with March quarter revenue records in every geographic segment. Foreign exchange was about a 2.5 percentage point tailwind to the March quarter growth rate. We also faced supply constraints on iPhone and to a lesser extent on Mac. We believe if you remove the favorable benefit from foreign exchange and add back the unfavorable impact from supply constraints, we would have had a higher growth rate for total company revenue for the quarter. Products revenue was $80.2 billion, up 17% year-over-year, driven by double-digit growth on iPhone, setting a new March quarter record. Our install base of over 2.5 billion active devices has reached another all-time high across all major product categories and geographic segments. Services revenue was $31 billion, up 16% year-over-year. We saw strong performance across the board with double-digit growth in the vast majority of the markets we track. Company gross margin was 49.3%, above the high end of our guidance range and up 110 basis points sequentially. Products gross margin was 38.7%, down 200 basis points sequentially. Services gross margin was 76.7%, up 20 basis points sequentially. Operating expenses landed at $18.9 billion, up 24% year-over-year. This was slightly above the high end of our guidance range due to a one-time expense in SG&A. Net income was $29.6 billion, and diluted earnings per share was $2.01, up 22% year-over-year. Both net income and diluted EPS achieved March quarter records and drove a very strong level of operating cash flow at $28.7 billion. I'm going to provide some more details for each of our revenue categories. iPhone revenue was $57 billion, up 22% year-over-year, driven by the iPhone 17 family. iPhone grew double digits in the majority of markets we track, including the U.S., Latin America, Greater China, Western Europe, India, Japan, and Southeast Asia. The iPhone active install base grew to an all-time high, and we set March quarter record for iPhone upgraders. According to a recent survey from Worldpanel, iPhone was a top-selling model in the U.S., urban China, the U.K., Australia, and Japan. We have been extremely pleased with the positive reception of the iPhone 17 family. In fact, customer satisfaction for the iPhone 17 family in the U.S. was recently measured at 99% by 451 Research. Mac revenue was $8.4 billion, up 6% year-over-year, driven by the strength of the recent product launches, including MacBook Neo. We grew in both developed and emerging markets with double-digit growth in many emerging markets, including India and Indonesia. As Tim mentioned earlier, we had a March quarter record for customers new to the Mac. And this helped drive a new all-time record for the overall Mac install base. In the U.S., customer satisfaction for Mac was recently reported at 97%. iPad revenue was $6.9 billion, up 8% year-over-year, driven by the continued strength of the A16-powered iPad and the M5-powered iPad Pro. The iPad install base reached a new all-time high as iPad continued to reach new customers around the world. During the quarter, over half of the customers who purchased an iPad were new to the product. Many of these customers are in our emerging markets, where we grew iPad revenue by double digits, including in India, Mexico, and Thailand. Based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S. Wearables, home, and accessories revenue was $7.9 billion, up 5% year-over-year, driven by strength in wearables and accessories. We were pleased to see strength in our emerging markets, where we set a new March quarter revenue record. The wearables install base reached a new all-time high, with over half of the customers purchasing an Apple Watch during the quarter being new to the product. In the U.S., customer satisfaction on Apple Watch was measured at 96%. Our services revenue reached an all-time high of $31 billion, up 16% year-over-year. The strong performance was broad-based, with all-time records in both developed and emerging markets. As Tim mentioned, we also set all-time revenue records in most of the services categories. We're optimistic about the future of our services business. With our large install base of over 2.5 billion active devices, we have an incredibly strong foundation for growth opportunities. Both transacting and paid accounts reached new all-time highs in the quarter as we continue to see more customers leveraging our services offerings. We continue to improve the quality and expand the breadth of our services from the expansion of features like Tap to Pay, now available in over 50 markets, to deeper support for enterprise customers. Building on this, we've launched Apple Business, a new all-in-one platform that combines our hardware, software, and enterprise services, enabling companies to efficiently manage their deployments and scale their business. We continue to see more organizations and enterprise choosing Apple's devices for performance and productivity. Marsh, a leading professional services firm, deployed a large-scale refresh of corporate devices to iPhone 17 as part of a commitment to security alongside adopting Mac for internal AI development. With Apple silicon and its powerful unified memory architecture, leading AI developers like Perplexity are choosing Mac as their preferred platform to build enterprise-grade AI assistants that power autonomous agents and boost workplace productivity. Across the Mac lineup, customers are finding the right device for their needs. From MacBook Pro and MacBook Air to our newest edition, MacBook Neo, which delivers an unprecedented combination of quality, value, and industry-leading security that is resonating strongly in enterprise and education. Kansas City Public Schools, for example, is switching their high school students from Windows laptops and Chromebooks to MacBook Neo, completing their transition to an all-Apple district. In India, leading enterprise software provider Freshworks deployed over 5,000 MacBook Pro and MacBook Air to accelerate their AI development. Let's turn to our cash position and capital return program. We ended the quarter with $147 billion in cash and marketable securities. We had $5.8 billion of debt maturities, and commercial paper remained unchanged at $2 billion, resulting in $85 billion in total debt. Therefore, at the end of the quarter, net cash was $62 billion. During the quarter, we returned $15 billion to shareholders. This included $3.8 billion in dividends and equivalents and $11 billion through open market repurchases of 42 million Apple shares. Our repurchase activity at any time can be affected by a number of factors that we take into account. As you're aware, we recently announced a CEO transition. Taking a step back, we plan to continue our capital allocation philosophy of first making all the necessary investments needed to support the business and then returning excess cash to shareholders over time. Net cash neutral has been a valuable framework for our capital structure, and since 2018, we have significantly right-sized our balance sheet and reduced net cash by over $100 billion. As we move ahead, we are no longer providing net cash neutral as a formal target, and we will independently evaluate cash and debt. Capital returns will continue to be important to our overall approach by delivering long-term shareholder value. Accordingly, our board has authorized an additional $100 billion for share repurchases, and we're also raising our dividend by 4% to $0.27 per share of common stock. This cash dividend will be payable on May 14th, 2026 to shareholders of record as of May 11th, 2026. As we move ahead into the June quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to. Importantly, the color we're providing assumes that global tariff rates, policies, and their application remain in effect as of this call. The global macroeconomic outlook does not worsen from today. We expect our June quarter total company revenue to grow by 14%-17% year-over-year, which comprehends our best view of constrained supply. On iPad, keep in mind, we face a difficult compare driven by the launch of the A16-powered iPad in the prior year. We expect services revenue to grow at a year-over-year rate similar to what we reported in the March quarter after removing the favorable year-over-year impact from foreign exchange tailwinds. Keep in mind, during the March quarter, FX was a 2.5 percentage point tailwind to the total company growth rate, and for services, that impact was slightly more favorable. We expect gross margin to be between 47.5% and 48.5%. We expect operating expenses to be between $18.8 billion and $19.1 billion. We expect OINE to be around $250 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17%. With that, Tim and I will take questions. Thank you, Kevan. We ask that you limit yourself to two questions. Operator, may we have the first question, please? Certainly. We'll go ahead and take our first question from Erik Woodring with Morgan Stanley. Please go ahead. Great. Thank you very much for taking my questions, guys. Tim, I'll save the congrats or the au revoir for next quarter. It's been a pleasure working together. I would love, maybe, Tim, if I could ask you just to maybe contextualize the supply constraints you alluded to in your prepared remarks. Meaning, you know, how much did demand outpace supply for iPhone and Mac in the March quarter? Does your June quarter guidance also reflect supply constraints for those segments? Or is that kind of an unconstrained guide as you see it today? A quick follow-up, please. Thank you. Yeah. Hi, Erik. Thanks for your comments. We were constrained during the March quarter. This was primarily on iPhone and to a lesser extent on the Mac. As we talked about in the last call, the constraints were primarily driven by the availability of the advanced nodes our SOCs are produced on. If you look forward to the June quarter, the majority of our supply constraints will be on several Mac models, given the continued high levels of demand that we're seeing. We have less flexibility in the supply chain than we normally would. For Mac, in the June quarter, there's 2 factors that are driving the constraints. One is that on the Mac mini and the Mac Studio, both of these are amazing platforms for AI and agentic tools, and the customer recognition of that is happening faster than what we had predicted. We saw higher than expected demand. The second reason is that the customer response to MacBook Neo has just been off the charts, with higher than expected demand. The March quarter record for customers, we set a March quarter record for customers new to the Mac, partly due to the Neo. We think, looking forward, that the Mac mini and the Mac Studio may take several months to reach supply-demand balance. Hopefully that gives you a view of both Q2 and Q3 on the supply side. All right. Awesome. Thank you very much for that color, Tim. You know, Kevan, I'd love to maybe turn to you and kind of a surprise little announcement there talking about net cash neutral. Still a great path, but we're no longer providing this as a formal target. Could you maybe expand on that a bit? Are we thinking about any different type of capital return policy? It doesn't seem so, but maybe give a little bit more detail when you talk about making investments. Is that organic versus inorganic? Just maybe tease that comment out a little bit more for us would be super helpful. Thank you so much, guys. Erik, thanks for the question. Let me just reiterate what we said, which is really more of a comment on the capital structure. Our goal of net cash neutral has really served us well. It's been a valuable framework for us, you know, and for our capital structure since, you know, 2018. We believe we're at a stage where we're evaluating cash and debt independently is really the right approach for us and allows us to make more optimal economic decisions around how we best utilize our debt and cash portfolios to support the business, you know, based on business factors and market conditions. We also believe we can manage this flexibility while also being very efficient and remaining disciplined. With all that being said, we remain very committed to returning excess cash to shareholders. As we talked about, you know, our investment in the business, I think, as you know, we invest in the business, you know, first and foremost, and then look to, you know, kind of return excess cash to shareholders. I think we have a very good track record of being disciplined. You know, we've returned over $1 trillion to shareholders from the start of the program, over $850 billion of which has been through share repurchases. You know, and the other piece as well that's really important is, you know, as part of that, we also have, you know, increased our buyback authorization by another $100 billion, and that's on top of, you know, the leftover capacity from the prior authorization. You can see, you know, the capital return piece is something, you know, very important to us, and as we talked about in the prepared remarks, important to the overall approach, you know, to delivering long-term shareholder value. Thanks so much, Kevan. Good luck, guys. Thanks, Erik. Thank you. Awesome. Thank you, Erik. Operator, could we get the next question, please? Our next question is from Ben Reitzes with Melius Research. Please go ahead. Yeah. Hey, thanks. I'll ask 2 myself. The first one is, there's just been a lot of talk and it's great to, by the way, speak with you, Tim and John, and Kevan. The first question is around there's been some commentary around an agentic smartphone. By the way, I don't even know what that means, but there's comments that, you know, about AI on the edge and that agents could catalyze smartphones, but also shift the smartphone kind of form factor or maybe not. I was just wondering, with the rise of agents, how you would like us to think about that. Is Does this mean there's new products coming, of a totally new form factor, or does it change the game or anything high level you might wanna say about that and that trend or potential non-trend? Thanks. Hi, Ben, it's Tim. you know, we don't get into our future roadmap. I don't wanna, you know, give too much info there, but I would just say that we're thrilled with how the iPhone is doing, growing 22% in the quarter and followed up from a incredible Q1 and having the strongest cycle that we've ever had in our history from the launch through March quarter. We could not be happier with it. Okay. Well, thanks. I appreciate that. I'm sure we'll hear a lot more. With regard to, I guess the question around constraints and whatnot, Tim, you know, I may push you one more time. Try to do it nicely, though, just given my age. The big concern out there is it's maybe how margins go after the June quarter, given the components and trends and whatnot and all these constraints. Is there some kind of overarching philosophy that you want us to think about? Do you feel, and maybe Kevan wants to weigh in on this, is do you see a lot of variability in the model, or is 47, 48 kind of a range you think you might be able to stay in, or is there just no visibility, you know, beyond June to answer this question? I, you know, I think any comfort level there, as we go throughout the calendar year would be so helpful. Thanks. Yeah. Ben, let me talk about memory specifically, which I think is the root of the question. And I'll go back to December for a moment and just walk you through the chronology. In the December quarter, we really had a minimal impact due to memory, and you can kinda see that in the gross margin results. We said it would be a bit more in the March quarter, and we did see higher memory costs in the March quarter, and they were partially offset by benefits from carry-in inventory that we had. For the June quarter, and what's embedded in the guidance that Kevan went through earlier, we expect significantly higher memory costs. They are also partly offset by the benefit of carry-in inventory. Then where we don't give color beyond June, I can tell you that beyond the June quarter, we believe memory costs will drive an increasing impact on our business. We'll continue to evaluate this, and as we've said before, we'll look at a range of options. Okay. Thanks, Tim. Yeah. Thank you, Ben. Thank you, Ben. Operator, could we have the next question, please? Our next question comes from Michael Ng with Goldman Sachs. Please go ahead. Hey, good afternoon. Thank you for the questions. I have two as well. First, given the success of the MacBook Neo, I was wondering if you could talk a little bit about how it's helped drive penetration with new customer segments, whether that be, you know, education or value or emerging markets. Then, how do you think about opportunities in, you know, under-penetrated markets more broadly, how will your future product roadmap inform that strategy? Thank you. Yeah. Right now we're supply constrained on the MacBook Neo. The response has been. We were very bullish on the product before announcing it. We undercalled the level of enthusiasm that would be with it. It's very much focused on getting the Mac to even more people than we were reaching before. We're very focused on customers new to the Mac and customers that have been holding onto their Mac a very long period of time. We're doing well with both of those. As Kevan alluded to in his comments, we're seeing school systems like the Kansas City Public Schools that are switching from Chromebooks and Windows PCs to the MacBook Neo, and I'm hearing anecdotally more and more of those kind of stories, both happening at the school system level and at the individual consumer level. We could not be happier with how things are going at the moment. Great. Thank you, Tim. For the second question, I wanted to ask about advertising within services. I think Apple introduced new inventory to ads on the App Store earlier this year. Has that new ad inventory on the App Store been a notable contributor to the services growth and outperformance in the quarter? Could you talk more broadly about your ad strategy, given the plans to also introduce ads to Maps this summer. Thank you. Michael Ng, it's Kevan Parekh. Thanks for the question. In advertising, we did see year-over-year growth in our advertising business. As you alluded to, we recently did introduce additional ads, you know, across the App Store search results to provide developers with more ways to drive downloads on platforms, you know, that users trust. And this summer, as you said, in the U.S. and Canada, Apple Maps will feature ads during key search and discovery moments, creating a new way for local businesses to reach customers and explore new places. Importantly, I think, you know, we believe it's possible to help businesses of all sizes grow via advertising while still delivering a great customer experience, while also importantly respecting people's fundamental right to privacy. Thank you, Kevan. Thanks, Mike. Thank you, Mike. Operator, could we get the next question, please? Our next question is from Wamsi Mohan with Bank of America. Please go ahead. Hi, yes. Thank you so much. Tim, you noted higher impact from memory as you look beyond the June quarter. Clearly, you guys have a lot of scale, supply chain efficiencies, relationships from a long time. As you think about product position relative to your competitors, so when you think about product position and pricing relative to competition, do you think in such times of dislocation that Apple would be strategically more focused on share gain or where potentially you don't raise pricing and perhaps lower ends of the portfolio where your competitors are struggling or more focused on profitability? Like, what's the right framework for us to think through as you enter that period? I have a follow-up. Wamsi, we will look at a range of options, with memory costs increasing. I really don't wanna go beyond that at this point. Okay, Tim. As a follow-up here, how's Apple thinking about the broader monetization, maybe following Ben's question here in the agentic AI world? What parts of the stack do you think Apple will be focused on, internally versus maybe leveraging your partners? I mean, we have some early looks into where you are developing relationships. As we think longer term, where will Apple invest more heavily over the next several years? Is this at all related to your net cash comments in terms of perhaps building out more infrastructure as we enter an AI-centric world? Thank you. We are clearly investing more. You can see that in the OpEx numbers. If you click down on those a step deeper and look at the R&D areas separate than SG&A, you'll find that R&D is even accelerating much higher than the company is. We're clearly investing. We're investing in products and services, and we see opportunities in both of those. We could not be more excited about how the future is playing out. I think Wamsi, as we've talked about, you know, building on what Tim said, you know, from the start, we've said we, you know, believe AI is a really important investment area for Apple, and we're gonna be doing that incrementally on top of what we normally invest in our product, you know, roadmap. I think just wanted to reiterate that point as well. Okay. Thanks, Tim. Thanks, Kevan. Mm-hmm. Awesome. Yep. Thank you, Wamsi. Operator, could we get the next question, please? Our next question is from Amit Daryanani with Evercore. Please go ahead. Yep, I have two as well. Good afternoon, everyone. You know, I guess first one, maybe just going back to the iPhone performance, which, you know, for a couple of quarters you folks have had 20% plus growth despite the supply constraint, and I think the guide sort of implies the momentum will continue in June. I'd love for you folks to just maybe double-click and talk about what are the levers that's driving this sort of impressive iPhone growth despite the supply constraints, and then sort of what is the durability of this growth. Yeah, if you look at it's the iPhone 17 family that's driving it. That is, as you point out, is despite the supply constraints that we're experiencing. It's the things that are driving people to the 17 are people love the design, people love the performance, they love the durability, they love the camera, they love Center Stage, and they love that Apple Intelligence is integrated across the platform. From a where we're seeing the growth, it is amazing. We're seeing double-digit growth in the majority of the markets we track, from the U.S. to Latin America, to Greater China, to Western Europe, to India, to Japan, to Southeast Asia. We set a new March quarter record for upgraders as well. You know, what's driving all this is that the customer satisfaction for the iPhone 17 family in the U.S., as an example, is 99%. These numbers are just unheard of. We're thrilled with how things are going. Perfect. Thank you. Tim, I think we have you for 1 more earnings call, but I would really appreciate if you could kind of share a bit about the upcoming transition. You know, you have historically, I think, talked about the advice that Steve gave you when you took over, and I might be paraphrasing this, but it was around, "Don't ask what I would do, just do the right thing." That's really been a big win, I think, for Apple and shareholders over the last 15 years. Would love to understand, what advice are you giving John to help him build on Apple's strengths while shaping up the next chapter for the company? Thank you. Well, I think Steve's advice to me lifted a huge burden. So that advice did well, for me and over the 15 years. For John, I think my advice is that, or what I've told him is that one of the most important decisions he'll make is where to spend his time. I would spend it where the greatest benefit to the company and the users are. Never forget the North Star for the company. You know, we're about making the best products in the world that really enrich other people's lives. If you keep focusing on that and make your decisions around that, it will produce a great business, and we'll be able to build more products and do it all over again. Thank you for the question. Thank you. Thanks, Amit. Operator, could we get the next question, please? Our next question is from David Vogt with UBS. Please go ahead. Great. Thanks, guys, for taking my question. Maybe, Tim, I wanna come back to the supply chain for a second. I don't think I heard you state in your prepared remarks or in response to a question if the iPhone is constrained in the June quarter. Can you walk through kind of how you're thinking about your ability to secure not just SOC, but also memory? Are you thinking about using alternative sources of memory outside of sort of the traditional partners that you have? Just what's kind of driving that confidence that the iPhone isn't constrained given the amount of share it sounds like you're taking in that market? I have a follow-up as well. Yeah. David, the constraint in the March quarter and the June quarter, the primary constraint is the availability of the advanced nodes our SOCs are produced on, not memory. I don't want to predict our ability to for supply and demand to match because if I look at it realistically, I think on the Mac mini and the Mac Studio, I believe it will take several months to reach supply-demand balance. We're not at the point where we're saying this is going to end anytime soon. It's not because of a problem per se, other than we just under called the demand. You know, there are lead time to this, as you well understand, it takes a while to correct that. The primary constraint from a product point of view in the or the majority of it for this quarter, for the June quarter, will be on the Mac. It's Mac mini, Mac Studio, and the MacBook Neo. It's all of those. Great. Yeah. Thank you. Maybe just on services real quick. You know, obviously, you know, real-relatively strong gross margins yet again. Are we getting to a point, given sort of the product mix within services, I know a lot of different offerings are growing double digits, that we're sort of asymptotically getting to a level where, we're seeing, you know, increasingly more challenging to scale that business from a profitability perspective? Or is there still sort of low-hanging fruit in terms of volume leverage in some of the offerings, or maybe lower losses in some different categories that can continue to scale gross margin across the services base? Thanks. Yeah, David, it's Kevan. Thanks for the question. Look, as you know, our services portfolio contains a wide range of businesses that have different, you know, business models and profitability profiles and also are growing at different rates. At any given time, right, the relative performance of those can impact the gross margin. This time in particular, we look at the, you know, Q2 services margin. We talked about the fact that it increased 20 basis points sequentially. That's primarily driven by mix. Again, I think it's hard to speculate, you know, how that evolves over time. You know, we're encouraged by what we're seeing. We do have some services that are improving in profitability as they gain scale. Again, I think we have a wide portfolio that has different characteristics and can grow, you know, at different rates at different times. Overall, we're encouraged by the overall trajectory that we've seen. Great. Thank you, guys. All right. Thank you, David. Operator, could we get the next question, please? Our next question is from Samik Chatterjee with JP Morgan. Please go ahead. Hi, thanks for taking my questions. Tim, for my first question, last quarter you did talk about Apple foundational models and sort of the two-pronged strategy there of the collaboration with Google as well as continuing to internally sort of work on your own models. Hoping you can sort of give us an update in terms of how you're able to balance those two priorities, as well as do you feel like you need to double down, invest more to be able to balance those two priorities side by side? Kind of a follow-up. Yeah, it's a good question. We are investing more. You can see that in the OpEx numbers. As I'd mentioned before, the R&D in particular has scaled rather significantly on a year-over-year basis. The collaboration with Google is going well. We're happy with where things are, and we're happy with the work that we're doing independently as well. Okay, great. My follow-up for Kevan. Kevan, the sequential moderation in the product gross margin this year is relatively muted compared to what you've historically seen, at least over the last couple of years. Is it primarily mix, or what was the, maybe the FX tailwind as well? How would we sort of break it down in terms of what was different this year relative to what we typically see? If you could sort of also clarify what the FX impact on gross margin was for the quarter. Thank you. Sure, Samik. Well, let me start. On products, for Q2, basically products gross margin did decrease by 200 basis points sequentially, driven by, you know, seasonal loss of leverage and higher memory costs, as Tim had alluded. If I zoom out, though, I think it's important just to look at what drove the overall company gross margin performance, and let me just give you a quick kinda rundown of that. If you look at our overall performance, right, our sequential gross margin impact was 110 basis points positively, and that was driven by favorable mix, lower tariff-related costs, and that was partly offset by seasonal loss of leverage and higher memory costs. I did wanna turn it over to Tim, 'cause we do wanna provide some clarity around the lower tariff-related costs, and just make a comment on that as well. Yeah, thanks, Kevan. For the March quarter, the gross margin of 49.3% did include the impact of tariff-related costs. However, tariffs in the March quarter versus the December quarter were lower because we had lower product volume, as you know, sequentially from Q1 to Q2. There was the full quarter benefit from a reduction in the IEEPA tariff rates, as well as the reduced global tariff rate under Section 122. In terms of applying for a refund of tariffs paid, we're following the established processes, and we plan to reinvest any amount we receive back into U.S. innovation and advanced manufacturing. These would be new investments and would be in addition to our prior commitments in the U.S. 1 last point on your FX question. We really didn't see any sequential impact related to foreign exchange as a factor going from Q1 gross margin to Q2. Thank you. Mm. All right. Thank you. Operator, could we get the last question, please? We'll go ahead and take our last question from Aaron Rakers with Wells Fargo. Please go ahead. Yeah, thanks for taking the question, and congrats on the quarter. I wanted to ask about a few of the end markets. I guess particularly, Tim, if you could comment a little bit on what you're seeing specifically in China. I guess from a competitive perspective, are you seeing advantages from supply constraints impacting some of your competitors? Any thoughts on the China market, and I do have a quick follow-up. Yeah. We are thrilled with the performance in Greater China. The first half of the year grew at 33%. In the March quarter, revenue was up 28%. It's a quarterly revenue record for us. The performance is really driven by iPhone, which was also a March quarter record. If you look at the individual products, iPhone was the top-selling model in urban China. The Mac mini was the top-selling desktop in China, and the MacBook Air was the top-selling laptop model. We're really doing well, pretty well across the board there. I was over there in March. The traffic in our stores grew by double digit. We were celebrating the Apple's fiftieth anniversary there, and it was just amazing to be a part of the community there. I'm really happy with how things have gone the first half of this year. Yeah. Maybe I'll stick with a similar theme, kind of the same question on the India market. It seems like that continues to be a focal point on these last several quarterly conference calls. I mean, how are you seeing the market in India evolve around, you know, the base of iPhones and the opportunity of kind of a rising middle class, just the overall opportunity set in that large mobile market? Yeah. I think it's a huge opportunity for us. You know, we've been focused on this for a while. It's the second-largest smartphone market in the world and the third-largest PC market. Despite doing extremely well there for quite some time, we still have a modest share. I think there's that really speaks to the opportunity that we have. There are a lot of people moving into the middle class there, and we've got some great products for them, both currently and coming. If you look at the majority of customers on all of our categories, from the iPhone to the Mac to the iPad to the Watch, are new to that product there. It speaks very well to growing the install base there. Net-net, I'm over the moon excited about India. Thank you. Yep. Thank you, Aaron Rakers. A replay of today's call will be available for 2 weeks on Apple Podcasts, as a webcast on apple.com/investor, and via telephone. The number for the telephone replay is 866-583-1035. Please enter confirmation code 2803309, followed by the pound sign. These replays will be available by approximately 5:00 P.M. Pacific Time today. Members of the press with additional questions can contact Josh Rosenstock at 408-862-1142. Financial analysts can contact me, Suhasini Chandramouli, with additional questions at 408-974-3123. Thanks again for joining us today. Once again, this does conclude today's conference. We do appreciate your participation.

Speaker 11: Good afternoon, welcome to the Apple Q2 fiscal year 2026 earnings conference call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple CEO Tim Cook. John Ternus will be joining after that for a brief set of remarks, and he'll be followed by CFO Kevan Parekh. After that, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook. Good afternoon, welcome to the Apple Q2 fiscal year 2026 earnings conference call. good afternoon welcome to the apple q2 fiscal year 2026 earnings conference call My name is Suhasini Chandramouli, Director of Investor Relations. my name is suhasini chandramouli director of investor relations Today's call is being recorded. today's call is being recorded Speaking first today is Apple CEO Tim Cook. speaking first today is apple ceo tim cook John Ternus will be joining after that for a brief set of remarks, and he'll be followed by CFO Kevan Parekh. john ternus will be joining after that for a brief set of remarks and he'll be followed by cfo kevan parekh After that, we'll open the call to questions from analysts. after that we'll open the call to questions from analysts Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook. please note that some of the information you'll hear during our discussion today will consist of forward-looking statements including without limitation those regarding revenue gross margin operating expenses other income and expense taxes capital allocation and future business outlook These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures, and legal and regulatory proceedings. For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-Q for the quarter ended March 28th, 2026 to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements which speak only as of the date they are made. I'd now like to turn the call over to Tim for introductory remarks. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures, and legal and regulatory proceedings. these statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions tariffs and other measures and legal and regulatory proceedings For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. for more information please refer to the risk factors discussed in apple's most recently filed reports on form 10-q and form 10-k and the form 8-k filed with the sec today along with the associated press release Additional information will also be in our report on Form 10-Q for the quarter ended March 28th, 2026 to be filed tomorrow and in other reports and filings we make with the SEC. additional information will also be in our report on form 10-q for the quarter ended march 28th 2026 to be filed tomorrow and in other reports and filings we make with the sec Apple assumes no obligation to update any forward-looking statements which speak only as of the date they are made. apple assumes no obligation to update any forward-looking statements which speak only as of the date they are made I'd now like to turn the call over to Tim for introductory remarks. i'd now like to turn the call over to tim for introductory remarks

Speaker 12: Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Before we get into the quarter, I wanted to take a moment to talk about the transition we recently announced. I just celebrated my 28th anniversary of being here at Apple, 15 years as CEO. In fact, this will be my 89th earnings call. I'll always be proud of the impact Apple has had on our users' lives, and I can't begin to express how grateful I am for our amazing teams. It's because of them that there is no company like Apple, and I truly believe there never will be. This moment for the transition is the right one for a number of reasons. First, our business has been performing extremely well. The first half of this year was very strong, growing double digits year-over-year. Second, our roadmap is incredible. Thank you, Suhasini. thank you suhasini Good afternoon, everyone, and thanks for joining the call. good afternoon everyone and thanks for joining the call Before we get into the quarter, I wanted to take a moment to talk about the transition we recently announced. before we get into the quarter i wanted to take a moment to talk about the transition we recently announced I just celebrated my 28th anniversary of being here at Apple, 15 years as CEO. i just celebrated my 28th anniversary of being here at apple 15 years as ceo In fact, this will be my 89th earnings call. in fact this will be my 89th earnings call I'll always be proud of the impact Apple has had on our users' lives, and I can't begin to express how grateful I am for our amazing teams. i'll always be proud of the impact apple has had on our users' lives and i can't begin to express how grateful i am for our amazing teams It's because of them that there is no company like Apple, and I truly believe there never will be. it's because of them that there is no company like apple and i truly believe there never will be This moment for the transition is the right one for a number of reasons. this moment for the transition is the right one for a number of reasons First, our business has been performing extremely well. first our business has been performing extremely well The first half of this year was very strong, growing double digits year-over-year. the first half of this year was very strong growing double digits year-over-year Second, our roadmap is incredible. second our roadmap is incredible Most importantly, we have the right leader ready to step into the role. As I have said, there is no 1 on this planet I trust more to lead Apple into the future than John Ternus. John is a brilliant engineer, a deep thinker, a person of remarkable character, and a born leader. I know he will push us to go further than we think is possible in order to deliver the greatest products and services for our users. I have been so proud to call him a colleague and a friend, and I will be even more proud to call him Apple's CEO. Over the coming months, John and I will be working closely together to make sure this transition is perfectly smooth. I very much look forward to stepping into the role of Executive Chairman on September 1st. Most importantly, we have the right leader ready to step into the role. most importantly we have the right leader ready to step into the role As I have said, there is no 1 on this planet I trust more to lead Apple into the future than John Ternus. as i have said there is no 1 on this planet i trust more to lead apple into the future than john ternus John is a brilliant engineer, a deep thinker, a person of remarkable character, and a born leader. john is a brilliant engineer a deep thinker a person of remarkable character and a born leader I know he will push us to go further than we think is possible in order to deliver the greatest products and services for our users. i know he will push us to go further than we think is possible in order to deliver the greatest products and services for our users I have been so proud to call him a colleague and a friend, and I will be even more proud to call him Apple's CEO. i have been so proud to call him a colleague and a friend and i will be even more proud to call him apple's ceo Over the coming months, John and I will be working closely together to make sure this transition is perfectly smooth. over the coming months john and i will be working closely together to make sure this transition is perfectly smooth I very much look forward to stepping into the role of Executive Chairman on September 1st. i very much look forward to stepping into the role of executive chairman on september 1st As I've told John, I will be here to support him in any way he needs and in any way I can. I am incredibly optimistic about Apple's future, and I know we have the right team in place to deliver on the promise of this company. I also want to take just a moment to share my profound gratitude for our shareholders, especially our long-term shareholders, for believing in Apple and for your support over the years. It means a great deal to all of us. With that, I'd like to bring John on the call for a moment to say a few words. John? As I've told John, I will be here to support him in any way he needs and in any way I can. as i've told john i will be here to support him in any way he needs and in any way i can I am incredibly optimistic about Apple's future, and I know we have the right team in place to deliver on the promise of this company. i am incredibly optimistic about apple's future and i know we have the right team in place to deliver on the promise of this company I also want to take just a moment to share my profound gratitude for our shareholders, especially our long-term shareholders, for believing in Apple and for your support over the years. i also want to take just a moment to share my profound gratitude for our shareholders especially our long-term shareholders for believing in apple and for your support over the years It means a great deal to all of us. it means a great deal to all of us With that, I'd like to bring John on the call for a moment to say a few words. with that i'd like to bring john on the call for a moment to say a few words John? john

Speaker 6: Thanks, Tim, and thanks to everyone on the call. In my view, Tim is one of the greatest business leaders of all time. Stepping into the role of CEO is an incredible honor, and it means a great deal to me to have Tim's trust and confidence. I want to echo Tim's sentiment about our shareholders, especially those who have been with us for many years. Thank you so much for your confidence in our company. As you know, one of the hallmarks of Tim's tenure has been a deep thoughtfulness, deliberateness, and discipline when it comes to the financial decision-making of the company. I want you to know that is something Kevan and I intend to continue when I transition into the role in September. This is an especially exciting moment for Apple. As Tim mentioned, we have an incredible roadmap ahead. Thanks, Tim, and thanks to everyone on the call. thanks tim and thanks to everyone on the call In my view, Tim is one of the greatest business leaders of all time. in my view tim is one of the greatest business leaders of all time Stepping into the role of CEO is an incredible honor, and it means a great deal to me to have Tim's trust and confidence. stepping into the role of ceo is an incredible honor and it means a great deal to me to have tim's trust and confidence I want to echo Tim's sentiment about our shareholders, especially those who have been with us for many years. i want to echo tim's sentiment about our shareholders especially those who have been with us for many years Thank you so much for your confidence in our company. thank you so much for your confidence in our company As you know, one of the hallmarks of Tim's tenure has been a deep thoughtfulness, deliberateness, and discipline when it comes to the financial decision-making of the company. as you know one of the hallmarks of tim's tenure has been a deep thoughtfulness deliberateness and discipline when it comes to the financial decision-making of the company I want you to know that is something Kevan and I intend to continue when I transition into the role in September. i want you to know that is something kevan and i intend to continue when i transition into the role in september This is an especially exciting moment for Apple. this is an especially exciting moment for apple As Tim mentioned, we have an incredible roadmap ahead. as tim mentioned we have an incredible roadmap ahead While you're not going to get me to talk about the details of that roadmap, suffice it to say this is the most exciting time in my 25-year career at Apple to be building products and services. There are so many opportunities before us, and I couldn't be more optimistic about what's to come. For now, let me simply say I am deeply grateful to Tim, to the executive team, and to everyone at Apple, and I look forward to all of the important work ahead. With that, let me turn it back over to Tim. While you're not going to get me to talk about the details of that roadmap, suffice it to say this is the most exciting time in my 25-year career at Apple to be building products and services. while you're not going to get me to talk about the details of that roadmap suffice it to say this is the most exciting time in my 25-year career at apple to be building products and services There are so many opportunities before us, and I couldn't be more optimistic about what's to come. there are so many opportunities before us and i couldn't be more optimistic about what's to come For now, let me simply say I am deeply grateful to Tim, to the executive team, and to everyone at Apple, and I look forward to all of the important work ahead. for now let me simply say i am deeply grateful to tim to the executive team and to everyone at apple and i look forward to all of the important work ahead With that, let me turn it back over to Tim. with that let me turn it back over to tim

Speaker 12: Thanks, John. Let me turn to the quarter. Today, Apple is proud to report $111.2 billion in revenue, up 17% from a year ago, and a March quarter record, which was above the high end of our guidance range despite supply constraints. Customer enthusiasm for iPhone has been extraordinary, with revenue growing 22% year-over-year to achieve a March quarter record. Services reached an all-time revenue record, growing 16% from a year ago, while EPS set a March quarter record of $2.01, up 22% year-over-year. We set March quarter revenue records and grew double digits in every geographic segment, including strong double-digit growth in Greater China and the rest of Asia Pacific. Thanks, John. thanks john Let me turn to the quarter. let me turn to the quarter Today, Apple is proud to report $111.2 billion in revenue, up 17% from a year ago, and a March quarter record, which was above the high end of our guidance range despite supply constraints. today apple is proud to report $111.2 billion in revenue up 17% from a year ago and a march quarter record which was above the high end of our guidance range despite supply constraints Customer enthusiasm for iPhone has been extraordinary, with revenue growing 22% year-over-year to achieve a March quarter record. customer enthusiasm for iphone has been extraordinary with revenue growing 22% year-over-year to achieve a march quarter record Services reached an all-time revenue record, growing 16% from a year ago, while EPS set a March quarter record of $2.01, up 22% year-over-year. services reached an all-time revenue record growing 16% from a year ago while eps set a march quarter record of $2.01 up 22% year-over-year We set March quarter revenue records and grew double digits in every geographic segment, including strong double-digit growth in Greater China and the rest of Asia Pacific. we set march quarter revenue records and grew double digits in every geographic segment including strong double-digit growth in greater china and the rest of asia pacific We also achieved March quarter revenue records in both developed and emerging markets and saw double-digit growth in nearly every emerging market we track, including India. We recently marked Apple's 50th anniversary with celebrations in our retail stores and with users around the world. It was a special moment for us to reflect on the incredible journey we've shared with our users, to thank everyone who's been a part of it, and to look forward to writing the next chapter in our story of innovation. We have always believed that people who think different can change the world, and we have been proud to build tools and technologies that allow them to do just that. In March, we put an amazing showcase of human creativity and ingenuity in action with updates across iPhone, iPad, and Mac. We also achieved March quarter revenue records in both developed and emerging markets and saw double-digit growth in nearly every emerging market we track, including India. we also achieved march quarter revenue records in both developed and emerging markets and saw double-digit growth in nearly every emerging market we track including india We recently marked Apple's 50th anniversary with celebrations in our retail stores and with users around the world. we recently marked apple's 50th anniversary with celebrations in our retail stores and with users around the world It was a special moment for us to reflect on the incredible journey we've shared with our users, to thank everyone who's been a part of it, and to look forward to writing the next chapter in our story of innovation. it was a special moment for us to reflect on the incredible journey we've shared with our users to thank everyone who's been a part of it and to look forward to writing the next chapter in our story of innovation We have always believed that people who think different can change the world, and we have been proud to build tools and technologies that allow them to do just that. we have always believed that people who think different can change the world and we have been proud to build tools and technologies that allow them to do just that In March, we put an amazing showcase of human creativity and ingenuity in action with updates across iPhone, iPad, and Mac. in march we put an amazing showcase of human creativity and ingenuity in action with updates across iphone ipad and mac Through an unforgettable week of innovation, we also unveiled MacBook Neo, giving us an opportunity to bring the power of Mac to more people than ever before. I'll have more to say on that and all the incredible things we delivered for our customers over the last few months. Let's take a closer look at results from across our product line, beginning with iPhone. As I mentioned earlier, iPhone had an excellent quarter with $57 billion in revenue, a March quarter record despite supply constraints. During the quarter, we welcomed iPhone 17e, the newest addition to what is already the strongest iPhone lineup we've ever had. It brings outstanding performance and core iPhone experiences at a remarkable value for everyone from enterprise teams to consumers. Across the lineup, this is the most powerful, capable, and versatile iPhone family we've ever created. Through an unforgettable week of innovation, we also unveiled MacBook Neo, giving us an opportunity to bring the power of Mac to more people than ever before. through an unforgettable week of innovation we also unveiled macbook neo giving us an opportunity to bring the power of mac to more people than ever before I'll have more to say on that and all the incredible things we delivered for our customers over the last few months. i'll have more to say on that and all the incredible things we delivered for our customers over the last few months Let's take a closer look at results from across our product line, beginning with iPhone. let's take a closer look at results from across our product line beginning with iphone As I mentioned earlier, iPhone had an excellent quarter with $57 billion in revenue, a March quarter record despite supply constraints. as i mentioned earlier iphone had an excellent quarter with $57 billion in revenue a march quarter record despite supply constraints During the quarter, we welcomed iPhone 17e, the newest addition to what is already the strongest iPhone lineup we've ever had. during the quarter we welcomed iphone 17e the newest addition to what is already the strongest iphone lineup we've ever had It brings outstanding performance and core iPhone experiences at a remarkable value for everyone from enterprise teams to consumers. it brings outstanding performance and core iphone experiences at a remarkable value for everyone from enterprise teams to consumers Across the lineup, this is the most powerful, capable, and versatile iPhone family we've ever created. across the lineup this is the most powerful capable and versatile iphone family we've ever created That starts with the latest in Apple silicon for iPhone, A19 and A19 Pro, which include neural accelerators in the GPU to deliver a huge boost to AI performance. With incredible performance and battery life and deep integration of Apple Intelligence, iPhone continues to set the standard for what a smartphone can be. Customers are capturing stunning photos and videos with our most advanced camera system ever on iPhone 17 Pro and Pro Max, including an 8x optical quality zoom and the all-new Center Stage front camera, unlocking entirely new ways to frame, create, and share their moments. In fact, during their recent mission, Artemis II astronauts captured some truly otherworldly images of Earth and space using iPhone 17 Pro Max. Meanwhile, iPhone Air users are tapping into the pro-level performance in our slimmest iPhone ever. That starts with the latest in Apple silicon for iPhone, A19 and A19 Pro, which include neural accelerators in the GPU to deliver a huge boost to AI performance. that starts with the latest in apple silicon for iphone a19 and a19 pro which include neural accelerators in the gpu to deliver a huge boost to ai performance With incredible performance and battery life and deep integration of Apple Intelligence, iPhone continues to set the standard for what a smartphone can be. with incredible performance and battery life and deep integration of apple intelligence iphone continues to set the standard for what a smartphone can be Customers are capturing stunning photos and videos with our most advanced camera system ever on iPhone 17 Pro and Pro Max, including an 8x optical quality zoom and the all-new Center Stage front camera, unlocking entirely new ways to frame, create, and share their moments. customers are capturing stunning photos and videos with our most advanced camera system ever on iphone 17 pro and pro max including an 8x optical quality zoom and the all-new center stage front camera unlocking entirely new ways to frame create and share their moments In fact, during their recent mission, Artemis II astronauts captured some truly otherworldly images of Earth and space using iPhone 17 Pro Max. in fact during their recent mission artemis ii astronauts captured some truly otherworldly images of earth and space using iphone 17 pro max Meanwhile, iPhone Air users are tapping into the pro-level performance in our slimmest iPhone ever. meanwhile iphone air users are tapping into the pro-level performance in our slimmest iphone ever With iPhone 17, we're seeing a strong response, not only from customers upgrading from previous generations, but also from people choosing iPhone for the very first time. We've been enormously pleased with how the entire lineup has been received. In fact, the iPhone 17 family is now the most popular lineup in our history when looking at the launch through the March quarter. According to IDC, we gained market share during the quarter. Mac revenue was $8.4 billion for the March quarter, up 6% from a year-ago, despite supply constraints driven by higher-than-expected levels of demand. We're delighted with the reception of what is the most advanced Mac lineup in our history. We set March quarter records for upgraders and customers new to Mac. According to IDC, we gained market share in the quarter. With iPhone 17, we're seeing a strong response, not only from customers upgrading from previous generations, but also from people choosing iPhone for the very first time. with iphone 17 we're seeing a strong response not only from customers upgrading from previous generations but also from people choosing iphone for the very first time We've been enormously pleased with how the entire lineup has been received. we've been enormously pleased with how the entire lineup has been received In fact, the iPhone 17 family is now the most popular lineup in our history when looking at the launch through the March quarter. in fact the iphone 17 family is now the most popular lineup in our history when looking at the launch through the march quarter According to IDC, we gained market share during the quarter. according to idc we gained market share during the quarter Mac revenue was $8.4 billion for the March quarter, up 6% from a year-ago, despite supply constraints driven by higher-than-expected levels of demand. mac revenue was $8.4 billion for the march quarter up 6% from a year-ago despite supply constraints driven by higher-than-expected levels of demand We're delighted with the reception of what is the most advanced Mac lineup in our history. we're delighted with the reception of what is the most advanced mac lineup in our history We set March quarter records for upgraders and customers new to Mac. we set march quarter records for upgraders and customers new to mac According to IDC, we gained market share in the quarter. according to idc we gained market share in the quarter From Mac mini to MacBook Pro and everything in between, Mac is the best platform for AI, with Apple silicon delivering exceptional performance, industry-leading efficiency, and the ability to run advanced models locally in ways that simply weren't possible before. It's so exciting to see how strongly users are embracing Mac for these capabilities. There's tremendous enthusiasm for MacBook Neo, which made its debut during the March quarter, opening up an entirely new way to experience Mac at a breakthrough price. We've also further improved MacBook Air, already the world's most popular laptop, with M5, making everyday tasks faster and more responsive than ever. MacBook Pro reaches new heights with M5 Pro and M5 Max, delivering extraordinary performance and dramatically advancing what users can do with AI on a portable system. From Mac mini to MacBook Pro and everything in between, Mac is the best platform for AI, with Apple silicon delivering exceptional performance, industry-leading efficiency, and the ability to run advanced models locally in ways that simply weren't possible before. from mac mini to macbook pro and everything in between mac is the best platform for ai with apple silicon delivering exceptional performance industry-leading efficiency and the ability to run advanced models locally in ways that simply weren't possible before It's so exciting to see how strongly users are embracing Mac for these capabilities. it's so exciting to see how strongly users are embracing mac for these capabilities There's tremendous enthusiasm for MacBook Neo, which made its debut during the March quarter, opening up an entirely new way to experience Mac at a breakthrough price. there's tremendous enthusiasm for macbook neo which made its debut during the march quarter opening up an entirely new way to experience mac at a breakthrough price We've also further improved MacBook Air, already the world's most popular laptop, with M5, making everyday tasks faster and more responsive than ever. we've also further improved macbook air already the world's most popular laptop with m5 making everyday tasks faster and more responsive than ever MacBook Pro reaches new heights with M5 Pro and M5 Max, delivering extraordinary performance and dramatically advancing what users can do with AI on a portable system. macbook pro reaches new heights with m5 pro and m5 max delivering extraordinary performance and dramatically advancing what users can do with ai on a portable system For desktop users, Studio Display pairs beautifully with Mac, while the all-new Studio Display XDR takes things even further, bringing unmatched image quality and an extraordinarily immersive experience to pro workflows. Turning to iPad, revenue was $6.9 billion, up 8% from a year ago. iPad continues to be a great choice for students, small business owners, artists, and so many others because it empowers entirely new ways to work, learn, create, and connect. It's not just about mobility. It's about versatility, delivering a uniquely flexible experience that adapts to whatever users want to accomplish. Today, our iPad lineup is stronger than ever, led by the arrival of the M4-powered iPad Air. With a remarkable leap in performance, it raises the bar for what users can do on iPad, from advanced creative workflows to powerful productivity and immersive learning. For desktop users, Studio Display pairs beautifully with Mac, while the all-new Studio Display XDR takes things even further, bringing unmatched image quality and an extraordinarily immersive experience to pro workflows. for desktop users studio display pairs beautifully with mac while the all-new studio display xdr takes things even further bringing unmatched image quality and an extraordinarily immersive experience to pro workflows Turning to iPad, revenue was $6.9 billion, up 8% from a year ago. iPad continues to be a great choice for students, small business owners, artists, and so many others because it empowers entirely new ways to work, learn, create, and connect. turning to ipad revenue was $6.9 billion up 8% from a year ago ipad continues to be a great choice for students small business owners artists and so many others because it empowers entirely new ways to work learn create and connect It's not just about mobility. it's not just about mobility It's about versatility, delivering a uniquely flexible experience that adapts to whatever users want to accomplish. Today, our iPad lineup is stronger than ever, led by the arrival of the M4-powered iPad Air. it's about versatility delivering a uniquely flexible experience that adapts to whatever users want to accomplish. today our ipad lineup is stronger than ever led by the arrival of the m4-powered ipad air With a remarkable leap in performance, it raises the bar for what users can do on iPad, from advanced creative workflows to powerful productivity and immersive learning. with a remarkable leap in performance it raises the bar for what users can do on ipad from advanced creative workflows to powerful productivity and immersive learning With the addition of our latest Apple silicon, along with the N1 wireless networking chip and C1X modem, users can stay seamlessly connected wherever they are. Across wearables, home, and accessories, revenue for the March quarter came in at $7.9 billion, up 5% from a one year ago. Apple Watch Ultra 3, Apple Watch Series 11, and Apple Watch SE continue to play an essential role in users' lives, going far beyond fitness tracking to deliver meaningful insights and support for their health and well-being. From helping users stay active and reach their fitness goals to delivering powerful, science-backed health insights that can prompt meaningful conversations with care providers, Apple Watch is with them every step of the way. It's tremendously meaningful to see how Apple Watch continues to empower users to better understand their health, make more informed decisions, and in many cases change and even save lives. With the addition of our latest Apple silicon, along with the N1 wireless networking chip and C1X modem, users can stay seamlessly connected wherever they are. with the addition of our latest apple silicon along with the n1 wireless networking chip and c1x modem users can stay seamlessly connected wherever they are Across wearables, home, and accessories, revenue for the March quarter came in at $7.9 billion, up 5% from a one year ago. across wearables home and accessories revenue for the march quarter came in at $7.9 billion up 5% from a one year ago Apple Watch Ultra 3, Apple Watch Series 11, and Apple Watch SE continue to play an essential role in users' lives, going far beyond fitness tracking to deliver meaningful insights and support for their health and well-being. apple watch ultra 3 apple watch series 11 and apple watch se continue to play an essential role in users' lives going far beyond fitness tracking to deliver meaningful insights and support for their health and well-being From helping users stay active and reach their fitness goals to delivering powerful, science-backed health insights that can prompt meaningful conversations with care providers, Apple Watch is with them every step of the way. from helping users stay active and reach their fitness goals to delivering powerful science-backed health insights that can prompt meaningful conversations with care providers apple watch is with them every step of the way It's tremendously meaningful to see how Apple Watch continues to empower users to better understand their health, make more informed decisions, and in many cases change and even save lives. it's tremendously meaningful to see how apple watch continues to empower users to better understand their health make more informed decisions and in many cases change and even save lives During the quarter, we introduced customers to a new level of audio experience with AirPods Max 2, delivering stunning sound quality and our most advanced active noise cancellation yet. At the same time, AirPods Pro 3 combine an incredibly immersive listening experience with intelligent features that adapt to how users move, train, and live. Whether it's a call across town or a conversation across continents, AirPods make it effortless to stay connected. AirPods can bridge languages too, thanks to live translation powered by Apple Intelligence. In addition to live translation, Apple Intelligence brings together dozens of powerful capabilities from visual intelligence to cleanup in photos that are seamlessly integrated into the moments that matter most to our users every day. We look forward to bringing a more personalized Siri to users coming this year. During the quarter, we introduced customers to a new level of audio experience with AirPods Max 2, delivering stunning sound quality and our most advanced active noise cancellation yet. during the quarter we introduced customers to a new level of audio experience with airpods max 2 delivering stunning sound quality and our most advanced active noise cancellation yet At the same time, AirPods Pro 3 combine an incredibly immersive listening experience with intelligent features that adapt to how users move, train, and live. at the same time airpods pro 3 combine an incredibly immersive listening experience with intelligent features that adapt to how users move train and live Whether it's a call across town or a conversation across continents, AirPods make it effortless to stay connected. whether it's a call across town or a conversation across continents airpods make it effortless to stay connected AirPods can bridge languages too, thanks to live translation powered by Apple Intelligence. airpods can bridge languages too thanks to live translation powered by apple intelligence In addition to live translation, Apple Intelligence brings together dozens of powerful capabilities from visual intelligence to cleanup in photos that are seamlessly integrated into the moments that matter most to our users every day. in addition to live translation apple intelligence brings together dozens of powerful capabilities from visual intelligence to cleanup in photos that are seamlessly integrated into the moments that matter most to our users every day We look forward to bringing a more personalized Siri to users coming this year. we look forward to bringing a more personalized siri to users coming this year What truly sets Apple apart is how Apple Intelligence is woven into the core of our platforms, powered by Apple silicon and designed from the ground up to deliver intelligence that is fast, personal, and private. This is not AI as a standalone feature, but AI as an essential, intuitive part of the experience across our devices. It builds on years of innovation, from the neural engine to advanced on-device processing, enabling capabilities that are not only incredibly powerful, but also respectful of user privacy. Increasingly, that same foundation is drawing developers and researchers to our products as powerful platforms for building and running agentic AI, thanks to the unique combination of performance, efficiency, and on-device capabilities. When you combine this level of integration with our relentless focus on the customer experience, it becomes clear why Apple platforms are the best place to experience AI. What truly sets Apple apart is how Apple Intelligence is woven into the core of our platforms, powered by Apple silicon and designed from the ground up to deliver intelligence that is fast, personal, and private. what truly sets apple apart is how apple intelligence is woven into the core of our platforms powered by apple silicon and designed from the ground up to deliver intelligence that is fast personal and private This is not AI as a standalone feature, but AI as an essential, intuitive part of the experience across our devices. this is not ai as a standalone feature but ai as an essential intuitive part of the experience across our devices It builds on years of innovation, from the neural engine to advanced on-device processing, enabling capabilities that are not only incredibly powerful, but also respectful of user privacy. it builds on years of innovation from the neural engine to advanced on-device processing enabling capabilities that are not only incredibly powerful but also respectful of user privacy Increasingly, that same foundation is drawing developers and researchers to our products as powerful platforms for building and running agentic AI, thanks to the unique combination of performance, efficiency, and on-device capabilities. increasingly that same foundation is drawing developers and researchers to our products as powerful platforms for building and running agentic ai thanks to the unique combination of performance efficiency and on-device capabilities When you combine this level of integration with our relentless focus on the customer experience, it becomes clear why Apple platforms are the best place to experience AI. when you combine this level of integration with our relentless focus on the customer experience it becomes clear why apple platforms are the best place to experience ai Now let's turn to services, which set an all-time revenue record with $31 billion. We saw double-digit growth in both developed and emerging markets and set new all-time revenue records across most of the services categories. There's no better place to find celebrated storytellers than Apple TV. Audiences are applauding the return of shows like Your Friends & Neighbors, Shrinking, and For All Mankind, while discovering new favorites like Widow's Bay. Apple TV has also earned its place among the most decorated names in entertainment, with more than 800 wins and more than 3,400 nominations in the six years since launch. This is a great time for sports fans on Apple TV too. Formula One season kicked off in March, and Apple TV subscribers in the U.S. have one of the best views of the track. Now let's turn to services, which set an all-time revenue record with $31 billion. now let's turn to services which set an all-time revenue record with $31 billion We saw double-digit growth in both developed and emerging markets and set new all-time revenue records across most of the services categories. we saw double-digit growth in both developed and emerging markets and set new all-time revenue records across most of the services categories There's no better place to find celebrated storytellers than Apple TV. there's no better place to find celebrated storytellers than apple tv Audiences are applauding the return of shows like Your Friends & Neighbors, Shrinking, and For All Mankind, while discovering new favorites like Widow's Bay. audiences are applauding the return of shows like your friends & neighbors shrinking and for all mankind while discovering new favorites like widow's bay Apple TV has also earned its place among the most decorated names in entertainment, with more than 800 wins and more than 3,400 nominations in the six years since launch. apple tv has also earned its place among the most decorated names in entertainment with more than 800 wins and more than 3,400 nominations in the six years since launch This is a great time for sports fans on Apple TV too. this is a great time for sports fans on apple tv too Formula One season kicked off in March, and Apple TV subscribers in the U.S. have one of the best views of the track. formula one season kicked off in march and apple tv subscribers in the u.s have one of the best views of the track The new MLS season is also well underway, and subscribers in more than 100 countries and regions can watch every match with no blackouts. Friday Night Baseball returned for its fifth year on Apple TV with a full season of marquee matchups. In retail, we had a March quarter revenue record and saw very high levels of store traffic throughout the quarter. From New York to Chengdu to Paris, it was wonderful to see stores around the world at the center of Apple's 50th anniversary celebrations. We were also thrilled to open the doors to our sixth store in India. It has been wonderful to see how we've continued to grow in India in recent years, part of our larger efforts to connect with even more customers in emerging markets all over the world. The new MLS season is also well underway, and subscribers in more than 100 countries and regions can watch every match with no blackouts. the new mls season is also well underway and subscribers in more than 100 countries and regions can watch every match with no blackouts Friday Night Baseball returned for its fifth year on Apple TV with a full season of marquee matchups. friday night baseball returned for its fifth year on apple tv with a full season of marquee matchups In retail, we had a March quarter revenue record and saw very high levels of store traffic throughout the quarter. in retail we had a march quarter revenue record and saw very high levels of store traffic throughout the quarter From New York to Chengdu to Paris, it was wonderful to see stores around the world at the center of Apple's 50th anniversary celebrations. from new york to chengdu to paris it was wonderful to see stores around the world at the center of apple's 50th anniversary celebrations We were also thrilled to open the doors to our sixth store in India. we were also thrilled to open the doors to our sixth store in india It has been wonderful to see how we've continued to grow in India in recent years, part of our larger efforts to connect with even more customers in emerging markets all over the world. it has been wonderful to see how we've continued to grow in india in recent years part of our larger efforts to connect with even more customers in emerging markets all over the world At Apple, we believe powerful innovation and uncompromising quality can go hand in hand with sustainability. Over the last year, we've reached new milestones in the environment, including the use of recycled content in 30% of the materials in all of our products shipped in 2025, the most we've ever had. That includes the use of 100% recycled cobalt in all Apple-designed batteries and 100% recycled rare earth elements in all magnets. We've also achieved our goal of removing plastic from packaging with every Apple product now shipping in fiber-based packaging. All of this is a testament to the outstanding forward-thinking and innovative work of our teams. We're also making great progress in advancing American supply chain innovation. At Apple, we believe powerful innovation and uncompromising quality can go hand in hand with sustainability. at apple we believe powerful innovation and uncompromising quality can go hand in hand with sustainability Over the last year, we've reached new milestones in the environment, including the use of recycled content in 30% of the materials in all of our products shipped in 2025, the most we've ever had. over the last year we've reached new milestones in the environment including the use of recycled content in 30% of the materials in all of our products shipped in 2025 the most we've ever had That includes the use of 100% recycled cobalt in all Apple-designed batteries and 100% recycled rare earth elements in all magnets. We've also achieved our goal of removing plastic from packaging with every Apple product now shipping in fiber-based packaging. that includes the use of 100% recycled cobalt in all apple-designed batteries and 100% recycled rare earth elements in all magnets. we've also achieved our goal of removing plastic from packaging with every apple product now shipping in fiber-based packaging All of this is a testament to the outstanding forward-thinking and innovative work of our teams. all of this is a testament to the outstanding forward-thinking and innovative work of our teams We're also making great progress in advancing American supply chain innovation. we're also making great progress in advancing american supply chain innovation As part of our $600 billion commitment to the U.S., we were pleased to share recently that Mac mini production is coming to America later this year, expanding our factory operations in Houston with a brand-new facility. In March, we were thrilled to welcome four new companies to our American manufacturing program to help manufacture essential materials and components for Apple products sold worldwide. These include sensors that support key iPhone features like camera stabilization and integrated circuits essential for features like crash detection and activity tracking. These efforts build on the progress we've made in the American manufacturing program, including the work we're doing to advance an end-to-end silicon supply chain across the U.S. At TSMC's Arizona facility, for example, Apple is on track to purchase well over 100 million advanced chips. As part of our $600 billion commitment to the U.S., we were pleased to share recently that Mac mini production is coming to America later this year, expanding our factory operations in Houston with a brand-new facility. as part of our $600 billion commitment to the u.s we were pleased to share recently that mac mini production is coming to america later this year expanding our factory operations in houston with a brand-new facility In March, we were thrilled to welcome four new companies to our American manufacturing program to help manufacture essential materials and components for Apple products sold worldwide. in march we were thrilled to welcome four new companies to our american manufacturing program to help manufacture essential materials and components for apple products sold worldwide These include sensors that support key iPhone features like camera stabilization and integrated circuits essential for features like crash detection and activity tracking. these include sensors that support key iphone features like camera stabilization and integrated circuits essential for features like crash detection and activity tracking These efforts build on the progress we've made in the American manufacturing program, including the work we're doing to advance an end-to-end silicon supply chain across the U.S. these efforts build on the progress we've made in the american manufacturing program including the work we're doing to advance an end-to-end silicon supply chain across the u.s At TSMC's Arizona facility, for example, Apple is on track to purchase well over 100 million advanced chips. at tsmc's arizona facility for example apple is on track to purchase well over 100 million advanced chips We're accelerating our long-standing support for U.S. innovation, we're also investing in America's workforce. We're looking forward to opening the doors to an all-new advanced manufacturing center in Houston later this year, which will provide hands-on training led by Apple experts and tailor-made for students, supplier employees, and American businesses. Whether around the world or in our own backyard, we're proud of the difference Apple has made to enrich lives and support the communities we serve. Looking ahead, we're delighted to welcome developers back to Apple Park for WWDC 2026. We can't wait to share what we've been working on, from AI advancements to exciting new software and developer tools. It's going to be an incredible week. As always, we remain in relentless pursuit of even more powerful innovations guided by our North Star, our users. We're accelerating our long-standing support for U.S. innovation, we're also investing in America's workforce. we're accelerating our long-standing support for u.s innovation we're also investing in america's workforce We're looking forward to opening the doors to an all-new advanced manufacturing center in Houston later this year, which will provide hands-on training led by Apple experts and tailor-made for students, supplier employees, and American businesses. we're looking forward to opening the doors to an all-new advanced manufacturing center in houston later this year which will provide hands-on training led by apple experts and tailor-made for students supplier employees and american businesses Whether around the world or in our own backyard, we're proud of the difference Apple has made to enrich lives and support the communities we serve. whether around the world or in our own backyard we're proud of the difference apple has made to enrich lives and support the communities we serve Looking ahead, we're delighted to welcome developers back to Apple Park for WWDC 2026. looking ahead we're delighted to welcome developers back to apple park for wwdc 2026 We can't wait to share what we've been working on, from AI advancements to exciting new software and developer tools. we can't wait to share what we've been working on from ai advancements to exciting new software and developer tools It's going to be an incredible week. it's going to be an incredible week As always, we remain in relentless pursuit of even more powerful innovations guided by our North Star, our users. as always we remain in relentless pursuit of even more powerful innovations guided by our north star our users As we celebrated 50 years of Apple, we are even more excited and more optimistic about the next 50 years and beyond. With that, I'll turn it over to Kevan. As we celebrated 50 years of Apple, we are even more excited and more optimistic about the next 50 years and beyond. as we celebrated 50 years of apple we are even more excited and more optimistic about the next 50 years and beyond With that, I'll turn it over to Kevan. with that i'll turn it over to kevan

Speaker 7: Thanks, Tim. Good afternoon, everyone. Our revenue of $111.2 billion was up 17% year-over-year, a March quarter revenue record. We saw strong performance around the world with March quarter revenue records in every geographic segment. Foreign exchange was about a 2.5 percentage point tailwind to the March quarter growth rate. We also faced supply constraints on iPhone and to a lesser extent on Mac. We believe if you remove the favorable benefit from foreign exchange and add back the unfavorable impact from supply constraints, we would have had a higher growth rate for total company revenue for the quarter. Products revenue was $80.2 billion, up 17% year-over-year, driven by double-digit growth on iPhone, setting a new March quarter record. Thanks, Tim. thanks tim Good afternoon, everyone. good afternoon everyone Our revenue of $111.2 billion was up 17% year-over-year, a March quarter revenue record. our revenue of $111.2 billion was up 17% year-over-year a march quarter revenue record We saw strong performance around the world with March quarter revenue records in every geographic segment. we saw strong performance around the world with march quarter revenue records in every geographic segment Foreign exchange was about a 2.5 percentage point tailwind to the March quarter growth rate. foreign exchange was about a 2.5 percentage point tailwind to the march quarter growth rate We also faced supply constraints on iPhone and to a lesser extent on Mac. we also faced supply constraints on iphone and to a lesser extent on mac We believe if you remove the favorable benefit from foreign exchange and add back the unfavorable impact from supply constraints, we would have had a higher growth rate for total company revenue for the quarter. we believe if you remove the favorable benefit from foreign exchange and add back the unfavorable impact from supply constraints we would have had a higher growth rate for total company revenue for the quarter Products revenue was $80.2 billion, up 17% year-over-year, driven by double-digit growth on iPhone, setting a new March quarter record. products revenue was $80.2 billion up 17% year-over-year driven by double-digit growth on iphone setting a new march quarter record Our install base of over 2.5 billion active devices has reached another all-time high across all major product categories and geographic segments. Services revenue was $31 billion, up 16% year-over-year. We saw strong performance across the board with double-digit growth in the vast majority of the markets we track. Company gross margin was 49.3%, above the high end of our guidance range and up 110 basis points sequentially. Products gross margin was 38.7%, down 200 basis points sequentially. Services gross margin was 76.7%, up 20 basis points sequentially. Operating expenses landed at $18.9 billion, up 24% year-over-year. This was slightly above the high end of our guidance range due to a one-time expense in SG&A. Our install base of over 2.5 billion active devices has reached another all-time high across all major product categories and geographic segments. our install base of over 2.5 billion active devices has reached another all-time high across all major product categories and geographic segments Services revenue was $31 billion, up 16% year-over-year. services revenue was $31 billion up 16% year-over-year We saw strong performance across the board with double-digit growth in the vast majority of the markets we track. we saw strong performance across the board with double-digit growth in the vast majority of the markets we track Company gross margin was 49.3%, above the high end of our guidance range and up 110 basis points sequentially. company gross margin was 49.3% above the high end of our guidance range and up 110 basis points sequentially Products gross margin was 38.7%, down 200 basis points sequentially. products gross margin was 38.7% down 200 basis points sequentially Services gross margin was 76.7%, up 20 basis points sequentially. services gross margin was 76.7% up 20 basis points sequentially Operating expenses landed at $18.9 billion, up 24% year-over-year. operating expenses landed at $18.9 billion up 24% year-over-year This was slightly above the high end of our guidance range due to a one-time expense in SG&A. this was slightly above the high end of our guidance range due to a one-time expense in sg&a Net income was $29.6 billion, and diluted earnings per share was $2.01, up 22% year-over-year. Both net income and diluted EPS achieved March quarter records and drove a very strong level of operating cash flow at $28.7 billion. I'm going to provide some more details for each of our revenue categories. iPhone revenue was $57 billion, up 22% year-over-year, driven by the iPhone 17 family. iPhone grew double digits in the majority of markets we track, including the U.S., Latin America, Greater China, Western Europe, India, Japan, and Southeast Asia. The iPhone active install base grew to an all-time high, and we set March quarter record for iPhone upgraders. According to a recent survey from Worldpanel, iPhone was a top-selling model in the U.S., urban China, the U.K., Australia, and Japan. Net income was $29.6 billion, and diluted earnings per share was $2.01, up 22% year-over-year. net income was $29.6 billion and diluted earnings per share was $2.01 up 22% year-over-year Both net income and diluted EPS achieved March quarter records and drove a very strong level of operating cash flow at $28.7 billion. both net income and diluted eps achieved march quarter records and drove a very strong level of operating cash flow at $28.7 billion I'm going to provide some more details for each of our revenue categories. iPhone revenue was $57 billion, up 22% year-over-year, driven by the iPhone 17 family. iPhone grew double digits in the majority of markets we track, including the U.S., Latin America, Greater China, Western Europe, India, Japan, and Southeast Asia. i'm going to provide some more details for each of our revenue categories iphone revenue was $57 billion up 22% year-over-year driven by the iphone 17 family iphone grew double digits in the majority of markets we track including the u.s latin america greater china western europe india japan and southeast asia The iPhone active install base grew to an all-time high, and we set March quarter record for iPhone upgraders. the iphone active install base grew to an all-time high and we set march quarter record for iphone upgraders According to a recent survey from Worldpanel, iPhone was a top-selling model in the U.S., urban China, the U.K., Australia, and Japan. according to a recent survey from worldpanel iphone was a top-selling model in the u.s urban china the u.k australia and japan We have been extremely pleased with the positive reception of the iPhone 17 family. In fact, customer satisfaction for the iPhone 17 family in the U.S. was recently measured at 99% by 451 Research. Mac revenue was $8.4 billion, up 6% year-over-year, driven by the strength of the recent product launches, including MacBook Neo. We grew in both developed and emerging markets with double-digit growth in many emerging markets, including India and Indonesia. As Tim mentioned earlier, we had a March quarter record for customers new to the Mac. And this helped drive a new all-time record for the overall Mac install base. In the U.S., customer satisfaction for Mac was recently reported at 97%. iPad revenue was $6.9 billion, up 8% year-over-year, driven by the continued strength of the A16-powered iPad and the M5-powered iPad Pro. We have been extremely pleased with the positive reception of the iPhone 17 family. we have been extremely pleased with the positive reception of the iphone 17 family In fact, customer satisfaction for the iPhone 17 family in the U.S. was recently measured at 99% by 451 Research. in fact customer satisfaction for the iphone 17 family in the u.s was recently measured at 99% by 451 research Mac revenue was $8.4 billion, up 6% year-over-year, driven by the strength of the recent product launches, including MacBook Neo. mac revenue was $8.4 billion up 6% year-over-year driven by the strength of the recent product launches including macbook neo We grew in both developed and emerging markets with double-digit growth in many emerging markets, including India and Indonesia. we grew in both developed and emerging markets with double-digit growth in many emerging markets including india and indonesia As Tim mentioned earlier, we had a March quarter record for customers new to the Mac. And this helped drive a new all-time record for the overall Mac install base. as tim mentioned earlier we had a march quarter record for customers new to the mac. and this helped drive a new all-time record for the overall mac install base In the U.S., customer satisfaction for Mac was recently reported at 97%. iPad revenue was $6.9 billion, up 8% year-over-year, driven by the continued strength of the A16-powered iPad and the M5-powered iPad Pro. in the u.s customer satisfaction for mac was recently reported at 97% ipad revenue was $6.9 billion up 8% year-over-year driven by the continued strength of the a16-powered ipad and the m5-powered ipad pro The iPad install base reached a new all-time high as iPad continued to reach new customers around the world. During the quarter, over half of the customers who purchased an iPad were new to the product. Many of these customers are in our emerging markets, where we grew iPad revenue by double digits, including in India, Mexico, and Thailand. Based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S. Wearables, home, and accessories revenue was $7.9 billion, up 5% year-over-year, driven by strength in wearables and accessories. We were pleased to see strength in our emerging markets, where we set a new March quarter revenue record. The wearables install base reached a new all-time high, with over half of the customers purchasing an Apple Watch during the quarter being new to the product. The iPad install base reached a new all-time high as iPad continued to reach new customers around the world. the ipad install base reached a new all-time high as ipad continued to reach new customers around the world During the quarter, over half of the customers who purchased an iPad were new to the product. during the quarter over half of the customers who purchased an ipad were new to the product Many of these customers are in our emerging markets, where we grew iPad revenue by double digits, including in India, Mexico, and Thailand. many of these customers are in our emerging markets where we grew ipad revenue by double digits including in india mexico and thailand Based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S. based on the latest reports from 451 research customer satisfaction was 98% in the u.s Wearables, home, and accessories revenue was $7.9 billion, up 5% year-over-year, driven by strength in wearables and accessories. wearables home and accessories revenue was $7.9 billion up 5% year-over-year driven by strength in wearables and accessories We were pleased to see strength in our emerging markets, where we set a new March quarter revenue record. we were pleased to see strength in our emerging markets where we set a new march quarter revenue record The wearables install base reached a new all-time high, with over half of the customers purchasing an Apple Watch during the quarter being new to the product. the wearables install base reached a new all-time high with over half of the customers purchasing an apple watch during the quarter being new to the product In the U.S., customer satisfaction on Apple Watch was measured at 96%. Our services revenue reached an all-time high of $31 billion, up 16% year-over-year. The strong performance was broad-based, with all-time records in both developed and emerging markets. As Tim mentioned, we also set all-time revenue records in most of the services categories. We're optimistic about the future of our services business. With our large install base of over 2.5 billion active devices, we have an incredibly strong foundation for growth opportunities. Both transacting and paid accounts reached new all-time highs in the quarter as we continue to see more customers leveraging our services offerings. We continue to improve the quality and expand the breadth of our services from the expansion of features like Tap to Pay, now available in over 50 markets, to deeper support for enterprise customers. In the U.S., customer satisfaction on Apple Watch was measured at 96%. in the u.s customer satisfaction on apple watch was measured at 96% Our services revenue reached an all-time high of $31 billion, up 16% year-over-year. our services revenue reached an all-time high of $31 billion up 16% year-over-year The strong performance was broad-based, with all-time records in both developed and emerging markets. the strong performance was broad-based with all-time records in both developed and emerging markets As Tim mentioned, we also set all-time revenue records in most of the services categories. as tim mentioned we also set all-time revenue records in most of the services categories We're optimistic about the future of our services business. we're optimistic about the future of our services business With our large install base of over 2.5 billion active devices, we have an incredibly strong foundation for growth opportunities. with our large install base of over 2.5 billion active devices we have an incredibly strong foundation for growth opportunities Both transacting and paid accounts reached new all-time highs in the quarter as we continue to see more customers leveraging our services offerings. both transacting and paid accounts reached new all-time highs in the quarter as we continue to see more customers leveraging our services offerings We continue to improve the quality and expand the breadth of our services from the expansion of features like Tap to Pay, now available in over 50 markets, to deeper support for enterprise customers. we continue to improve the quality and expand the breadth of our services from the expansion of features like tap to pay now available in over 50 markets to deeper support for enterprise customers Building on this, we've launched Apple Business, a new all-in-one platform that combines our hardware, software, and enterprise services, enabling companies to efficiently manage their deployments and scale their business. We continue to see more organizations and enterprise choosing Apple's devices for performance and productivity. Marsh, a leading professional services firm, deployed a large-scale refresh of corporate devices to iPhone 17 as part of a commitment to security alongside adopting Mac for internal AI development. With Apple silicon and its powerful unified memory architecture, leading AI developers like Perplexity are choosing Mac as their preferred platform to build enterprise-grade AI assistants that power autonomous agents and boost workplace productivity. Across the Mac lineup, customers are finding the right device for their needs. Building on this, we've launched Apple Business, a new all-in-one platform that combines our hardware, software, and enterprise services, enabling companies to efficiently manage their deployments and scale their business. building on this we've launched apple business a new all-in-one platform that combines our hardware software and enterprise services enabling companies to efficiently manage their deployments and scale their business We continue to see more organizations and enterprise choosing Apple's devices for performance and productivity. we continue to see more organizations and enterprise choosing apple's devices for performance and productivity Marsh, a leading professional services firm, deployed a large-scale refresh of corporate devices to iPhone 17 as part of a commitment to security alongside adopting Mac for internal AI development. marsh a leading professional services firm deployed a large-scale refresh of corporate devices to iphone 17 as part of a commitment to security alongside adopting mac for internal ai development With Apple silicon and its powerful unified memory architecture, leading AI developers like Perplexity are choosing Mac as their preferred platform to build enterprise-grade AI assistants that power autonomous agents and boost workplace productivity. with apple silicon and its powerful unified memory architecture leading ai developers like perplexity are choosing mac as their preferred platform to build enterprise-grade ai assistants that power autonomous agents and boost workplace productivity Across the Mac lineup, customers are finding the right device for their needs. across the mac lineup customers are finding the right device for their needs From MacBook Pro and MacBook Air to our newest edition, MacBook Neo, which delivers an unprecedented combination of quality, value, and industry-leading security that is resonating strongly in enterprise and education. Kansas City Public Schools, for example, is switching their high school students from Windows laptops and Chromebooks to MacBook Neo, completing their transition to an all-Apple district. In India, leading enterprise software provider Freshworks deployed over 5,000 MacBook Pro and MacBook Air to accelerate their AI development. Let's turn to our cash position and capital return program. We ended the quarter with $147 billion in cash and marketable securities. We had $5.8 billion of debt maturities, and commercial paper remained unchanged at $2 billion, resulting in $85 billion in total debt. Therefore, at the end of the quarter, net cash was $62 billion. From MacBook Pro and MacBook Air to our newest edition, MacBook Neo, which delivers an unprecedented combination of quality, value, and industry-leading security that is resonating strongly in enterprise and education. from macbook pro and macbook air to our newest edition macbook neo which delivers an unprecedented combination of quality value and industry-leading security that is resonating strongly in enterprise and education Kansas City Public Schools, for example, is switching their high school students from Windows laptops and Chromebooks to MacBook Neo, completing their transition to an all-Apple district. kansas city public schools for example is switching their high school students from windows laptops and chromebooks to macbook neo completing their transition to an all-apple district In India, leading enterprise software provider Freshworks deployed over 5,000 MacBook Pro and MacBook Air to accelerate their AI development. in india leading enterprise software provider freshworks deployed over 5,000 macbook pro and macbook air to accelerate their ai development Let's turn to our cash position and capital return program. let's turn to our cash position and capital return program We ended the quarter with $147 billion in cash and marketable securities. we ended the quarter with $147 billion in cash and marketable securities We had $5.8 billion of debt maturities, and commercial paper remained unchanged at $2 billion, resulting in $85 billion in total debt. we had $5.8 billion of debt maturities and commercial paper remained unchanged at $2 billion resulting in $85 billion in total debt Therefore, at the end of the quarter, net cash was $62 billion. therefore at the end of the quarter net cash was $62 billion During the quarter, we returned $15 billion to shareholders. This included $3.8 billion in dividends and equivalents and $11 billion through open market repurchases of 42 million Apple shares. Our repurchase activity at any time can be affected by a number of factors that we take into account. As you're aware, we recently announced a CEO transition. Taking a step back, we plan to continue our capital allocation philosophy of first making all the necessary investments needed to support the business and then returning excess cash to shareholders over time. Net cash neutral has been a valuable framework for our capital structure, and since 2018, we have significantly right-sized our balance sheet and reduced net cash by over $100 billion. During the quarter, we returned $15 billion to shareholders. during the quarter we returned $15 billion to shareholders This included $3.8 billion in dividends and equivalents and $11 billion through open market repurchases of 42 million Apple shares. this included $3.8 billion in dividends and equivalents and $11 billion through open market repurchases of 42 million apple shares Our repurchase activity at any time can be affected by a number of factors that we take into account. our repurchase activity at any time can be affected by a number of factors that we take into account As you're aware, we recently announced a CEO transition. as you're aware we recently announced a ceo transition Taking a step back, we plan to continue our capital allocation philosophy of first making all the necessary investments needed to support the business and then returning excess cash to shareholders over time. taking a step back we plan to continue our capital allocation philosophy of first making all the necessary investments needed to support the business and then returning excess cash to shareholders over time Net cash neutral has been a valuable framework for our capital structure, and since 2018, we have significantly right-sized our balance sheet and reduced net cash by over $100 billion. net cash neutral has been a valuable framework for our capital structure and since 2018 we have significantly right-sized our balance sheet and reduced net cash by over $100 billion As we move ahead, we are no longer providing net cash neutral as a formal target, and we will independently evaluate cash and debt. Capital returns will continue to be important to our overall approach by delivering long-term shareholder value. Accordingly, our board has authorized an additional $100 billion for share repurchases, and we're also raising our dividend by 4% to $0.27 per share of common stock. This cash dividend will be payable on May 14th, 2026 to shareholders of record as of May 11th, 2026. As we move ahead into the June quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to. As we move ahead, we are no longer providing net cash neutral as a formal target, and we will independently evaluate cash and debt. as we move ahead we are no longer providing net cash neutral as a formal target and we will independently evaluate cash and debt Capital returns will continue to be important to our overall approach by delivering long-term shareholder value. capital returns will continue to be important to our overall approach by delivering long-term shareholder value Accordingly, our board has authorized an additional $100 billion for share repurchases, and we're also raising our dividend by 4% to $0.27 per share of common stock. accordingly our board has authorized an additional $100 billion for share repurchases and we're also raising our dividend by 4% to $0.27 per share of common stock This cash dividend will be payable on May 14th, 2026 to shareholders of record as of May 11th, 2026. this cash dividend will be payable on may 14th 2026 to shareholders of record as of may 11th 2026 As we move ahead into the June quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to. as we move ahead into the june quarter i'd like to review our outlook which includes the types of forward-looking information that suhasini referred to Importantly, the color we're providing assumes that global tariff rates, policies, and their application remain in effect as of this call. The global macroeconomic outlook does not worsen from today. We expect our June quarter total company revenue to grow by 14%-17% year-over-year, which comprehends our best view of constrained supply. On iPad, keep in mind, we face a difficult compare driven by the launch of the A16-powered iPad in the prior year. We expect services revenue to grow at a year-over-year rate similar to what we reported in the March quarter after removing the favorable year-over-year impact from foreign exchange tailwinds. Keep in mind, during the March quarter, FX was a 2.5 percentage point tailwind to the total company growth rate, and for services, that impact was slightly more favorable. Importantly, the color we're providing assumes that global tariff rates, policies, and their application remain in effect as of this call. importantly the color we're providing assumes that global tariff rates policies and their application remain in effect as of this call The global macroeconomic outlook does not worsen from today. the global macroeconomic outlook does not worsen from today We expect our June quarter total company revenue to grow by 14%-17% year-over-year, which comprehends our best view of constrained supply. we expect our june quarter total company revenue to grow by 14%-17% year-over-year which comprehends our best view of constrained supply On iPad, keep in mind, we face a difficult compare driven by the launch of the A16-powered iPad in the prior year. on ipad keep in mind we face a difficult compare driven by the launch of the a16-powered ipad in the prior year We expect services revenue to grow at a year-over-year rate similar to what we reported in the March quarter after removing the favorable year-over-year impact from foreign exchange tailwinds. we expect services revenue to grow at a year-over-year rate similar to what we reported in the march quarter after removing the favorable year-over-year impact from foreign exchange tailwinds Keep in mind, during the March quarter, FX was a 2.5 percentage point tailwind to the total company growth rate, and for services, that impact was slightly more favorable. keep in mind during the march quarter fx was a 2.5 percentage point tailwind to the total company growth rate and for services that impact was slightly more favorable We expect gross margin to be between 47.5% and 48.5%. We expect operating expenses to be between $18.8 billion and $19.1 billion. We expect OINE to be around $250 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17%. With that, Tim and I will take questions. We expect gross margin to be between 47.5% and 48.5%. we expect gross margin to be between 47.5% and 48.5% We expect operating expenses to be between $18.8 billion and $19.1 billion. we expect operating expenses to be between $18.8 billion and $19.1 billion We expect OINE to be around $250 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17%. we expect oine to be around $250 million excluding any potential impact from the mark-to-market of minority investments and our tax rate to be around 17% With that, Tim and I will take questions. with that tim and i will take questions

Speaker 11: Thank you, Kevan. We ask that you limit yourself to two questions. Operator, may we have the first question, please? Thank you, Kevan. thank you kevan We ask that you limit yourself to two questions. we ask that you limit yourself to two questions Operator, may we have the first question, please? operator may we have the first question please

Speaker 9: Certainly. We'll go ahead and take our first question from Erik Woodring with Morgan Stanley. Please go ahead. Certainly. certainly We'll go ahead and take our first question from Erik Woodring with Morgan Stanley. we'll go ahead and take our first question from erik woodring with morgan stanley Please go ahead. please go ahead

Speaker 5: Great. Thank you very much for taking my questions, guys. Tim, I'll save the congrats or the au revoir for next quarter. It's been a pleasure working together. I would love, maybe, Tim, if I could ask you just to maybe contextualize the supply constraints you alluded to in your prepared remarks. Meaning, you know, how much did demand outpace supply for iPhone and Mac in the March quarter? Does your June quarter guidance also reflect supply constraints for those segments? Or is that kind of an unconstrained guide as you see it today? A quick follow-up, please. Thank you. Great. great Thank you very much for taking my questions, guys. thank you very much for taking my questions guys Tim, I'll save the congrats or the au revoir for next quarter. tim i'll save the congrats or the au revoir for next quarter It's been a pleasure working together. it's been a pleasure working together I would love, maybe, Tim, if I could ask you just to maybe contextualize the supply constraints you alluded to in your prepared remarks. i would love maybe tim if i could ask you just to maybe contextualize the supply constraints you alluded to in your prepared remarks Meaning, you know, how much did demand outpace supply for iPhone and Mac in the March quarter? meaning you know how much did demand outpace supply for iphone and mac in the march quarter Does your June quarter guidance also reflect supply constraints for those segments? does your june quarter guidance also reflect supply constraints for those segments Or is that kind of an unconstrained guide as you see it today? or is that kind of an unconstrained guide as you see it today A quick follow-up, please. a quick follow-up please Thank you. thank you

Speaker 12: Yeah. Hi, Erik. Thanks for your comments. We were constrained during the March quarter. This was primarily on iPhone and to a lesser extent on the Mac. As we talked about in the last call, the constraints were primarily driven by the availability of the advanced nodes our SOCs are produced on. If you look forward to the June quarter, the majority of our supply constraints will be on several Mac models, given the continued high levels of demand that we're seeing. We have less flexibility in the supply chain than we normally would. For Mac, in the June quarter, there's 2 factors that are driving the constraints. Yeah. yeah Hi, Erik. hi erik Thanks for your comments. thanks for your comments We were constrained during the March quarter. we were constrained during the march quarter This was primarily on iPhone and to a lesser extent on the Mac. this was primarily on iphone and to a lesser extent on the mac As we talked about in the last call, the constraints were primarily driven by the availability of the advanced nodes our SOCs are produced on. as we talked about in the last call the constraints were primarily driven by the availability of the advanced nodes our socs are produced on If you look forward to the June quarter, the majority of our supply constraints will be on several Mac models, given the continued high levels of demand that we're seeing. if you look forward to the june quarter the majority of our supply constraints will be on several mac models given the continued high levels of demand that we're seeing We have less flexibility in the supply chain than we normally would. we have less flexibility in the supply chain than we normally would For Mac, in the June quarter, there's 2 factors that are driving the constraints. for mac in the june quarter there's 2 factors that are driving the constraints One is that on the Mac mini and the Mac Studio, both of these are amazing platforms for AI and agentic tools, and the customer recognition of that is happening faster than what we had predicted. We saw higher than expected demand. The second reason is that the customer response to MacBook Neo has just been off the charts, with higher than expected demand. The March quarter record for customers, we set a March quarter record for customers new to the Mac, partly due to the Neo. We think, looking forward, that the Mac mini and the Mac Studio may take several months to reach supply-demand balance. Hopefully that gives you a view of both Q2 and Q3 on the supply side. One is that on the Mac mini and the Mac Studio, both of these are amazing platforms for AI and agentic tools, and the customer recognition of that is happening faster than what we had predicted. one is that on the mac mini and the mac studio both of these are amazing platforms for ai and agentic tools and the customer recognition of that is happening faster than what we had predicted We saw higher than expected demand. we saw higher than expected demand The second reason is that the customer response to MacBook Neo has just been off the charts, with higher than expected demand. the second reason is that the customer response to macbook neo has just been off the charts with higher than expected demand The March quarter record for customers, we set a March quarter record for customers new to the Mac, partly due to the Neo. the march quarter record for customers we set a march quarter record for customers new to the mac partly due to the neo We think, looking forward, that the Mac mini and the Mac Studio may take several months to reach supply-demand balance. we think looking forward that the mac mini and the mac studio may take several months to reach supply-demand balance Hopefully that gives you a view of both Q2 and Q3 on the supply side. hopefully that gives you a view of both q2 and q3 on the supply side

Speaker 5: All right. Awesome. Thank you very much for that color, Tim. You know, Kevan, I'd love to maybe turn to you and kind of a surprise little announcement there talking about net cash neutral. Still a great path, but we're no longer providing this as a formal target. Could you maybe expand on that a bit? Are we thinking about any different type of capital return policy? It doesn't seem so, but maybe give a little bit more detail when you talk about making investments. Is that organic versus inorganic? Just maybe tease that comment out a little bit more for us would be super helpful. Thank you so much, guys. All right. all right Awesome. awesome Thank you very much for that color, Tim. thank you very much for that color tim You know, Kevan, I'd love to maybe turn to you and kind of a surprise little announcement there talking about net cash neutral. you know kevan i'd love to maybe turn to you and kind of a surprise little announcement there talking about net cash neutral Still a great path, but we're no longer providing this as a formal target. still a great path but we're no longer providing this as a formal target Could you maybe expand on that a bit? could you maybe expand on that a bit Are we thinking about any different type of capital return policy? are we thinking about any different type of capital return policy It doesn't seem so, but maybe give a little bit more detail when you talk about making investments. it doesn't seem so but maybe give a little bit more detail when you talk about making investments Is that organic versus inorganic? is that organic versus inorganic Just maybe tease that comment out a little bit more for us would be super helpful. just maybe tease that comment out a little bit more for us would be super helpful Thank you so much, guys. thank you so much guys

Speaker 7: Erik, thanks for the question. Let me just reiterate what we said, which is really more of a comment on the capital structure. Our goal of net cash neutral has really served us well. It's been a valuable framework for us, you know, and for our capital structure since, you know, 2018. We believe we're at a stage where we're evaluating cash and debt independently is really the right approach for us and allows us to make more optimal economic decisions around how we best utilize our debt and cash portfolios to support the business, you know, based on business factors and market conditions. We also believe we can manage this flexibility while also being very efficient and remaining disciplined. Erik, thanks for the question. erik thanks for the question Let me just reiterate what we said, which is really more of a comment on the capital structure. let me just reiterate what we said which is really more of a comment on the capital structure Our goal of net cash neutral has really served us well. our goal of net cash neutral has really served us well It's been a valuable framework for us, you know, and for our capital structure since, you know, 2018. it's been a valuable framework for us you know and for our capital structure since you know 2018 We believe we're at a stage where we're evaluating cash and debt independently is really the right approach for us and allows us to make more optimal economic decisions around how we best utilize our debt and cash portfolios to support the business, you know, based on business factors and market conditions. we believe we're at a stage where we're evaluating cash and debt independently is really the right approach for us and allows us to make more optimal economic decisions around how we best utilize our debt and cash portfolios to support the business you know based on business factors and market conditions We also believe we can manage this flexibility while also being very efficient and remaining disciplined. we also believe we can manage this flexibility while also being very efficient and remaining disciplined With all that being said, we remain very committed to returning excess cash to shareholders. As we talked about, you know, our investment in the business, I think, as you know, we invest in the business, you know, first and foremost, and then look to, you know, kind of return excess cash to shareholders. I think we have a very good track record of being disciplined. You know, we've returned over $1 trillion to shareholders from the start of the program, over $850 billion of which has been through share repurchases. You know, and the other piece as well that's really important is, you know, as part of that, we also have, you know, increased our buyback authorization by another $100 billion, and that's on top of, you know, the leftover capacity from the prior authorization. With all that being said, we remain very committed to returning excess cash to shareholders. with all that being said we remain very committed to returning excess cash to shareholders As we talked about, you know, our investment in the business, I think, as you know, we invest in the business, you know, first and foremost, and then look to, you know, kind of return excess cash to shareholders. as we talked about you know our investment in the business i think as you know we invest in the business you know first and foremost and then look to you know kind of return excess cash to shareholders I think we have a very good track record of being disciplined. i think we have a very good track record of being disciplined You know, we've returned over $1 trillion to shareholders from the start of the program, over $850 billion of which has been through share repurchases. you know we've returned over $1 trillion to shareholders from the start of the program over $850 billion of which has been through share repurchases You know, and the other piece as well that's really important is, you know, as part of that, we also have, you know, increased our buyback authorization by another $100 billion, and that's on top of, you know, the leftover capacity from the prior authorization. you know and the other piece as well that's really important is you know as part of that we also have you know increased our buyback authorization by another $100 billion and that's on top of you know the leftover capacity from the prior authorization You can see, you know, the capital return piece is something, you know, very important to us, and as we talked about in the prepared remarks, important to the overall approach, you know, to delivering long-term shareholder value. You can see, you know, the capital return piece is something, you know, very important to us, and as we talked about in the prepared remarks, important to the overall approach, you know, to delivering long-term shareholder value. you can see you know the capital return piece is something you know very important to us and as we talked about in the prepared remarks important to the overall approach you know to delivering long-term shareholder value

Speaker 5: Thanks so much, Kevan. Good luck, guys. Thanks so much, Kevan. thanks so much kevan Good luck, guys. good luck guys

Speaker 7: Thanks, Erik. Thanks, Erik. thanks erik

Speaker 12: Thank you. Thank you. thank you

Speaker 11: Awesome. Thank you, Erik. Operator, could we get the next question, please? Awesome. awesome Thank you, Erik. thank you erik Operator, could we get the next question, please? operator could we get the next question please

Speaker 9: Our next question is from Ben Reitzes with Melius Research. Please go ahead. Our next question is from Ben Reitzes with Melius Research. our next question is from ben reitzes with melius research Please go ahead. please go ahead

Speaker 3: Yeah. Hey, thanks. I'll ask 2 myself. The first one is, there's just been a lot of talk and it's great to, by the way, speak with you, Tim and John, and Kevan. The first question is around there's been some commentary around an agentic smartphone. By the way, I don't even know what that means, but there's comments that, you know, about AI on the edge and that agents could catalyze smartphones, but also shift the smartphone kind of form factor or maybe not. I was just wondering, with the rise of agents, how you would like us to think about that. Is Yeah. yeah Hey, thanks. hey thanks I'll ask 2 myself. i'll ask 2 myself The first one is, there's just been a lot of talk and it's great to, by the way, speak with you, Tim and John, and Kevan. the first one is there's just been a lot of talk and it's great to by the way speak with you tim and john and kevan The first question is around there's been some commentary around an agentic smartphone. the first question is around there's been some commentary around an agentic smartphone By the way, I don't even know what that means, but there's comments that, you know, about AI on the edge and that agents could catalyze smartphones, but also shift the smartphone kind of form factor or maybe not. by the way i don't even know what that means but there's comments that you know about ai on the edge and that agents could catalyze smartphones but also shift the smartphone kind of form factor or maybe not I was just wondering, with the rise of agents, how you would like us to think about that. i was just wondering with the rise of agents how you would like us to think about that Is is Does this mean there's new products coming, of a totally new form factor, or does it change the game or anything high level you might wanna say about that and that trend or potential non-trend? Thanks. Does this mean there's new products coming, of a totally new form factor, or does it change the game or anything high level you might wanna say about that and that trend or potential non-trend? does this mean there's new products coming of a totally new form factor or does it change the game or anything high level you might wanna say about that and that trend or potential non-trend Thanks. thanks

Speaker 12: Hi, Ben, it's Tim. you know, we don't get into our future roadmap. I don't wanna, you know, give too much info there, but I would just say that we're thrilled with how the iPhone is doing, growing 22% in the quarter and followed up from a incredible Q1 and having the strongest cycle that we've ever had in our history from the launch through March quarter. We could not be happier with it. Hi, Ben, it's Tim. you know, we don't get into our future roadmap. hi ben it's tim you know we don't get into our future roadmap I don't wanna, you know, give too much info there, but I would just say that we're thrilled with how the iPhone is doing, growing 22% in the quarter and followed up from a incredible Q1 and having the strongest cycle that we've ever had in our history from the launch through March quarter. i don't wanna you know give too much info there but i would just say that we're thrilled with how the iphone is doing growing 22% in the quarter and followed up from a incredible q1 and having the strongest cycle that we've ever had in our history from the launch through march quarter We could not be happier with it. we could not be happier with it

Speaker 3: Okay. Well, thanks. I appreciate that. I'm sure we'll hear a lot more. With regard to, I guess the question around constraints and whatnot, Tim, you know, I may push you one more time. Try to do it nicely, though, just given my age. The big concern out there is it's maybe how margins go after the June quarter, given the components and trends and whatnot and all these constraints. Is there some kind of overarching philosophy that you want us to think about? Okay. okay Well, thanks. well thanks I appreciate that. i appreciate that I'm sure we'll hear a lot more. i'm sure we'll hear a lot more With regard to, I guess the question around constraints and whatnot, Tim, you know, I may push you one more time. with regard to i guess the question around constraints and whatnot tim you know i may push you one more time Try to do it nicely, though, just given my age. try to do it nicely though just given my age The big concern out there is it's maybe how margins go after the June quarter, given the components and trends and whatnot and all these constraints. the big concern out there is it's maybe how margins go after the june quarter given the components and trends and whatnot and all these constraints Is there some kind of overarching philosophy that you want us to think about? is there some kind of overarching philosophy that you want us to think about Do you feel, and maybe Kevan wants to weigh in on this, is do you see a lot of variability in the model, or is 47, 48 kind of a range you think you might be able to stay in, or is there just no visibility, you know, beyond June to answer this question? I, you know, I think any comfort level there, as we go throughout the calendar year would be so helpful. Thanks. Do you feel, and maybe Kevan wants to weigh in on this, is do you see a lot of variability in the model, or is 47, 48 kind of a range you think you might be able to stay in, or is there just no visibility, you know, beyond June to answer this question? do you feel and maybe kevan wants to weigh in on this is do you see a lot of variability in the model or is 47 48 kind of a range you think you might be able to stay in or is there just no visibility you know beyond june to answer this question I, you know, I think any comfort level there, as we go throughout the calendar year would be so helpful. i you know i think any comfort level there as we go throughout the calendar year would be so helpful Thanks. thanks

Speaker 12: Yeah. Ben, let me talk about memory specifically, which I think is the root of the question. And I'll go back to December for a moment and just walk you through the chronology. In the December quarter, we really had a minimal impact due to memory, and you can kinda see that in the gross margin results. We said it would be a bit more in the March quarter, and we did see higher memory costs in the March quarter, and they were partially offset by benefits from carry-in inventory that we had. For the June quarter, and what's embedded in the guidance that Kevan went through earlier, we expect significantly higher memory costs. They are also partly offset by the benefit of carry-in inventory. Yeah. yeah Ben, let me talk about memory specifically, which I think is the root of the question. ben let me talk about memory specifically which i think is the root of the question And I'll go back to December for a moment and just walk you through the chronology. and i'll go back to december for a moment and just walk you through the chronology In the December quarter, we really had a minimal impact due to memory, and you can kinda see that in the gross margin results. in the december quarter we really had a minimal impact due to memory and you can kinda see that in the gross margin results We said it would be a bit more in the March quarter, and we did see higher memory costs in the March quarter, and they were partially offset by benefits from carry-in inventory that we had. we said it would be a bit more in the march quarter and we did see higher memory costs in the march quarter and they were partially offset by benefits from carry-in inventory that we had For the June quarter, and what's embedded in the guidance that Kevan went through earlier, we expect significantly higher memory costs. for the june quarter and what's embedded in the guidance that kevan went through earlier we expect significantly higher memory costs They are also partly offset by the benefit of carry-in inventory. they are also partly offset by the benefit of carry-in inventory Then where we don't give color beyond June, I can tell you that beyond the June quarter, we believe memory costs will drive an increasing impact on our business. We'll continue to evaluate this, and as we've said before, we'll look at a range of options. Then where we don't give color beyond June, I can tell you that beyond the June quarter, we believe memory costs will drive an increasing impact on our business. then where we don't give color beyond june i can tell you that beyond the june quarter we believe memory costs will drive an increasing impact on our business We'll continue to evaluate this, and as we've said before, we'll look at a range of options. we'll continue to evaluate this and as we've said before we'll look at a range of options

Speaker 3: Okay. Thanks, Tim. Okay. okay Thanks, Tim. thanks tim

Speaker 12: Yeah. Thank you, Ben. Yeah. yeah Thank you, Ben. thank you ben

Speaker 11: Thank you, Ben. Operator, could we have the next question, please? Thank you, Ben. thank you ben Operator, could we have the next question, please? operator could we have the next question please

Speaker 9: Our next question comes from Michael Ng with Goldman Sachs. Please go ahead. Our next question comes from Michael Ng with Goldman Sachs. our next question comes from michael ng with goldman sachs Please go ahead. please go ahead

Speaker 8: Hey, good afternoon. Thank you for the questions. I have two as well. First, given the success of the MacBook Neo, I was wondering if you could talk a little bit about how it's helped drive penetration with new customer segments, whether that be, you know, education or value or emerging markets. Then, how do you think about opportunities in, you know, under-penetrated markets more broadly, how will your future product roadmap inform that strategy? Thank you. Hey, good afternoon. hey good afternoon Thank you for the questions. thank you for the questions I have two as well. i have two as well First, given the success of the MacBook Neo, I was wondering if you could talk a little bit about how it's helped drive penetration with new customer segments, whether that be, you know, education or value or emerging markets. first given the success of the macbook neo i was wondering if you could talk a little bit about how it's helped drive penetration with new customer segments whether that be you know education or value or emerging markets Then, how do you think about opportunities in, you know, under-penetrated markets more broadly, how will your future product roadmap inform that strategy? then how do you think about opportunities in you know under-penetrated markets more broadly how will your future product roadmap inform that strategy Thank you. thank you

Speaker 12: Yeah. Right now we're supply constrained on the MacBook Neo. The response has been. We were very bullish on the product before announcing it. We undercalled the level of enthusiasm that would be with it. It's very much focused on getting the Mac to even more people than we were reaching before. We're very focused on customers new to the Mac and customers that have been holding onto their Mac a very long period of time. We're doing well with both of those. Yeah. yeah Right now we're supply constrained on the MacBook Neo. right now we're supply constrained on the macbook neo The response has been. the response has been We were very bullish on the product before announcing it. we were very bullish on the product before announcing it We undercalled the level of enthusiasm that would be with it. we undercalled the level of enthusiasm that would be with it It's very much focused on getting the Mac to even more people than we were reaching before. it's very much focused on getting the mac to even more people than we were reaching before We're very focused on customers new to the Mac and customers that have been holding onto their Mac a very long period of time. we're very focused on customers new to the mac and customers that have been holding onto their mac a very long period of time We're doing well with both of those. we're doing well with both of those As Kevan alluded to in his comments, we're seeing school systems like the Kansas City Public Schools that are switching from Chromebooks and Windows PCs to the MacBook Neo, and I'm hearing anecdotally more and more of those kind of stories, both happening at the school system level and at the individual consumer level. We could not be happier with how things are going at the moment. As Kevan alluded to in his comments, we're seeing school systems like the Kansas City Public Schools that are switching from Chromebooks and Windows PCs to the MacBook Neo, and I'm hearing anecdotally more and more of those kind of stories, both happening at the school system level and at the individual consumer level. as kevan alluded to in his comments we're seeing school systems like the kansas city public schools that are switching from chromebooks and windows pcs to the macbook neo and i'm hearing anecdotally more and more of those kind of stories both happening at the school system level and at the individual consumer level We could not be happier with how things are going at the moment. we could not be happier with how things are going at the moment

Speaker 8: Great. Thank you, Tim. For the second question, I wanted to ask about advertising within services. I think Apple introduced new inventory to ads on the App Store earlier this year. Has that new ad inventory on the App Store been a notable contributor to the services growth and outperformance in the quarter? Could you talk more broadly about your ad strategy, given the plans to also introduce ads to Maps this summer. Thank you. Great. great Thank you, Tim. thank you tim For the second question, I wanted to ask about advertising within services. for the second question i wanted to ask about advertising within services I think Apple introduced new inventory to ads on the App Store earlier this year. i think apple introduced new inventory to ads on the app store earlier this year Has that new ad inventory on the App Store been a notable contributor to the services growth and outperformance in the quarter? has that new ad inventory on the app store been a notable contributor to the services growth and outperformance in the quarter Could you talk more broadly about your ad strategy, given the plans to also introduce ads to Maps this summer. could you talk more broadly about your ad strategy given the plans to also introduce ads to maps this summer Thank you. thank you

Speaker 7: Michael Ng, it's Kevan Parekh. Thanks for the question. In advertising, we did see year-over-year growth in our advertising business. As you alluded to, we recently did introduce additional ads, you know, across the App Store search results to provide developers with more ways to drive downloads on platforms, you know, that users trust. And this summer, as you said, in the U.S. and Canada, Apple Maps will feature ads during key search and discovery moments, creating a new way for local businesses to reach customers and explore new places. Importantly, I think, you know, we believe it's possible to help businesses of all sizes grow via advertising while still delivering a great customer experience, while also importantly respecting people's fundamental right to privacy. Michael Ng, it's Kevan Parekh. michael ng it's kevan parekh Thanks for the question. thanks for the question In advertising, we did see year-over-year growth in our advertising business. in advertising we did see year-over-year growth in our advertising business As you alluded to, we recently did introduce additional ads, you know, across the App Store search results to provide developers with more ways to drive downloads on platforms, you know, that users trust. as you alluded to we recently did introduce additional ads you know across the app store search results to provide developers with more ways to drive downloads on platforms you know that users trust And this summer, as you said, in the U.S. and Canada, Apple Maps will feature ads during key search and discovery moments, creating a new way for local businesses to reach customers and explore new places. and this summer as you said in the u.s and canada apple maps will feature ads during key search and discovery moments creating a new way for local businesses to reach customers and explore new places Importantly, I think, you know, we believe it's possible to help businesses of all sizes grow via advertising while still delivering a great customer experience, while also importantly respecting people's fundamental right to privacy. importantly i think you know we believe it's possible to help businesses of all sizes grow via advertising while still delivering a great customer experience while also importantly respecting people's fundamental right to privacy

Speaker 8: Thank you, Kevan. Thank you, Kevan. thank you kevan

Speaker 7: Thanks, Mike. Thanks, Mike. thanks mike

Speaker 11: Thank you, Mike. Operator, could we get the next question, please? Thank you, Mike. thank you mike Operator, could we get the next question, please? operator could we get the next question please

Speaker 9: Our next question is from Wamsi Mohan with Bank of America. Please go ahead. Our next question is from Wamsi Mohan with Bank of America. our next question is from wamsi mohan with bank of america Please go ahead. please go ahead

Speaker 13: Hi, yes. Thank you so much. Tim, you noted higher impact from memory as you look beyond the June quarter. Clearly, you guys have a lot of scale, supply chain efficiencies, relationships from a long time. As you think about product position relative to your competitors, so when you think about product position and pricing relative to competition, do you think in such times of dislocation that Apple would be strategically more focused on share gain or where potentially you don't raise pricing and perhaps lower ends of the portfolio where your competitors are struggling or more focused on profitability? Like, what's the right framework for us to think through as you enter that period? I have a follow-up. Hi, yes. hi yes Thank you so much. thank you so much Tim, you noted higher impact from memory as you look beyond the June quarter. tim you noted higher impact from memory as you look beyond the june quarter Clearly, you guys have a lot of scale, supply chain efficiencies, relationships from a long time. clearly you guys have a lot of scale supply chain efficiencies relationships from a long time As you think about product position relative to your competitors, so when you think about product position and pricing relative to competition, do you think in such times of dislocation that Apple would be strategically more focused on share gain or where potentially you don't raise pricing and perhaps lower ends of the portfolio where your competitors are struggling or more focused on profitability? as you think about product position relative to your competitors so when you think about product position and pricing relative to competition do you think in such times of dislocation that apple would be strategically more focused on share gain or where potentially you don't raise pricing and perhaps lower ends of the portfolio where your competitors are struggling or more focused on profitability Like, what's the right framework for us to think through as you enter that period? like what's the right framework for us to think through as you enter that period I have a follow-up. i have a follow-up

Speaker 12: Wamsi, we will look at a range of options, with memory costs increasing. I really don't wanna go beyond that at this point. Wamsi, we will look at a range of options, with memory costs increasing. wamsi we will look at a range of options with memory costs increasing I really don't wanna go beyond that at this point. i really don't wanna go beyond that at this point

Speaker 13: Okay, Tim. As a follow-up here, how's Apple thinking about the broader monetization, maybe following Ben's question here in the agentic AI world? What parts of the stack do you think Apple will be focused on, internally versus maybe leveraging your partners? I mean, we have some early looks into where you are developing relationships. As we think longer term, where will Apple invest more heavily over the next several years? Is this at all related to your net cash comments in terms of perhaps building out more infrastructure as we enter an AI-centric world? Thank you. Okay, Tim. okay tim As a follow-up here, how's Apple thinking about the broader monetization, maybe following Ben's question here in the agentic AI world? as a follow-up here how's apple thinking about the broader monetization maybe following ben's question here in the agentic ai world What parts of the stack do you think Apple will be focused on, internally versus maybe leveraging your partners? what parts of the stack do you think apple will be focused on internally versus maybe leveraging your partners I mean, we have some early looks into where you are developing relationships. i mean we have some early looks into where you are developing relationships As we think longer term, where will Apple invest more heavily over the next several years? as we think longer term where will apple invest more heavily over the next several years Is this at all related to your net cash comments in terms of perhaps building out more infrastructure as we enter an AI-centric world? is this at all related to your net cash comments in terms of perhaps building out more infrastructure as we enter an ai-centric world Thank you. thank you

Speaker 12: We are clearly investing more. You can see that in the OpEx numbers. If you click down on those a step deeper and look at the R&D areas separate than SG&A, you'll find that R&D is even accelerating much higher than the company is. We're clearly investing. We're investing in products and services, and we see opportunities in both of those. We could not be more excited about how the future is playing out. We are clearly investing more. we are clearly investing more You can see that in the OpEx numbers. you can see that in the opex numbers If you click down on those a step deeper and look at the R&D areas separate than SG&A, you'll find that R&D is even accelerating much higher than the company is. if you click down on those a step deeper and look at the r&d areas separate than sg&a you'll find that r&d is even accelerating much higher than the company is We're clearly investing. we're clearly investing We're investing in products and services, and we see opportunities in both of those. we're investing in products and services and we see opportunities in both of those We could not be more excited about how the future is playing out. we could not be more excited about how the future is playing out

Speaker 7: I think Wamsi, as we've talked about, you know, building on what Tim said, you know, from the start, we've said we, you know, believe AI is a really important investment area for Apple, and we're gonna be doing that incrementally on top of what we normally invest in our product, you know, roadmap. I think just wanted to reiterate that point as well. I think Wamsi, as we've talked about, you know, building on what Tim said, you know, from the start, we've said we, you know, believe AI is a really important investment area for Apple, and we're gonna be doing that incrementally on top of what we normally invest in our product, you know, roadmap. i think wamsi as we've talked about you know building on what tim said you know from the start we've said we you know believe ai is a really important investment area for apple and we're gonna be doing that incrementally on top of what we normally invest in our product you know roadmap I think just wanted to reiterate that point as well. i think just wanted to reiterate that point as well

Speaker 13: Okay. Thanks, Tim. Thanks, Kevan. Okay. okay Thanks, Tim. thanks tim Thanks, Kevan. thanks kevan

Speaker 7: Mm-hmm. Mm-hmm. mm-hmm

Speaker 11: Awesome. Awesome. awesome

Speaker 12: Yep. Yep. yep

Speaker 11: Thank you, Wamsi. Operator, could we get the next question, please? Thank you, Wamsi. thank you wamsi Operator, could we get the next question, please? operator could we get the next question please

Speaker 9: Our next question is from Amit Daryanani with Evercore. Please go ahead. Our next question is from Amit Daryanani with Evercore. our next question is from amit daryanani with evercore Please go ahead. please go ahead

Speaker 2: Yep, I have two as well. Good afternoon, everyone. You know, I guess first one, maybe just going back to the iPhone performance, which, you know, for a couple of quarters you folks have had 20% plus growth despite the supply constraint, and I think the guide sort of implies the momentum will continue in June. I'd love for you folks to just maybe double-click and talk about what are the levers that's driving this sort of impressive iPhone growth despite the supply constraints, and then sort of what is the durability of this growth. Yep, I have two as well. yep i have two as well Good afternoon, everyone. good afternoon everyone You know, I guess first one, maybe just going back to the iPhone performance, which, you know, for a couple of quarters you folks have had 20% plus growth despite the supply constraint, and I think the guide sort of implies the momentum will continue in June. you know i guess first one maybe just going back to the iphone performance which you know for a couple of quarters you folks have had 20% plus growth despite the supply constraint and i think the guide sort of implies the momentum will continue in june I'd love for you folks to just maybe double-click and talk about what are the levers that's driving this sort of impressive iPhone growth despite the supply constraints, and then sort of what is the durability of this growth. i'd love for you folks to just maybe double-click and talk about what are the levers that's driving this sort of impressive iphone growth despite the supply constraints and then sort of what is the durability of this growth

Speaker 12: Yeah, if you look at it's the iPhone 17 family that's driving it. That is, as you point out, is despite the supply constraints that we're experiencing. It's the things that are driving people to the 17 are people love the design, people love the performance, they love the durability, they love the camera, they love Center Stage, and they love that Apple Intelligence is integrated across the platform. From a where we're seeing the growth, it is amazing. We're seeing double-digit growth in the majority of the markets we track, from the U.S. to Latin America, to Greater China, to Western Europe, to India, to Japan, to Southeast Asia. We set a new March quarter record for upgraders as well. Yeah, if you look at it's the iPhone 17 family that's driving it. yeah if you look at it's the iphone 17 family that's driving it That is, as you point out, is despite the supply constraints that we're experiencing. that is as you point out is despite the supply constraints that we're experiencing It's the things that are driving people to the 17 are people love the design, people love the performance, they love the durability, they love the camera, they love Center Stage, and they love that Apple Intelligence is integrated across the platform. it's the things that are driving people to the 17 are people love the design people love the performance they love the durability they love the camera they love center stage and they love that apple intelligence is integrated across the platform From a where we're seeing the growth, it is amazing. from a where we're seeing the growth it is amazing We're seeing double-digit growth in the majority of the markets we track, from the U.S. to Latin America, to Greater China, to Western Europe, to India, to Japan, to Southeast Asia. we're seeing double-digit growth in the majority of the markets we track from the u.s to latin america to greater china to western europe to india to japan to southeast asia We set a new March quarter record for upgraders as well. we set a new march quarter record for upgraders as well You know, what's driving all this is that the customer satisfaction for the iPhone 17 family in the U.S., as an example, is 99%. These numbers are just unheard of. We're thrilled with how things are going. You know, what's driving all this is that the customer satisfaction for the iPhone 17 family in the U.S., as an example, is 99%. you know what's driving all this is that the customer satisfaction for the iphone 17 family in the u.s as an example is 99% These numbers are just unheard of. these numbers are just unheard of We're thrilled with how things are going. we're thrilled with how things are going

Speaker 2: Perfect. Thank you. Tim, I think we have you for 1 more earnings call, but I would really appreciate if you could kind of share a bit about the upcoming transition. You know, you have historically, I think, talked about the advice that Steve gave you when you took over, and I might be paraphrasing this, but it was around, "Don't ask what I would do, just do the right thing." That's really been a big win, I think, for Apple and shareholders over the last 15 years. Would love to understand, what advice are you giving John to help him build on Apple's strengths while shaping up the next chapter for the company? Thank you. Perfect. perfect Thank you. thank you Tim, I think we have you for 1 more earnings call, but I would really appreciate if you could kind of share a bit about the upcoming transition. tim i think we have you for 1 more earnings call but i would really appreciate if you could kind of share a bit about the upcoming transition You know, you have historically, I think, talked about the advice that Steve gave you when you took over, and I might be paraphrasing this, but it was around, "Don't ask what I would do, just do the right thing." That's really been a big win, I think, for Apple and shareholders over the last 15 years. you know you have historically i think talked about the advice that steve gave you when you took over and i might be paraphrasing this but it was around "don't ask what i would do just do the right thing." that's really been a big win i think for apple and shareholders over the last 15 years Would love to understand, what advice are you giving John to help him build on Apple's strengths while shaping up the next chapter for the company? would love to understand what advice are you giving john to help him build on apple's strengths while shaping up the next chapter for the company Thank you. thank you

Speaker 12: Well, I think Steve's advice to me lifted a huge burden. So that advice did well, for me and over the 15 years. For John, I think my advice is that, or what I've told him is that one of the most important decisions he'll make is where to spend his time. I would spend it where the greatest benefit to the company and the users are. Never forget the North Star for the company. You know, we're about making the best products in the world that really enrich other people's lives. If you keep focusing on that and make your decisions around that, it will produce a great business, and we'll be able to build more products and do it all over again. Thank you for the question. Well, I think Steve's advice to me lifted a huge burden. well i think steve's advice to me lifted a huge burden So that advice did well, for me and over the 15 years. so that advice did well for me and over the 15 years For John, I think my advice is that, or what I've told him is that one of the most important decisions he'll make is where to spend his time. for john i think my advice is that or what i've told him is that one of the most important decisions he'll make is where to spend his time I would spend it where the greatest benefit to the company and the users are. i would spend it where the greatest benefit to the company and the users are Never forget the North Star for the company. never forget the north star for the company You know, we're about making the best products in the world that really enrich other people's lives. you know we're about making the best products in the world that really enrich other people's lives If you keep focusing on that and make your decisions around that, it will produce a great business, and we'll be able to build more products and do it all over again. if you keep focusing on that and make your decisions around that it will produce a great business and we'll be able to build more products and do it all over again Thank you for the question. thank you for the question

Speaker 2: Thank you. Thank you. thank you

Speaker 11: Thanks, Amit. Operator, could we get the next question, please? Thanks, Amit. thanks amit Operator, could we get the next question, please? operator could we get the next question please

Speaker 9: Our next question is from David Vogt with UBS. Please go ahead. Our next question is from David Vogt with UBS. our next question is from david vogt with ubs Please go ahead. please go ahead

Speaker 4: Great. Thanks, guys, for taking my question. Maybe, Tim, I wanna come back to the supply chain for a second. I don't think I heard you state in your prepared remarks or in response to a question if the iPhone is constrained in the June quarter. Can you walk through kind of how you're thinking about your ability to secure not just SOC, but also memory? Are you thinking about using alternative sources of memory outside of sort of the traditional partners that you have? Just what's kind of driving that confidence that the iPhone isn't constrained given the amount of share it sounds like you're taking in that market? I have a follow-up as well. Great. great Thanks, guys, for taking my question. thanks guys for taking my question Maybe, Tim, I wanna come back to the supply chain for a second. maybe tim i wanna come back to the supply chain for a second I don't think I heard you state in your prepared remarks or in response to a question if the iPhone is constrained in the June quarter. i don't think i heard you state in your prepared remarks or in response to a question if the iphone is constrained in the june quarter Can you walk through kind of how you're thinking about your ability to secure not just SOC, but also memory? can you walk through kind of how you're thinking about your ability to secure not just soc but also memory Are you thinking about using alternative sources of memory outside of sort of the traditional partners that you have? are you thinking about using alternative sources of memory outside of sort of the traditional partners that you have Just what's kind of driving that confidence that the iPhone isn't constrained given the amount of share it sounds like you're taking in that market? just what's kind of driving that confidence that the iphone isn't constrained given the amount of share it sounds like you're taking in that market I have a follow-up as well. i have a follow-up as well

Speaker 12: Yeah. David, the constraint in the March quarter and the June quarter, the primary constraint is the availability of the advanced nodes our SOCs are produced on, not memory. I don't want to predict our ability to for supply and demand to match because if I look at it realistically, I think on the Mac mini and the Mac Studio, I believe it will take several months to reach supply-demand balance. We're not at the point where we're saying this is going to end anytime soon. It's not because of a problem per se, other than we just under called the demand. Yeah. yeah David, the constraint in the March quarter and the June quarter, the primary constraint is the availability of the advanced nodes our SOCs are produced on, not memory. david the constraint in the march quarter and the june quarter the primary constraint is the availability of the advanced nodes our socs are produced on not memory I don't want to predict our ability to for supply and demand to match because if I look at it realistically, I think on the Mac mini and the Mac Studio, I believe it will take several months to reach supply-demand balance. i don't want to predict our ability to for supply and demand to match because if i look at it realistically i think on the mac mini and the mac studio i believe it will take several months to reach supply-demand balance We're not at the point where we're saying this is going to end anytime soon. we're not at the point where we're saying this is going to end anytime soon It's not because of a problem per se, other than we just under called the demand. it's not because of a problem per se other than we just under called the demand You know, there are lead time to this, as you well understand, it takes a while to correct that. The primary constraint from a product point of view in the or the majority of it for this quarter, for the June quarter, will be on the Mac. It's Mac mini, Mac Studio, and the MacBook Neo. It's all of those. You know, there are lead time to this, as you well understand, it takes a while to correct that. you know there are lead time to this as you well understand it takes a while to correct that The primary constraint from a product point of view in the or the majority of it for this quarter, for the June quarter, will be on the Mac. the primary constraint from a product point of view in the or the majority of it for this quarter for the june quarter will be on the mac It's Mac mini, Mac Studio, and the MacBook Neo. it's mac mini mac studio and the macbook neo It's all of those. it's all of those

Speaker 4: Great. Great. great

Speaker 12: Yeah. Thank you. Yeah. yeah Thank you. thank you

Speaker 4: Maybe just on services real quick. You know, obviously, you know, real-relatively strong gross margins yet again. Are we getting to a point, given sort of the product mix within services, I know a lot of different offerings are growing double digits, that we're sort of asymptotically getting to a level where, we're seeing, you know, increasingly more challenging to scale that business from a profitability perspective? Or is there still sort of low-hanging fruit in terms of volume leverage in some of the offerings, or maybe lower losses in some different categories that can continue to scale gross margin across the services base? Thanks. Maybe just on services real quick. maybe just on services real quick You know, obviously, you know, real-relatively strong gross margins yet again. you know obviously you know real-relatively strong gross margins yet again Are we getting to a point, given sort of the product mix within services, I know a lot of different offerings are growing double digits, that we're sort of asymptotically getting to a level where, we're seeing, you know, increasingly more challenging to scale that business from a profitability perspective? are we getting to a point given sort of the product mix within services i know a lot of different offerings are growing double digits that we're sort of asymptotically getting to a level where we're seeing you know increasingly more challenging to scale that business from a profitability perspective Or is there still sort of low-hanging fruit in terms of volume leverage in some of the offerings, or maybe lower losses in some different categories that can continue to scale gross margin across the services base? or is there still sort of low-hanging fruit in terms of volume leverage in some of the offerings or maybe lower losses in some different categories that can continue to scale gross margin across the services base Thanks. thanks

Speaker 7: Yeah, David, it's Kevan. Thanks for the question. Look, as you know, our services portfolio contains a wide range of businesses that have different, you know, business models and profitability profiles and also are growing at different rates. At any given time, right, the relative performance of those can impact the gross margin. This time in particular, we look at the, you know, Q2 services margin. We talked about the fact that it increased 20 basis points sequentially. That's primarily driven by mix. Again, I think it's hard to speculate, you know, how that evolves over time. You know, we're encouraged by what we're seeing. We do have some services that are improving in profitability as they gain scale. Yeah, David, it's Kevan. yeah david it's kevan Thanks for the question. thanks for the question Look, as you know, our services portfolio contains a wide range of businesses that have different, you know, business models and profitability profiles and also are growing at different rates. look as you know our services portfolio contains a wide range of businesses that have different you know business models and profitability profiles and also are growing at different rates At any given time, right, the relative performance of those can impact the gross margin. at any given time right the relative performance of those can impact the gross margin This time in particular, we look at the, you know, Q2 services margin. this time in particular we look at the you know q2 services margin We talked about the fact that it increased 20 basis points sequentially. we talked about the fact that it increased 20 basis points sequentially That's primarily driven by mix. that's primarily driven by mix Again, I think it's hard to speculate, you know, how that evolves over time. again i think it's hard to speculate you know how that evolves over time You know, we're encouraged by what we're seeing. you know we're encouraged by what we're seeing We do have some services that are improving in profitability as they gain scale. we do have some services that are improving in profitability as they gain scale Again, I think we have a wide portfolio that has different characteristics and can grow, you know, at different rates at different times. Overall, we're encouraged by the overall trajectory that we've seen. Again, I think we have a wide portfolio that has different characteristics and can grow, you know, at different rates at different times. again i think we have a wide portfolio that has different characteristics and can grow you know at different rates at different times Overall, we're encouraged by the overall trajectory that we've seen. overall we're encouraged by the overall trajectory that we've seen

Speaker 4: Great. Thank you, guys. Great. great Thank you, guys. thank you guys

Speaker 11: All right. Thank you, David. Operator, could we get the next question, please? All right. all right Thank you, David. thank you david Operator, could we get the next question, please? operator could we get the next question please

Speaker 9: Our next question is from Samik Chatterjee with JP Morgan. Please go ahead. Our next question is from Samik Chatterjee with JP Morgan. our next question is from samik chatterjee with jp morgan Please go ahead. please go ahead

Speaker 10: Hi, thanks for taking my questions. Tim, for my first question, last quarter you did talk about Apple foundational models and sort of the two-pronged strategy there of the collaboration with Google as well as continuing to internally sort of work on your own models. Hoping you can sort of give us an update in terms of how you're able to balance those two priorities, as well as do you feel like you need to double down, invest more to be able to balance those two priorities side by side? Kind of a follow-up. Hi, thanks for taking my questions. hi thanks for taking my questions Tim, for my first question, last quarter you did talk about Apple foundational models and sort of the two-pronged strategy there of the collaboration with Google as well as continuing to internally sort of work on your own models. tim for my first question last quarter you did talk about apple foundational models and sort of the two-pronged strategy there of the collaboration with google as well as continuing to internally sort of work on your own models Hoping you can sort of give us an update in terms of how you're able to balance those two priorities, as well as do you feel like you need to double down, invest more to be able to balance those two priorities side by side? hoping you can sort of give us an update in terms of how you're able to balance those two priorities as well as do you feel like you need to double down invest more to be able to balance those two priorities side by side Kind of a follow-up. kind of a follow-up

Speaker 12: Yeah, it's a good question. We are investing more. You can see that in the OpEx numbers. As I'd mentioned before, the R&D in particular has scaled rather significantly on a year-over-year basis. The collaboration with Google is going well. We're happy with where things are, and we're happy with the work that we're doing independently as well. Yeah, it's a good question. yeah it's a good question We are investing more. we are investing more You can see that in the OpEx numbers. you can see that in the opex numbers As I'd mentioned before, the R&D in particular has scaled rather significantly on a year-over-year basis. as i'd mentioned before the r&d in particular has scaled rather significantly on a year-over-year basis The collaboration with Google is going well. the collaboration with google is going well We're happy with where things are, and we're happy with the work that we're doing independently as well. we're happy with where things are and we're happy with the work that we're doing independently as well

Speaker 10: Okay, great. My follow-up for Kevan. Kevan, the sequential moderation in the product gross margin this year is relatively muted compared to what you've historically seen, at least over the last couple of years. Is it primarily mix, or what was the, maybe the FX tailwind as well? How would we sort of break it down in terms of what was different this year relative to what we typically see? If you could sort of also clarify what the FX impact on gross margin was for the quarter. Thank you. Okay, great. okay great My follow-up for Kevan. my follow-up for kevan Kevan, the sequential moderation in the product gross margin this year is relatively muted compared to what you've historically seen, at least over the last couple of years. kevan the sequential moderation in the product gross margin this year is relatively muted compared to what you've historically seen at least over the last couple of years Is it primarily mix, or what was the, maybe the FX tailwind as well? is it primarily mix or what was the maybe the fx tailwind as well How would we sort of break it down in terms of what was different this year relative to what we typically see? how would we sort of break it down in terms of what was different this year relative to what we typically see If you could sort of also clarify what the FX impact on gross margin was for the quarter. if you could sort of also clarify what the fx impact on gross margin was for the quarter Thank you. thank you

Speaker 7: Sure, Samik. Well, let me start. On products, for Q2, basically products gross margin did decrease by 200 basis points sequentially, driven by, you know, seasonal loss of leverage and higher memory costs, as Tim had alluded. If I zoom out, though, I think it's important just to look at what drove the overall company gross margin performance, and let me just give you a quick kinda rundown of that. If you look at our overall performance, right, our sequential gross margin impact was 110 basis points positively, and that was driven by favorable mix, lower tariff-related costs, and that was partly offset by seasonal loss of leverage and higher memory costs. Sure, Samik. sure samik Well, let me start. well let me start On products, for Q2, basically products gross margin did decrease by 200 basis points sequentially, driven by, you know, seasonal loss of leverage and higher memory costs, as Tim had alluded. on products for q2 basically products gross margin did decrease by 200 basis points sequentially driven by you know seasonal loss of leverage and higher memory costs as tim had alluded If I zoom out, though, I think it's important just to look at what drove the overall company gross margin performance, and let me just give you a quick kinda rundown of that. if i zoom out though i think it's important just to look at what drove the overall company gross margin performance and let me just give you a quick kinda rundown of that If you look at our overall performance, right, our sequential gross margin impact was 110 basis points positively, and that was driven by favorable mix, lower tariff-related costs, and that was partly offset by seasonal loss of leverage and higher memory costs. if you look at our overall performance right our sequential gross margin impact was 110 basis points positively and that was driven by favorable mix, lower tariff-related costs and that was partly offset by seasonal loss of leverage and higher memory costs I did wanna turn it over to Tim, 'cause we do wanna provide some clarity around the lower tariff-related costs, and just make a comment on that as well. I did wanna turn it over to Tim, 'cause we do wanna provide some clarity around the lower tariff-related costs, and just make a comment on that as well. i did wanna turn it over to tim 'cause we do wanna provide some clarity around the lower tariff-related costs and just make a comment on that as well

Speaker 12: Yeah, thanks, Kevan. For the March quarter, the gross margin of 49.3% did include the impact of tariff-related costs. However, tariffs in the March quarter versus the December quarter were lower because we had lower product volume, as you know, sequentially from Q1 to Q2. There was the full quarter benefit from a reduction in the IEEPA tariff rates, as well as the reduced global tariff rate under Section 122. In terms of applying for a refund of tariffs paid, we're following the established processes, and we plan to reinvest any amount we receive back into U.S. innovation and advanced manufacturing. These would be new investments and would be in addition to our prior commitments in the U.S. Yeah, thanks, Kevan. yeah thanks kevan For the March quarter, the gross margin of 49.3% did include the impact of tariff-related costs. for the march quarter the gross margin of 49.3% did include the impact of tariff-related costs However, tariffs in the March quarter versus the December quarter were lower because we had lower product volume, as you know, sequentially from Q1 to Q2. however tariffs in the march quarter versus the december quarter were lower because we had lower product volume as you know sequentially from q1 to q2 There was the full quarter benefit from a reduction in the IEEPA tariff rates, as well as the reduced global tariff rate under Section 122. there was the full quarter benefit from a reduction in the ieepa tariff rates as well as the reduced global tariff rate under section 122 In terms of applying for a refund of tariffs paid, we're following the established processes, and we plan to reinvest any amount we receive back into U.S. innovation and advanced manufacturing. in terms of applying for a refund of tariffs paid we're following the established processes and we plan to reinvest any amount we receive back into u.s innovation and advanced manufacturing These would be new investments and would be in addition to our prior commitments in the U.S. these would be new investments and would be in addition to our prior commitments in the u.s

Speaker 7: 1 last point on your FX question. We really didn't see any sequential impact related to foreign exchange as a factor going from Q1 gross margin to Q2. 1 last point on your FX question. 1 last point on your fx question We really didn't see any sequential impact related to foreign exchange as a factor going from Q1 gross margin to Q2. we really didn't see any sequential impact related to foreign exchange as a factor going from q1 gross margin to q2

Speaker 10: Thank you. Thank you. thank you

Speaker 7: Mm. Mm. mm

Speaker 11: All right. Thank you. Operator, could we get the last question, please? All right. all right Thank you. thank you Operator, could we get the last question, please? operator could we get the last question please

Speaker 9: We'll go ahead and take our last question from Aaron Rakers with Wells Fargo. Please go ahead. We'll go ahead and take our last question from Aaron Rakers with Wells Fargo. we'll go ahead and take our last question from aaron rakers with wells fargo Please go ahead. please go ahead

Speaker 1: Yeah, thanks for taking the question, and congrats on the quarter. I wanted to ask about a few of the end markets. I guess particularly, Tim, if you could comment a little bit on what you're seeing specifically in China. I guess from a competitive perspective, are you seeing advantages from supply constraints impacting some of your competitors? Any thoughts on the China market, and I do have a quick follow-up. Yeah, thanks for taking the question, and congrats on the quarter. yeah thanks for taking the question and congrats on the quarter I wanted to ask about a few of the end markets. i wanted to ask about a few of the end markets I guess particularly, Tim, if you could comment a little bit on what you're seeing specifically in China. i guess particularly tim if you could comment a little bit on what you're seeing specifically in china I guess from a competitive perspective, are you seeing advantages from supply constraints impacting some of your competitors? i guess from a competitive perspective are you seeing advantages from supply constraints impacting some of your competitors Any thoughts on the China market, and I do have a quick follow-up. any thoughts on the china market and i do have a quick follow-up

Speaker 12: Yeah. We are thrilled with the performance in Greater China. The first half of the year grew at 33%. In the March quarter, revenue was up 28%. It's a quarterly revenue record for us. The performance is really driven by iPhone, which was also a March quarter record. If you look at the individual products, iPhone was the top-selling model in urban China. The Mac mini was the top-selling desktop in China, and the MacBook Air was the top-selling laptop model. We're really doing well, pretty well across the board there. I was over there in March. The traffic in our stores grew by double digit. We were celebrating the Apple's fiftieth anniversary there, and it was just amazing to be a part of the community there. Yeah. yeah We are thrilled with the performance in Greater China. we are thrilled with the performance in greater china The first half of the year grew at 33%. the first half of the year grew at 33% In the March quarter, revenue was up 28%. in the march quarter revenue was up 28% It's a quarterly revenue record for us. it's a quarterly revenue record for us The performance is really driven by iPhone, which was also a March quarter record. the performance is really driven by iphone which was also a march quarter record If you look at the individual products, iPhone was the top-selling model in urban China. if you look at the individual products iphone was the top-selling model in urban china The Mac mini was the top-selling desktop in China, and the MacBook Air was the top-selling laptop model. the mac mini was the top-selling desktop in china and the macbook air was the top-selling laptop model We're really doing well, pretty well across the board there. we're really doing well pretty well across the board there I was over there in March. i was over there in march The traffic in our stores grew by double digit. the traffic in our stores grew by double digit We were celebrating the Apple's fiftieth anniversary there, and it was just amazing to be a part of the community there. we were celebrating the apple's fiftieth anniversary there and it was just amazing to be a part of the community there I'm really happy with how things have gone the first half of this year. I'm really happy with how things have gone the first half of this year. i'm really happy with how things have gone the first half of this year

Speaker 1: Yeah. Maybe I'll stick with a similar theme, kind of the same question on the India market. It seems like that continues to be a focal point on these last several quarterly conference calls. I mean, how are you seeing the market in India evolve around, you know, the base of iPhones and the opportunity of kind of a rising middle class, just the overall opportunity set in that large mobile market? Yeah. yeah Maybe I'll stick with a similar theme, kind of the same question on the India market. maybe i'll stick with a similar theme kind of the same question on the india market It seems like that continues to be a focal point on these last several quarterly conference calls. it seems like that continues to be a focal point on these last several quarterly conference calls I mean, how are you seeing the market in India evolve around, you know, the base of iPhones and the opportunity of kind of a rising middle class, just the overall opportunity set in that large mobile market? i mean how are you seeing the market in india evolve around you know the base of iphones and the opportunity of kind of a rising middle class just the overall opportunity set in that large mobile market

Speaker 12: Yeah. I think it's a huge opportunity for us. You know, we've been focused on this for a while. It's the second-largest smartphone market in the world and the third-largest PC market. Despite doing extremely well there for quite some time, we still have a modest share. I think there's that really speaks to the opportunity that we have. There are a lot of people moving into the middle class there, and we've got some great products for them, both currently and coming. If you look at the majority of customers on all of our categories, from the iPhone to the Mac to the iPad to the Watch, are new to that product there. It speaks very well to growing the install base there. Yeah. yeah I think it's a huge opportunity for us. i think it's a huge opportunity for us You know, we've been focused on this for a while. you know we've been focused on this for a while It's the second-largest smartphone market in the world and the third-largest PC market. it's the second-largest smartphone market in the world and the third-largest pc market Despite doing extremely well there for quite some time, we still have a modest share. despite doing extremely well there for quite some time we still have a modest share I think there's that really speaks to the opportunity that we have. i think there's that really speaks to the opportunity that we have There are a lot of people moving into the middle class there, and we've got some great products for them, both currently and coming. there are a lot of people moving into the middle class there and we've got some great products for them both currently and coming If you look at the majority of customers on all of our categories, from the iPhone to the Mac to the iPad to the Watch, are new to that product there. if you look at the majority of customers on all of our categories from the iphone to the mac to the ipad to the watch are new to that product there It speaks very well to growing the install base there. it speaks very well to growing the install base there Net-net, I'm over the moon excited about India. Net-net, I'm over the moon excited about India. net-net i'm over the moon excited about india

Speaker 1: Thank you. Thank you. thank you

Speaker 12: Yep. Yep. yep

Speaker 11: Thank you, Aaron Rakers. A replay of today's call will be available for 2 weeks on Apple Podcasts, as a webcast on apple.com/investor, and via telephone. The number for the telephone replay is 866-583-1035. Please enter confirmation code 2803309, followed by the pound sign. These replays will be available by approximately 5:00 P.M. Pacific Time today. Members of the press with additional questions can contact Josh Rosenstock at 408-862-1142. Financial analysts can contact me, Suhasini Chandramouli, with additional questions at 408-974-3123. Thanks again for joining us today. Thank you, Aaron Rakers. thank you aaron rakers A replay of today's call will be available for 2 weeks on Apple Podcasts, as a webcast on apple.com/investor, and via telephone. a replay of today's call will be available for 2 weeks on apple podcasts as a webcast on apple.com/investor and via telephone The number for the telephone replay is 866-583-1035. the number for the telephone replay is 866-583-1035 Please enter confirmation code 2803309, followed by the pound sign. please enter confirmation code 2803309 followed by the pound sign These replays will be available by approximately 5:00 P.M. these replays will be available by approximately 5:00 p.m Pacific Time today. pacific time today Members of the press with additional questions can contact Josh Rosenstock at 408-862-1142. members of the press with additional questions can contact josh rosenstock at 408-862-1142 Financial analysts can contact me, Suhasini Chandramouli, with additional questions at 408-974-3123. financial analysts can contact me suhasini chandramouli with additional questions at 408-974-3123 Thanks again for joining us today. thanks again for joining us today

Speaker 9: Once again, this does conclude today's conference. We do appreciate your participation. Once again, this does conclude today's conference. once again this does conclude today's conference We do appreciate your participation. we do appreciate your participation