This is Tim: Complete transcript of Apple’s Q3 2025 financial call
Every quarter after releasing financial results, Apple CEO Tim Cook and CFO Kevan Parekh hop on a conference call with analysts to detail the quarter gone by, give a peek at what’s to come, and creatively avoid answering any pointed questions from analysts. This is Six Colors’s transcript of the call.
Tim Cook’s opening statement
Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Today, we are proud to report a June quarter revenue record of $94 billion, up 10 percent from a year ago, which was better than we expected. EPS set a June quarter record of $1.57, up 12% year over year. We saw an acceleration of growth around the world in the vast majority of markets we track, including greater China and many emerging markets, and we had June quarter revenue records in more than=two dozen countries and regions, including the U.S., Canada, Latin America, Western Europe, the Middle East, India, and South Asia. These results were driven by double-digit growth across iPhone, Mac, and services.
We set a June quarter record for iPhone, which grew a strong 13% year over year. We saw iPhone growth in every geographic segment and double-digit growth in emerging markets including India, the Middle East, South Asia, and Brazil. Mac continued to see excellent results with revenue up 15% year-over-year, and we set another all-time revenue record in Services which grew 13% with double-digit growth in both developed and emerging markets.
Last month, we hosted WWDC, an incredible event for our developer community, with millions joining us online and more than a thousand developers here in person at Apple Park. We shared some truly exciting updates, including a stunning new design crafted from a material we call liquid glass. It’s both beautiful and expressive, and for the first time ever, this design extends across all of our platforms. We can’t wait for users everywhere to experience it this fall. And we were excited to share some updates across our AI work. We announced even more capabilities coming later this year, including live translation and Workout Buddy. In addition to those new features, we announced new support for a number of languages, and we opened up access to the on-device foundation models at the core of Apple Intelligence, enabling developers to build a whole new experience for our users. It’s wonderful to see great momentum building for our platforms. iOS 26, macOS 26, and iPadOS 26 are by far the most popular developer betas we’ve had.
Taking a step back, we see AI as one of the most profound technologies of our lifetime. We are embedding it across our devices and platforms and across the company. We are also significantly growing our investments. Apple has always been about taking the most advanced technologies and making them easy to use and accessible for everyone, and that’s at the heart of our AI strategy. With Apple Intelligence, we’re integrating AI features across our platforms in a way that is deeply personal, private, and seamless, right where users need them. We’ve already released more than 20 Apple Intelligence features, including visual intelligence, cleanup, and powerful Writing Tools. We’re making good progress on a more personalized Siri, and as we’ve said before, we expect to release these features next year.
Apple silicon is at the heart of all of these experiences, enabling powerful Apple Intelligence features to run directly on device. For more advanced tasks, our servers, also powered by Apple silicon, deliver even greater capabilities while preserving user privacy through our Private Cloud Compute architecture. We believe our platforms offer the best way for users to experience the full potential of generative AI. Thanks to the exceptional performance of our systems, our users are able to run generative AI models right on their Mac, iPad, and iPhone. We’re excited about the work we’re doing in this space, and it’s incredibly rewarding to see the strong momentum building.
Now let me turn to more details about our results for the quarter, starting with iPhone. iPhone revenue was $44.6 billion, up 13 percent from a year ago, and we set a June quarter record for upgraders. This strong, broad-based performance was driven by the incredible popularity of the iPhone 16 family, which was up strong double digits year over year as compared to the 15 family. We also recently marked a significant milestone: We shipped the 3 billionth iPhone since its launch in 2007. From the Pro models with the powerhouse A18 Pro and innovative pro camera features to the iPhone 16e with breakthrough battery life and a 2-in-1 camera system, users are finding so many reasons to love the best iPhone lineup we’ve ever created. And iOS 26 will take that experience even further. In addition to the beautiful new design and powerful Apple Intelligence features, it introduces a range of meaningful updates, like real-time call screening and hold assist in the phone app, smarter messaging tools, and new live translation features. It all adds up to a smarter, more personal iPhone experience that we can’t wait for users everywhere to enjoy this fall.
In Mac, we had another strong quarter, with revenue of $8 billion, up 15% year over year, largely driven by the strength of the M4 MacBook Air. We set a June quarter record for upgraders on Mac and we saw great performance in emerging markets with strong double-digit growth on revenue as well as strong double-digit growth on both upgraders and customers new to Mac. MacBook Air, the world’s most popular laptop, unlocks a whole new level of performance with the power of M4. MacBook Pro customers, meanwhile, continue to be drawn to its incredible power and the longest battery life we’ve ever had on a Mac. Customers are also loving the newest Mac Studio, which is the most powerful Mac we’ve ever made, with next-level capabilities to tackle even the most demanding AI workflows. At the same time, Mac mini continues to win over customers by packing so much performance into an ultra compact design. And with fantastic new updates in macOS Tahoe 26, from the phone app, to live activities, to our biggest-ever update to Spotlight, Mac users across our entire lineup are going to find delightful new ways to stay connected and productive.
For iPad, June quarter revenue was $6.6 billion. Our incredibly versatile iPad lineup brings together power and portability like never before, and users are already excited for our biggest iPad software update ever with the upcoming release of iPadOS 26. It starts with a new windowing system that’s remarkably intuitive, giving users more control than ever of their iPad experience. An enhanced Files app makes it easier than ever to stay organized, and that’s all on top of a beautiful new software design that brings these updates to life.
Turning to Wearables, Home, and Accessories, revenue was $7.4 billion, and we saw a June quarter record for upgraders to Apple Watch. During the quarter, we marked the 10-year anniversary of Apple Watch, celebrating a decade of helping users navigate their health and fitness journeys. And with WatchOS 26, Apple Watch will be more intelligent than ever, with smart updates to the Workout app and Smart Stack, along with a fresh new design that feels both dynamic and personal. We’re also thrilled about what’s coming to Apple Vision Pro with VisionOS 26, introducing Spatial widgets that let users customize their digital space, more lifelike Personas, and new enterprise APIs that empower companies to build their own spatial experiences. And this fall, new features for our latest AirPods lineup will unlock even more possibilities, from studio-quality audio recording to using AirPods as a camera remote, giving users powerful new ways to capture content and stay connected.
As we’re innovating across our lineup, we’re especially proud of the work we’re doing to help our users live healthier lives. Since we first launched our hearing health features for AirPods Pro 2, I’ve received notes from people who are delighted to be able to connect more deeply with loved ones. Whether it’s with AirPods Pro 2 or Apple Watch or iPhone, it’s amazing to see the power of our health and safety features, from hearing tests to fall detection alerts to irregular rhythm notifications having such a profound impact.
Turning to Services, revenue for the June quarter was $27.4 billion, up 13% from a year ago, and an all-time record. Apple TV+ scored 81 nominations, a record for the platform, across nearly every eligible category for this year’s Emmy Awards. Severance leads all Emmy nominees with 27 nominations and The Studio follows close behind with 23 nominations, more than any other freshman comedy series ever. It’s amazing to see how these and other Apple TV shows have captured the popular imagination. To date, Apple TV+ has earned more than 2,700 award nominations and 585 wins on the strength of the highest-rated original content of any streaming network. And we continue to see very positive trends in the June quarter, with TV+ viewership up strong double digits year over year. In June we were also thrilled to release F1 in theaters around the world, one of the summer’s most unforgettable blockbusters. During the quarter, we celebrated a big anniversary with 10 years of Apple Music. To mark the occasion, we launched an all-new studio space in Los Angeles for artists to create content and connect with fans, and later this year, we’re bringing Apple Music users even more to love, from an enhanced listening experience with AutoMix, which mixes songs like a DJ, to lyrics translation and more. The App Store, meanwhile, continues to be the very best place to discover the latest apps from developers around the world in a safe and trusted way, and App Store revenue grew double digits year over year, setting a June quarter record.
In retail, we continue to find opportunities in emerging markets to connect with even more customers. We recently launched the Apple Store online in Saudi Arabia, and we couldn’t be more excited to open new stores in the UAE and India later this year. We were also delighted to welcome customers in Japan to a new location in the heart of Osaka.
Across everything we do at Apple, we show up by leading with our values. We feel strongly that the benefits of technology should be shared by everyone. That’s why we make technology for everyone. In May, to mark Global Accessibility Awareness Day, we announced updates to help users learn, connect, and interact with their worlds, including Magnifier for Mac, a new Braille experience, and Accessibility Reader, a new system-wide reading mode to make it easier to understand content. And we’re proud to introduce Accessibility Nutrition Labels, giving users an understanding of accessibility features before they download an app, while helping developers educate people on features their apps support.
This month, we also announced a half-a-billion-dollar commitment with MP Materials to strengthen the supply of vital recycled rare earth materials in the U.S. and support American industry. And in August, we’re opening our all-new Apple Manufacturing Academy in Detroit to train and support American manufacturers. These investments are part of Apple’s largest-ever spend commitment, which we announced earlier this year. Over the next four years, Apple is investing $500 billion in the U.S., driving innovation and creating jobs in cutting-edge fields like advanced manufacturing, silicon engineering, and artificial intelligence. We’re proud of this work, and all that we’re doing to tap into American innovation and bring the best technology experiences to users across the globe. And we continue to look for further opportunities to do even more.
Finally, the situation around tariffs is evolving, so let me provide some color there. For the June quarter, we incurred approximately $800 million of tariff-related costs. For the September quarter, assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add about $1.1 billion to our costs. This estimate should not be used to make projections for future quarters, as there are many factors that could change, including tariff rates.
We’re really proud of our results for the June quarter, and I want to thank our teams and our customers. In everything we do, we’re driven by transformative innovation, delivering the most exceptional products and services we’ve ever created, and we’re especially excited about what’s ahead. With that, I’ll turn it over to Kevan.
Apple CFO Kevan Parekh’s opening statement
Thanks, Tim, and good afternoon everyone. Our revenue of $94 billion was up 10% year-over-year and is a new June quarter record. We grew in every geographic segment and in the vast majority of the markets we track. Products revenue was $66.6 billion, up 8% year-over-year, driven by growth across iPhone and Mac. And thanks to our high levels of customer satisfaction and strong loyalty, our installed base of active devices reached another all-time high across all product categories and geographic segments. Services revenue was $27.4 billion, up 13% year-over-year, and an all-time record. We saw strength across the world, with double-digit growth in the majority of our markets.
Company gross margin was 46.5%, at the high end of our guidance range and down 60 basis points sequentially, primarily driven by approximately $800 million in tariff related costs Tim mentioned earlier. Products gross margin was 34.5% down 140 basis points sequentially driven by mix and tariff related costs, partly offset by cost savings. Services gross margin was 75.6 percent, down 10 basis points sequentially. Operating expenses landed at $15.5 billion, up 8 percent year over year. This strong business performance led to June quarter records for both net income, at $23.4 billion, and diluted earnings per share of $1.57, which was up 12% year-over-year. Operating cash flow was also strong at $27.9 billion.
Now, I’m going to provide some more details for each of our revenue categories. iPhone revenue was $44.6 billion, up 13% year-over-year, driven by the iPhone 16 family. As Tim noted, we saw iPhone growth in every geographic segment and double-digit growth in many emerging markets. The iPhone active installed base grew to an all-time high in total and in every geographic segment, and we reached a June quarter record for upgraders. According to a recent survey from World Panel, formerly of Kantar, iPhone was a top-selling model in the U.S., urban China. the UK, Australia, and Japan during the June quarter, and we continue to see very high levels of customer satisfaction in the U.S., at 98 percent, as measured by 451 Research.
Mac revenue was $8 billion, up 15 percent year-over-year, driven by continued strength across the portfolio, including MacBook Air, Mac Mini, and MacBook Pro. We grew in every geographic segment and saw double-digit growth in Europe, Greater China, and the rest of Asia-Pacific. The Mac installed base reached an all-time high and we hit a June quarter record for upgraders. In the U.S., customer satisfaction was recently measured at 97 percent.
iPad revenue was $6.6 billion, down 8% year-over-year, which was expected given the difficult compare against the launch of the iPad Air and iPad Pro in the year-ago quarter. At the same time, the iPad installed base reached another all-time high, and over half of the customers who purchased an iPad during the quarter were new to the product. And based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S.
Wearables, Home, and Accessories revenue was $7.4 billion, down 9% year-over-year. This was driven by a difficult compare on accessories due to the prior year’s iPad launches that I just referred to. The Apple Watch installed base reached a new all-time high, with over half of customers purchasing an Apple Watch during the quarter being new to the product. We also set a quarterly record for upgraders on Apple Watch, and the latest customer satisfaction for Watch in the U.S. was reported at 97%.
Our Services revenue reached an all-time high of $27.4 billion, up 13% year-over-year. The performance in the June quarter was broad-based. We saw a sequential acceleration across a majority of the categories, including cloud services, where we reached an all-time revenue record driven by the year-over-year growth of iCloud paying accounts. We saw strong momentum during the June quarter, and the growth of our installed base of active devices gives us great opportunities for the future. Customer engagement across our services offerings also continued to grow. Both transacting and paid accounts reached new all-time highs, with paid accounts growing double digits year-over-year. Paid subscriptions also grew double digits. We have well over a billion paid subscriptions across the services on our platform. We continue to improve the quality and breadth of our service offerings, from the new Apple Games app to a continued expansion of Tap to Pay in Wallet.
Turning to enterprise, organizations are continuing to invest in Apple products to drive employee innovation and productivity. With companies like PayPal and Roche deploying more Macs for their workforce, we had the best June quarter ever for Mac in Enterprise. In Thailand, Siam Commercial Bank, one of the largest Thai banks, has deployed thousands of iPads across their branches to enhance the quality and efficiency of their banking operations, from loan services to wealth management. CAE, a leader in pilot training and simulation technology, is using Apple Vision Pro to enable pilots to become more familiar with aircraft procedures, leading to more productive in-person flight simulator training outcomes.
Let’s turn to our cash position and capital return program. We ended the quarter with $133 billion in cash and marketable securities. We had $5.7 billion of debt maturities, issued $4.5 billion of new debt, and increased commercial paper by $4 billion, resulting in $102 billion in total debt. Therefore, at the end of the quarter, net cash was $31 billion. During the quarter we returned over $27 billion to shareholders. This included $3.9 billion in dividends and equivalents and $21 billion through open market repurchases of 104 million Apple shares.
As we move into the September 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 the global tariff rates, policies, and application remain in effect as of this call, the global macroeconomic outlook does not worsen from today, and the current revenue-share agreement with Google continues.
We expect our September quarter total company revenue to grow mid-to-high single digits year over year. We expect Services revenue to grow at a year-over-year rate similar to what we reported in the June quarter. We expect gross margin to be between 46% and 47%, which includes the estimated impact of the $1.1 billion tariff-related costs that Tim referred to earlier. We expect operating expenses to be between $15.6 billion and $15.8 billion. We expect OI&E to be around negative $25 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17 percent. Finally, today our Board of Directors has declared a cash dividend of 26 cents per share of common stock payable on August 14, 2025 to shareholders of record as of August 11th, 2025. With that, let’s open the call to questions.
Q&A
Michael Ng, Goldman Sachs: Hey, good afternoon. Thank you for the questions. I just have one on upgrade rates and one on CapEx. First, on the upgrade rates, it was encouraging to see the records on iPhone, Mac, and Watch. I was wondering if you’re seeing strength in the upgrade rates or are the records more a function of the growing installed base? What is your research showing that made upgrades particularly compelling this year? For example, is it product features, tariff, pull forward, perhaps Apple Intelligence? And then I’ll give my follow-up on CapEx. On the CapEx, it’s up notably year to date. Could you just comment on your capital spending plans this year and next and provide some qualitative color in terms of what’s driving that growth? Is it AI-related or supply chain diversification, for instance?
Kevan Parekh: Yeah, Mike, it’s a combination of factors. I would say a pretty significant driver, as Tim talked about, is the fact we are increasing our investment significantly in AI. So that is certainly a component of it. As you know, we’ve been investing in Private Cloud Compute, which is also in our first-party data centers. The other piece, as you know, is we do have a hybrid strategy where in cases we do use third parties to make capital investments and we also invest in our own. So you are going to see an increase in CapEx. We also, from time to time, have other investments in facilities, in tooling. But I would say a significant portion of the driver of growth that you’re seeing now is really driven by some of our AI-related investments.
Tim Cook: On the upgrades, Michael, if you look at iPhone, the 16 family grew double-digit as opposed to the 15 family from the year-ago quarter. And so we did set an upgrade record. I think it directly is because of the strength of the product. Mac also set records on upgrade. And I think we continue to see a move to Apple Silicon. And the performance of Apple Silicon is playing a very key role. And so it was an incredible quarter. In terms of, if you’re wondering about pull forward, we would estimate the pull forward of demand into April, specifically, to be about one point of the ten points. In terms of people buying because of discussions about tariffs.
Eric Woodring, Morgan Stanley:. Good afternoon, guys. Thank you very much for taking my questions. I have two as well. Maybe starting with you, you know, shortly after March quarter earnings, there were some reports about searches on Safari declining in April for the first time, I think, in over two decades. Judging by your 13% services growth this quarter, it doesn’t seem to indicate that April trends necessarily played out through the remainder of the June quarter, and so I’m really just looking for a little bit more color on really how the rest of the quarter played out, and if you believe Apple products as kind of search access points, are losing their strategic value as AI platforms become more popular, or increasing in strategic value?
Tim Cook: I think they continue to be very valuable. I think that consumers’ behaviors are evolving and we’re monitoring it very closely.
Eric Woodring, Morgan Stanley: I’d love if you could maybe elaborate a bit on what you’re seeing in China. I think in an interview earlier this afternoon, you alluded to some of the promotions being tailwinds, but just bigger picture, if we take a step back in China, how would you characterize demand interest in the iPhone 16 and some of your other products? Is that shifting, or maybe were some of the trends in the June quarter maybe a bit more one time and unique in nature.
Tim Cook: Yeah we we did grow in greater China by 4 percent during the quarter versus the previous quarter. It was driven by an acceleration by iPhone, although we also had substantial growth on the Mac year over year. As you know, the government has placed certain subsidies that affect some of our products, not all of them, but there are some of them, and I think that had some effect. It was the first full quarter of the subsidy playing out. It cut in during a portion of the previous quarter. The other things I would say are that the installed base hit a record high in Greater China, and we set an all-time record for the iPhone installed base. The iPhone upgraders in mainland China set a record for the June quarter, and according to World Panel, which was formerly known as Kantar, iPhone had the top three models in urban China, which is extraordinary. Also if you look at the other products, Mac, iPad, and Watch, the majority of customers that are buying in China mainland were new to the product. So lots of good things there. And the other thing I would point out, which… interesting point, the MacBook Air was the top selling laptop model in all of China, and the Mac Mini was the top-selling desktop model in all of China. So, overall, a positive, very positive quarter.
Ben Reitzes, Melius Research: I wanted to ask about Siri, Tim, and just overall AI investment. There’s a perception that Siri is going to help drive other new products, potentially, maybe where voice is quite needed and just wondering, how’s your confidence towards launching that next year? Is there anything that that’s been done internally to increase that confidence? Is it tied to the investment? I just think folks would love to know a little bit more about your confidence and how that’s going.
Tim Cook: Yeah, thanks for the question. We’re making good progress on a more personalized Siri, and we do expect to release the features next year, as we had said earlier. Our focus from an AI point of view is on putting AI features across the platform that are deeply personal, private, and seamlessly integrated, and, of course, we’ve done that with more than 20 Apple Intelligence features so far, from Visual Intelligence to Clean Up to Writing Tools and all the rest. We are significantly growing our investment. We did during the June quarter, we will again in the September quarter. I’m not putting specific numbers behind that at this point, but you can probably tell in the guidance that things are moving up. We are also reallocating a fair number of people to focus on AI features within the company. We have a great team and we’re putting all of our energy behind it. In terms of other products, I don’t want to really comment on specific other products but we have an exciting roadmap ahead and I could not be more excited about it.
Ben Reitzes, Melius Research: That’s great, Tim, thanks for the color. Just with regard to my second question, it’s about the overall revenue guide, and I appreciate that you guide the best you can see it, but I just wanted to challenge it from a different way. You know, why would it decelerate if services is staying the same at 13? Is there a conservatism there, I would think even currency is just as favorable if not more favorable. So, why would it decelerate to the higher single digits from where you were in the quarter, or is it just being conservative and if there’s something decelerating or a comp, do you mind just pointing that out? Thanks.
Kevan Parekh: Yeah, Ben. This is Kevan. Thanks for the question. I think when you look at the growth from Q3, which is reported to the mid to high single-digit guide, I think you have to kind of keep in mind two components. The first is the effect of the tariff-related pull-ahead in demand that Tim referenced earlier, which we estimated to be about one point of the 10 points that we ended up doing in Q3, and then the other factor that I think you have to take into consideration is the fact that in September quarter a year ago, we had the full quarter impact of the iPad launches, which also leads to a difficult compare this year. So those two components are things you have to take into consideration as you think about the move from Q3 to Q4. I would say foreign exchange is a very minor tailwind going from Q3 to Q4, so not really a major factor.
Wamsi Mohan, Bank of America: Hi, yes, thank you so much. Tim, I know you said similar growth in Services and that’s predicated with with google payments continuing. Is there any way for us to dimensionalize or maybe just conceptually talk about maybe options if the counter were to happen, if the payments were not allowed in some way? What are some of the things that Apple could do given that it is a significant chunk of profitability?
Tim Cook: Yeah, Wamsi, I don’t really want to speculate on the court ruling and how they would rule and what we would do as a consequence of it.
Wamsi Mohan, Bank of America: Okay, I guess we’ll wait for that ruling to come out. I guess separately, Tim, at a high level, when you look at some of what is perceived fears of new form factors and ways to interact with devices, there’s some worry that, given some of the developments in AI, that there could be a world where dependence on screen-based devices significantly diminishes. And I’m kind of curious to get your thoughts on if you think that would happen, and rate and pace in which, and how do you think Apple is preparing in that case?
Tim Cook: Yeah, when you think about all the things an iPhone can do, from connecting people, to bringing app and game experiences to life, to taking photos and videos to helping users explore the world and conduct their financial lives and pay for things and so much more. You know, it’s difficult to see a world where iPhone’s not living in it, and that doesn’t mean that we are not thinking about other things as well. But I think that the devices are likely to be complementary devices, not substitution.
Amit Daryanani, Evercore: Good afternoon. I guess to start with, Tim, the tariff assumption of $1.1 billion in the September quarter, I understand the uptick you folks are talking about, but can you talk about you know, assuming tariffs remain at these levels or even if they evolve under Section 232, how do you eventually think about offsetting this headwind to your P&L? And when you decide to execute on the leverage to offset this headwind versus just throwing it to your bottom line?
Tim Cook: You know, right now we’re just estimating the cost of it, and it’s up quarter over quarter because our volume is up quarter over quarter, and there was some build-ahead in the previous quarter, and so that’s the primary reasons that it’s up. In terms of what we do to mitigate, we obviously try to optimize our supply chain. And ultimately, we will do more in the United States. We’ve committed 500 billion investment in the U.S. over the next four years, and [we’re] already building chips in Arizona, and in fact, we’re building semiconductors across 12 states and 24 factories and have a lot of other things in the works. You probably saw the investment in MP Materials last week. And so we continue to explore these things and look for more that we can do, which I think ultimately is the objective.
Amit Daryanani, Evercore: Got it. Super helpful. And then your services growth, I think was extremely impressive at 13%, especially given all the fears folks had. Can you touch on, did you see any impact that was notable from the Epic case and the steering dynamics that came after that? And maybe just touch on what does that appeals process look like for me as you go forward?
Kevan Parekh: This is Kevin. Let me take that one. In general, I think, just reminding, I think as you said, we had a very strong Services quarter. We had an all-time record, had the $27.4 billion, up 13%. The one thing I would also say is our Services performance is broad-based. So we also saw strength in developed and emerging markets. Both parts of the world had double-digit growth. We also saw a sequential acceleration across the majority of our categories, including cloud services, where I mentioned in the prepared remarks that we had an all-time revenue record. As it relates to the Epic decision, keep in mind, we only just introduced the change required by the court in the June quarter. And as you know, we don’t provide that level of detail, but in general I would say in the U.S. we had a double digit growth for the U.S. App Store, and we set an all-time record, and so we’ll continue to monitor the effects on our business, but we’ll continue to innovate and ensure that the App Store delivers the best experience for users and remains a great business opportunity for developers.
David Vogt, UBS: Tim, just on the supply chain strategy, I know last quarter you talked about focusing production or assembly to India, and I just want to get an update on how you’re thinking about the strategy holistically given sort of the tariff rates, I think, in India potentially are higher than I think anyone has expected. I know you mentioned some U.S. investments, would love to kind of get your thoughts on how you’re thinking about China versus the rest of Southeast Asia and India going forward. And then I’ll give you my second question also. So Kevan, I’m just trying to understand a little bit more about the demand drivers of the iPhone in the quarter. because obviously the 16 has been in the market for some time, I know there was some promotional activity, but seasonally you generally don’t see this kind of strength in the June quarter. Maybe can you help us understand, you know, outside of maybe the promotional activity, what else were some of the drivers that led to what was looks like a pretty significant above-seasonal strength in the June quarter?
Tim Cook: In terms of the tariff situation and country of origin and so forth. One thing I would say, just to remind everyone, is keep in mind that the vast majority of our products are covered under the Section 232 investigation, and so last quarter, the bulk of the tariffs that we paid were the IEEPA tariffs that hit early in the year related to China, and so that’s just a reminder of where things are and what we assumed as we calculated the projection of $1.1 billion that’s in our outlook color. In terms of the country of origin, it’s the same as I referenced last quarter. There hasn’t been a change to that, which is the majority of the iPhones sold in the U.S. have a country of origin of India, and the vast majority of other products, the Mac and the iPad and the Watch have a country of origin of Vietnam, that are sold in the United States. Still, the products for other international countries, the vast majority of them are coming from China. And so that hopefully gives you a flavor of where things are. But I would stress again that we do a lot, in this country, in the United States, and we’ve committed $500 billion and we’re always looking to do more, and you can kind of see that in the most recent announcements, whether it’s MP Materials or our manufacturing academy that we’re standing up in Detroit in a couple weeks or so, and and so we’re doing more in this country and that’s on top of having roughly 19 billion chips coming out of the U.S. now, and we will do more. And of course glass from iPhone and the Face ID module, so there’s loads of different things that are done in the United States.
Kevan Parekh: So, I was going to mention the iPhone activity. You asked if there’s any kind of unique characteristics this quarter. I would just say, as Tim outlined, we really believe that the strong upgrade performance, which was a June quarter record, was really driven by the strength of the product lineup. You know, the iPhone 16 family has done incredibly well compared to the iPhone 15 family, and we also, as you recall, recently introduced the 16e as well, which also continued to impact the success of the overall iPhone 16 lineup.
Krish Sankar, TD Cowen: The first one is for Kevin. Do you think there was any pull-in of iPhones in the June quarter that led to some of the upsides. And how to think about channel inventory in June quarter and how it looks in September related to seasonal trends?
Tim Cook: Let me see if I can answer the channel inventory question or what I think is the channel inventory question. If you look at iPhone channel inventory from the beginning of the quarter, to the end of the quarter, we reduced it, and it ended toward the low end of our targeted range. And so that’s the answer on the inventory piece of it.
Kevan Parekh: Yeah, and I think you also asked about the pull-ahead impact. I think we referenced that earlier. Just to be clear on what we believe we saw on the June quarter, we did see some obvious signs of pull-ahead really in the April timeframe around the tariff related discussions that were out in the marketplace. And so we felt that that was from what we saw, about a one-point impact of the ten point at a total company level of growth, and so that was the limited impact that we believe we saw for the quarter.
Krish Sankar, TD Cowen: Very helpful. And a long-term follow-up for Tim. Tim, I’m curious about your thoughts on AI for edge devices. You know, there’s like some people who think that LLM could be a commodity in the future. Do you see a scenario where LLMs become a core part of your iOS, or is the SLM the way to go, and how to think about evolution of edge devices in a futuristic AI world, and is smartphone going to be the choice of device? I’m curious your thoughts on it, broadly speaking.
Tim Cook: The way that we look at AI is that it’s one of the most profound technologies of our lifetime, and I think it will affect all devices in a significant way. What pieces of the chain are commoditized and not commoditized, I wouldn’t want to really talk about today because that gives away some things on our strategy, but I think it’s a good question.
Samik Chatterjee, J.P. Morgan: Thanks for taking my questions. Tim, maybe if I can start with your remarks about the pull-ahead being about a one-percentage point benefit here. Anything to share in terms of how, what’s underlying that estimate in terms of what you’re seeing for, is it a pull ahead largely on iPhones or is it across the board and is it primarily in the U.S. or again sort of across multiple regions? Any color there would be helpful in terms of how you’re sort of getting to that assumption there.
Tim Cook: It was principally on iPhone and Mac, and it was pretty, you know, it was obvious evidence of it. It was an unusual buying pattern there and that largely occurred in April toward the beginning of the quarter, and we believe it was largely the United States.
Samik Chatterjee, J.P. Morgan: Okay, got it. And maybe on the tariff front, when you gave the estimate of $900 million last quarter, which came in $800, you did highlight there was unique factors in the quarter. When I think the $1.1 billion that you’re now sort of expecting for the September quarter, and as we start to think about December, is there anything unique in the December quarter in terms of sourcing from regions etc. that would uniquely impact December, just given sort of that you had highlighted that quarter to quarter there would be unique things. Just curious if December looks very different from September because of any unique factors.
Tim Cook: I would be careful about projecting based on the the numbers from Q2 and Q3 because, one, we’re uncertain of what the rates will be, so the rates may change. Two, particularly in last quarter, we had some built inventory that we had within the company and within our supplier, within our supply chain. And so those two are a little unique. Also, as you know from following us for so long, Q1 is generally a higher volume quarter, and the tariffs are currently are pretty linear with volume.
Aaron Rakers, Wells Fargo: I guess the first one should be just more housekeeping, Kevan, when we think about currency impact, how much of a benefit was currency this quarter, and I guess across the business, and in particular maybe on the Services segment, and on a year-on-year basis, how much currency benefit should we be thinking about embedded in the guidance into the September quarter? And then the second question is, CapEx is clearly moving higher. I know you guys don’t guide typically to that number, but just kind of qualitatively, should we, as you lean in more on AI, can we really start to see that CapEx, which is running close to about $4 billion annualized today, really start to move appreciably higher? Any color on that would be helpful.
Kevan Parekh: Let me answer the first one first around foreign exchange. For Q3, we really had no impact from a foreign exchange standpoint on the year-on-year results, and so when we look at both the revenue growth as well as the gross margin, there was really virtually no impact from foreign exchange. As we look at going from Q3, the June quarter to the September, again, as I mentioned earlier, a very small tailwind going from Q3 to Q4 from a foreign exchange standpoint on both revenue as well as gross margin. And then on the second question, sure, on the CapEx side, I think we talked about the the fact that we are, and Tim mentioned the fact that we are increasing our investments significantly AI. You are going to continue to see our CapEx grow. It’s not going to be exponential growth, but it is going to grow, you know, substantially, and you know, a lot of that’s a function of the investments we’re making in AI. As we mentioned, we also have other items that fall under that category, facilities and some of our retail store investments. But I would say a lot of the growth is really being driven by AI. I would remind you that we do have a hybrid model, though, where we also leverage third-party infrastructure in addition to investing in our own first-party infrastructure.
Atif Malik, Citi: Hi. Thank you for taking my question. Tim, at the WWDC earlier this quarter, you showed impressive updates on Vision Pro with the use of widgets, spatial scenes, new ways to create content. Peers like Meta and Xaiomi are seeing strong momentum on their eyeglasses. So, is the focus still around enterprises on Vision Pro, or are you thinking of changing the use cases and maybe tying it to more of your devices. Any thoughts on Vision Pro as it did not get enough air time in the prepared remarks?
Tim Cook: Yeah, thanks for bringing it up. I was thrilled with the release from the team on visionOS 26. It includes many things in it, like Spatial Widgets to enable users to customize their digital space. The personas took a huge increase, they’re much more lifelike. And of course there’s new enterprise APIs for companies as well. And we’re seeing, as Kevan talked about in his opening remarks, we’re seeing those things resonate out with CAE and other customers and so we continue to be very focused on it and I don’t want to get into the roadmap on it but this is an area that we really believe in.
Atif Malik, Citi: Kevan historically you guys have not done much big M&A. Do you feel like you need to accelerate your AI roadmap or just keep the organic focus?
Tim Cook: You know, let me take that one as well. We’ve acquired around seven companies this year, and that’s companies from all walks of life, not all AI oriented, and so we’re doing one—think of it as one every several weeks. We’re very open to M&A that accelerates our roadmap. We are are not stuck on a certain size company, although the ones that we have acquired thus far this year are small in nature. But we basically ask ourselves whether a company can help us accelerate a roadmap. If they do, then we’re interested, but we don’t have anything to share specifically today.
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