This is Tim (and John and Kevan): Complete transcript of Apple’s Q2 2026 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 maybe brag a little about setting an all-time record or two. And oh, who’s this?! It’s future CEO John Ternus joining as well!

This is Six Colors’s transcript of the call for April 30, 2026.

Tim Cook’s introduction

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. And most importantly, we have the right leader ready to step into the role. As I have said, there’s no one 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?

John Ternus’s statement

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, and 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, and 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. And with that, let me turn it back over to Tim.

Tim Cook’s opening statement

Thanks, John. Now 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. Now 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 in 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. And 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. And according to IDC, we gained market share during the quarter.

Mac revenue was 8.4 billion dollars 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, and 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. And 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. And 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 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. And 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 Clean Up in photos, that are seamlessly integrated into the moments that matter most to our users every day. And 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 and 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. And 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 and 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 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 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 26. 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.

Kevan Parekh’s opening remarks

Thanks, Tim, and good afternoon, everyone.

Our revenue of $111.2 billion was up 17 percent 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 we removed 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. $2.2 billion, up 17% year-over-year, driven by double-digit growth on iPhone, setting a new March quarter record. Our installed 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 percent, above the high end of our guidance range and up 110 basis points sequentially. Products gross margin was 38.7 percent, down 200 basis points sequentially. Services gross margin was 76.7 percent, up 20 basis points sequentially.

Operating expenses landed at $18.9 billion, up 24 percent 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.

Now 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 World Panel, iPhone was a top-selling model in the US, urban China, the UK, 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 installed base. And 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 installed 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. And 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 installed 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. And, 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, and as Tim mentioned, we also set all-time revenue records in most of the services categories. We are 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. And 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 launched Apple Business, a new all-in-one platform that combines our hardware, software and enterprise services, enabling companies to officially 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 addition, 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. And 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, and 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 of 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 14, 2026, to shareholders of record as of May 11, 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, and the global macroeconomic outlook does not worsen from today.

We expect our June quarter total company revenue to grow by 14 to 17 percent 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 OI&E 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 percent.

With that, Tim and I will take questions.

Analyst Q&A

Eric Woodring, Morgan Stanley: Thank you very much for taking my questions, guys, and, Tim, I’ll save the “congrats” and the au revoir for next quarter, but 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, how much did demand outpace supply for iPhone and Mac in the March quarter, and 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?

Tim Cook: Yeah. Hi, Eric. Thanks for your comments. We were constrained during the March quarter. This was primarily on iPhone and to a lesser extent on the Mac, and 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, and we have less flexibility in the supply chain than we normally would.

For Mac, in the June quarter, there’s two 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, and so we saw higher than expected demand. The second reason is that the customer response to Mac Neo has just been off the charts, with higher than expected demand, and 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. And so, hopefully that gives you a view of both Q2 and Q3 on the supply side.

Eric Woodring, Morgan Stanley: All right. Awesome. Thank you very much for that color, Tim. And then, Kevan, I’d love to maybe turn to you and kind of a surprise little announcement there talking about net cash neutral. So it’s 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, that would be super helpful. Thank you so much, guys.

Kevan Parekh: Yeah, sure, Eric. Thanks for the question. Yeah, let me just kind of reiterate what we said, which is really kind of more of a comment on the capital structure, but our goal of net cash neutral has really served us well. It’s been a valuable framework for us, and for our capital structure since 2018. We believe we’re at a stage where 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, based on business factors and market conditions. We also believe we can manage this flexibility while also being very efficient and disciplined. So with all that being said, we remain very committed to returning excess cash to shareholders. As we talked about our investment in the business, I think as you know, we invest in the business first and foremost and then look to kind of return excess cash to shareholders. I think we have a very good track record of being disciplined. We’ve returned over a trillion dollars to shareholders from the start of the program, over 850 billion of which has been through share repurchases, and so the other piece as well that’s really important is as part of that, we also have increased our buyback authorization by another $100 billion, and that’s on top of the leftover capacity from the prior authorization. So you can see the capital return piece is something very important to us, and as we talked about in the prepared remarks, important to the overall approach to delivering long-term shareholder value.

Ben Reitzes, Melius: 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 about AI on the edge and that agents could catalyze smartphones, but also shift the smartphone form factor, or maybe not. I was just wondering, with the rise of agents, how you would like us to think about that. 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 want to say about that and that trend or potential non-trend. Thanks.

Tim Cook: Hi, Ben, it’s Tim. You know, we don’t get into our future roadmap, and so 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 an 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.

Ben Reitzes, Melius: Okay. Well, thanks. I appreciate that. I’m sure we’ll hear a lot more. Then with regard to, I guess the question around constraints and whatnot, and Tim, you know, I may push you one more time, try to do it nicely, though, just given my age.

Tim Cook: (laughs)

Ben Reitzes, Melius: You know, the big concern out there is maybe how margins go after the June quarter, given the components and trends and whatnot and all these constraints. I mean, 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, 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 beyond June to answer this question. I think any comfort level there as we go throughout the calendar year would be so helpful. Thanks.

Tim Cook: 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 kind of 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. And 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. And we’ll continue to evaluate this, and as we’ve said before, we’ll look at a range of options.

Ben Reitzes, Melius: Okay, thanks, Tim.

Tim Cook: Yeah, thank you, Ben.

Michael Ng, Goldman Sachs: 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 education or value or emerging markets? And then, how do you think about opportunities in underpenetrated markets more broadly? And how will your future product roadmap inform that strategy?

Tim Cook: Yeah, right now we’re supply constrained on the MacBook Neo. We were very bullish on the product before announcing it, but we undercalled the level of enthusiasm that would be with it, and it’s very much focus on getting the Mac to even more people than we were reaching before. We’ve very focused on customers new to the Mac and customers that have been holding on to their Mac a very long period of time. We’re doing well with both of those, and 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 kinds of stories, both happening at the school system level and at the individual consumer level, and so we could not be happier with how things are going at the moment.

Michael Ng, Goldman Sachs: Great. Thank you, Tim. And 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 service’s growth and outperformance in the quarter? And then, could you talk more broadly about your ad strategy, given the plans to also introduce ads to maps this summer? Thank you.

Kevan Parekh: Yep. Mike, it’s Kevan. Thanks for the question. Again, advertising, we did see year-over-year growth in our advertising business. As you alluded to, we recently did introduce additional ads across the App Store search results to provide developers with more ways to drive downloads on platforms 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. But importantly, I think 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.

Wamsi Mohan, Bank of America: Tim, you noted higher impact from memory as you look beyond the june quarter. Clearly you’ve got a lot of scale to budget efficiencies, relationships, from a long time 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 where potentially you don’t raise pricing in 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?

Tim Cook: Wamsi, we will look at a range of options with memory costs increasing, and so I really don’t want to go beyond that at this point.

Wamsi Mohan, Bank of America: Okay. Okay, Tim. As a follow-up here, how is 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, but as we think longer term, do you think Apple will invest more? Where will Apple invest more heavily over the next several years? And 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.

Tim Cook: We are clearly investing more. You can see that in the OPEX numbers. And if you click down on those a step deeper and look at the R&D area separate than SG&A, you’ll find that R&D is even accelerating much higher than the company is. And so we’re clearly investing, we’re investing in products and services, and we see opportunities in both of those. And we could not be more excited about how the future is playing out.

Kevan Parekh: Yeah, and I think, Wamsi, as we’ve talked about, building on what Tim said, from the start, we said we believe AI is a really important investment area for Apple, and we’re going to be doing that incrementally on top of what we normally invest in our product roadmap. So I just wanted to reiterate that point as well.

Amit Daryanani, Evercore: Good afternoon, everyone. First one, maybe just going back to the iPhone performance, which for a couple of quarters you folks have had 20% plus growth despite the supply constraint, and I think the guides 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 what is the durability of this growth?

Tim Cook: Yeah, if you look at it, it’s the iPhone 17 family that’s driving it, and that is, as you point out, despite the supply constraints that we’re experiencing. And 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 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. And we set a new March quarter record for upgraders as well. And what’s driving all this is that the customer satisfaction for the 17 family in the U.S. as an example is 99%, these numbers are just unheard of. So we’re thrilled with how things are going.

Amit Daryanani, Evercore: Perfect, thank you. And then Tim, I think we have you for one more earnings call, but I would really appreciate if you could kind of share a bit about the upcoming transition. 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.

Tim Cook: Well, I think Steve’s advice to me lifted a huge burden, and so that advice did well for me over the 15 years. For John, I think my advice is that, what I’ve told him is, that one of the most important decisions he’ll make is where to spend his time. And I would spend it where the greatest benefit to the company and the users are, and 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, and 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.

Amit Daryanani, Evercore: Thank you.

David Vogt, UBS Tim, I want to 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 that the iPhone is constrained in the June quarter. So 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? And 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.

Tim Cook: 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. And so, I don’t want to predict our ability 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’ll take several months to reach supply/demand balance. And so, we’re not at the point where we’re saying this is going to end anytime soon. And it’s not because of a problem per se, other than we just under-called the demand. And, you know, there are lead times to this, as you well understand, and it takes a while to correct that. The primary constraint from a product point of view, or the majority of it for this quarter, for the June quarter, will be on the Mac. And it’s Mac Mini, Mac Studio and the MacBook Neo. It’s all of those.

David Vogt, UBS Maybe just on services real quick. Obviously, 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 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 space?

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

Samik Chatterjee, J.P. Morgan: Tim, my first question, last quarter you did talk about Apple’s 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 give us sort of an update in terms of how you are able to balance those two priorities as well as do you feel like you need to double down and invest more to be able to balance those two priorities side by side?

Tim Cook: Yeah, it’s a good question. We are investing more. You can see that in the OPEX numbers, and as I had 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 that we’re doing independently as well.

Samik Chatterjee, J.P. Morgan: 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 was it 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? And if you could sort of also clarify what the FX impact on gross margin was for the quarter. Thank you.

Kevan Parekh: Sure. Let me start on products for Q2. Basically, products gross margin did decrease by 200 basis points sequentially, driven by 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 kind of rundown of that. If you look at our overall performance, 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, and I did want to turn it over to Tim, because we do want to provide some clarity around the lower tariff-related costs and just make a comment on that as well.

Tim Cook: 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. And there was the full quarter benefit from a reduction in the IEPA 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.

Kevan Parekh: And then one 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.

Aaron Rakers, Wells Fargo: 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?

Tim Cook: 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, the 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. And so 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 Apple’s 50th anniversary there, and it was just amazing to be a part of the community there. And so I’m really happy with how things have gone the first half of this year.

Aaron Rakers, Wells Fargo: 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. How are you seeing the market in India evolve around the base of iPhones and the opportunity of kind of a rising middle class, just the overall opportunity set in that large mobile market?

Tim Cook: 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, and despite doing extremely well there for quite some time we still have a modest share. And so I think 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. And if you look at the majority of customers in all of our categories from the iPhone to the Mac to the iPad to the Watch, are new to that product there. And so it speaks very well to growing the installed base there. Net-net, I’m over the moon excited about India.