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Good afternoon, and welcome to the Apple Q4 Fiscal Year 2026 Earnings Conference Call. My name is Suhasini Chandramouli, Head of Investor Relations. Today's call is being recorded.

Speaking first today is Apple's CEO, John Ternus, and he'll be followed by CFO, Kevan Parekh. After that, we'll open the call to questions from analysts.

Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures and legal and regulatory proceedings. For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-K for the year ended September 26, 2026, to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made.

I'd now like to turn the call over to John for introductory remarks.

Thank you, Suhasini. Hello, everyone, and thanks for joining us. It's a privilege to be with you for the first time as Apple's CEO. I'm honored to represent our teams and the work they do every day. Today, Apple is pleased to report $114.5 billion in revenue, up 12% from a year ago and a September quarter record. These results helped Apple achieve its best ever fiscal year for revenue and EPS. This is an amazing time at Apple. We just completed one of the most prolific launch periods in our history. It's been a remarkable time for innovation across all of our categories. One of the greatest testaments to that is the all-new iPhone Duo, the most transformational iPhone since the original. We're also incredibly excited about iPhone 18 Pro and 18 Pro Max, which take massive leaps forward on camera, battery life and performance, features that our users care deeply about. Meanwhile, touch has arrived on Mac for the first time with the all-new MacBook Pro, and we were excited to announce the new iMac and 14-inch MacBook Pro. The all-new iPad Mini features a stunning new OLED display and brings a super thin design to the smallest member of the iPad family. Apple Watch now offers users the clearest window yet into their heart health. We introduced AirPods 5, which feature industry-leading active noise cancellation in an open ear design. And we've laid the foundation for an even more intelligent smart home with the all-new HomeView, Apple TV 4K and HomePod Mini. On top of it all, we're unlocking more powerful AI experiences across our lineup, including with the all-new Siri AI, a profoundly capable and deeply personal assistant seamlessly integrated across our platforms. And like everything we make, Siri AI is built with essential privacy protections, so no one can access users' data, not even Apple. We launched Siri AI in beta for U.S. English users in September and expanded to French, Japanese, Korean, Portuguese and Spanish in October. We're really excited to have rolled all these innovations out, and there's still so much more we plan to do. I'm feeling great about the opportunities ahead for Apple from our product road map and broad range of services to promising areas like health, emerging markets, enterprise and education. As one example, we recently secured our biggest education deal ever for Mac with the Department of Education in the Philippines. They're going to deploy 170,000 MacBook Neos to teachers and staff. Opportunities like this bring more users into our ecosystem and help fuel growth across our business.

Apple is the greatest company in the world. We've assembled an extraordinary collection of talent, the best engineers, designers, developers and experts in every corner of our business, from our supply chain to our stores. Every day, we bring the right people together with the best ideas to build products and services that change lives, guided by a foundational set of values and a belief that the best technology should make a better world. We do that by making products that are powerful and intuitive and meet Apple's uncompromising standards for quality, performance, design and durability. That's the Apple experience customers love. And with our latest lineup, people have even more reasons than ever to upgrade or switch to an Apple product.

At the same time, Apple services amplify the experience of every device, helping people work, play, listen, watch and stay connected to the world around them. I'm delighted with where our services business is today and where it's going. And with an installed base of more than 2.5 billion active devices, I'm looking forward to expanding our offerings and improving the lives of users around the world.

We see tremendous opportunity in AI as well. Siri AI marks a new chapter in AI at Apple. It is a completely reimagined assistant that is powerful, personal, private and deeply relevant to our users' daily lives. Siri AI picks up what's relevant to our users, understands what's on their screen and holds a natural conversation, all to help them with the things they do every day. It's the Siri we've always wanted. We are very pleased with the reviews and feedback we've received, and we're so excited that more and more users are getting to experience it.

iPhone remains at the center of our opportunity as the intelligent personal hub. It's always with you and understands your personal context from your messages to your photos, notes and apps to deliver powerful intelligence right when you need it.

Then there's Mac, which is having an AI moment all its own. Mac is what brought me to Apple. And through the years, it has opened a world of possibilities. More than 40 years after the first Mac, the category is having its biggest moment yet with every Mac in our latest lineup, a powerful platform for AI. Mac Mini and Mac Studio in particular, are pushing the boundaries of local private AI, giving users the ability to do things once considered impossible.

From Mac to iPhone to iPad, we are proud that our products are the best platforms in the industry for AI for both first-party and third-party applications, and we're excited about the opportunities that creates. Ultimately, everything we do at Apple is for our users. The success of every innovation is best measured by its impact on people's lives, and that's what drives us to keep building great products and to get them into the hands of people all around the world.

Now let's take a deeper dive into our results for the quarter. As I mentioned earlier, we had an excellent quarter at Apple. In addition to September quarter and fiscal year records in total company revenue, iPhone set a September quarter revenue record, capping its best fiscal year ever. Services achieved an all-time record during the quarter to close out our best year ever there, too. We grew in the vast majority of markets we track, setting September quarter records in the Americas, Europe, Greater China and the rest of Asia Pacific. We also set September quarter revenue records in both developed and emerging markets, in addition to an all-time record in India.

Turning to our lineup. iPhone revenue was $57.6 billion for the September quarter, up 17% from a year ago despite supply constraints and foreign exchange headwinds. We grew strong double digits in the U.S. and Greater China to achieve September quarter revenue records. We also set a September quarter record for upgraders worldwide as well as in the U.S., China Mainland and India, helping to deliver our best fiscal year ever for upgraders globally.

At the launch in September, we introduced the all-new iPhone Duo. From the very beginning, we knew what we wanted to create, a foldable form factor with a larger display that feels as natural and intuitive as iPad. We designed the hardware and software together to make it unmistakably iPhone, while enabling entirely new ways to use it. The result is a series of remarkable innovations that we believe will redefine what a foldable phone can be. We're so proud of what our teams have built. Developers have been quickly adapting to this new form factor, and we're excited to see more and more apps optimized for iPhone Duo. We've been thrilled with the early response from reviewers and customers, and we are working hard to get iPhone Duo into customers' hands as quickly as we can.

We have also been thrilled with the response to iPhone 18 Pro and Pro Max. It's easy to see why customers are embracing them. Our latest models feature a dramatically improved camera system with breakthrough upgrades like variable aperture and all new photographic styles. The A20 Pro and next-generation vapor chamber together deliver the highest sustained performance in iPhone history. And iPhone 18 Pro MAX delivers the biggest increase in battery life ever on an iPhone. A20 Pro also features a new dual 16-core neural engine, accelerating on-device AI and computational photography.

Turning to Mac. Revenue was $10.8 billion, up 24% from a year ago despite supply constraints. We had double-digit growth in the majority of markets we track and particularly strong performance in our emerging markets, where we set a September quarter revenue record. We also set a September quarter record for customers new to the Mac. According to IDC, we gained share globally during the quarter and for the full fiscal year, and we have never sold more Macs in a fiscal year than we did this time, which is a truly remarkable testament to these incredible products.

Last week, we introduced a whole new way for people to experience Mac. The all-new MacBook Pro with PROLED XDR brings touch to the Mac for the first time. It also boasts the best Pro laptop display we have ever shipped plus all-day battery and our most immersive laptop audio. And it all comes together in a thinner and lighter design. We also brought the power of M6 to the new 14-inch MacBook Pro and the new iMac. This latest generation of Apple Silicon includes the world's fastest CPU core to speed up everyday tasks in addition to a dual 16-core neural engine to drive private on-device AI tasks.

Now turning to iPad, where revenue was $6.2 billion for the September quarter. Last week, we introduced the all-new iPad Mini with an amazing new OLED display, super thin design and the power of A20 Pro. With the newest addition, our iPad lineup is more capable and versatile than ever before. Anywhere our users go, there's a place for iPad, like a classroom where it helps students explore the world in amazing ways. We're a design studio, giving artists and creatives an expansive canvas to explore their ideas.

In Wearables, Home and Accessories, revenue was $8.3 billion for the September quarter. Apple Watch makes the simple act of wearing a watch a powerful way to help take care of your health. We were thrilled to introduce our all-new health sensing system to help our users get the most out of health tracking. Paired with the S11 chip, Apple's most powerful wearable chip, the health sensing system delivers the most accurate heart rate sensing in a wearable. We were also happy to unveil new features like health age and readiness, which will tell you when to push forward or hold back as well as the all-new health app redesign. And we're excited for audio intelligence, which will be coming in a future software update and will help you remember moments you might otherwise miss. Apple Watch Series 12 brings it all together in a beautifully light design, while Apple Watch Ultra 4 goes further with longer battery life compared to the previous generation and the most accurate on-device GPS in a sports watch.

Meanwhile, AirPods 5 offers best-in-class open ear active noise cancellation at an incredible price, while improving sound quality, battery life and durability. With iPhone and Apple Intelligence, including Siri AI, AirPods allow users to do remarkable things. like connect with someone who's speaking another language with live translation or get answers with broad world knowledge entirely hands-free.

And just a few weeks ago, we introduced a whole new generation of hardware for the home. That includes Apple HomeView, which was designed to be central to the home and personal to everyone in it, bringing entertainment, connection and home management together in one place. We announced this alongside the new Apple TV 4K, now smarter with Apple Intelligence, the all-new HomePod Mini and Apple Home Collection, a new program that extends Apple Home beyond our own products through deep collaboration with key partners. All of it, as always, is built on Apple's approach to privacy.

Now let's turn to services. Revenue was $31.6 billion, up 10% from a year ago and an all-time record. We saw double-digit growth in the majority of markets that we track, and we set all-time revenue records in the Americas and Europe as well as the September quarter record in the rest of Asia Pacific. The 78th Primetime Emmy Awards were a night to remember for Apple TV with our shows earning more awards than any other network. Widow's Bay, the show of the summer, became the most awarded comedy ever in a single year with 14 wins. We're very excited about our programming from fan favorites like Slow Horses and Ted Lasso to the upcoming film Being Heumann. To date, Apple TV productions have earned more than 900 wins and over 3,800 nominations.

Turning to Apple Pay. We recently launched in India with Axis Bank, bringing a seamless, safe and secure way to pay in one of the biggest markets in the world. Today, Apple Pay is available in over 90 markets, giving customers around the world peace of mind built into every transaction.

Apple Music was created to bring artists and fans closer together. And with the opening of Apple Music Hall, we have a beautiful new venue for intimate shows that bring them even closer. To celebrate the opening of the site in London, we hosted an unforgettable performance by Elton John.

People love Apple products and services for the countless ways they make life easier, more enjoyable and just plain better. They also count on Apple to create technology responsibly, built the right way, not the easy way. That means building products with even more recycled content to take less from the earth and with even better durability so they last longer. It means developing intelligent capabilities like sound recognition on Apple Watch to alert users who are deaf or hard of hearing to what's happening around them. It means designing privacy protections like on-device processing, so personal data stays on a user's device. And it means introducing new child safety features to make it easier for parents to manage when and how their kids can use their devices.

We're also pleased to be doing more and more manufacturing in the United States. Through our American manufacturing program, we're deepening partnerships with suppliers across the country. including Perryman, a titanium producer now supplying iPhone Duo; and Qnity Electronics, which is producing the camera technology behind iPhone 18 Pro's new variable aperture system. Nearly 100 components in our newest iPhones come from American companies in more than a dozen states. All told, Apple supports more than 450,000 American jobs with thousands of suppliers and partners across all 50 states. It's all part of our $600 billion 4-year commitment to U.S. innovation and advanced manufacturing. I am proud of what we've accomplished this quarter, and I'm excited for what's ahead. We have everything we need to be extraordinarily successful. And with this team, this vision, this mission and these values, I have no doubt that we will.

With that, I'll hand it over to Kevan.

Thanks, John, and good afternoon, everyone. Here's a quick rundown of our key financial metrics. Our revenue of $114.5 billion was up 12% year-over-year, a September quarter revenue record. This strong performance was despite sequential foreign exchange headwinds of nearly 2 percentage points as well as supply constraints on iPhone, Mac and iPad. Products revenue was $82.9 billion, up 12% year-over-year, driven by strong double-digit growth on iPhone and Mac. 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 $31.6 billion, up 10% year-over-year. We saw strong performance in many services categories with all-time records in video, cloud services, payment services and advertising and a September quarter record in music.

Company gross margin was 47.9% and products gross margin was 37.2%. These both included a benefit from tariff refunds, which had a favorable impact of approximately 1 percentage point in the September quarter. When you remove the tariff refunds from both the June and September quarter, both company and products gross margin would be down about 1 point sequentially, primarily driven by higher memory costs. As of the September quarter, we have received the vast majority of the refunds related to tariffs paid. Services gross margin was 76%, up 40 basis points sequentially. Operating expenses came in at $19.2 billion, up 21% year-over-year as we continue to make investments in R&D.

Net income was $30.7 billion. Diluted earnings per share was $2.10, up 14% year-over-year and included $0.05 of favorable impact from tariff refunds. Both net income and EPS set September quarter records even when excluding the tariff refund benefit. Operating cash flow was also very strong at $28.1 billion. This performance marked our best fiscal year yet with $478.8 billion in revenue, up 15% year-over-year and a fiscal year record for EPS of $8.98, up 20% year-over-year.

Now I'm going to provide some more details for each of our revenue categories. iPhone revenue was $57.6 billion, up 17% year-over-year despite supply constraints. We grew double digits in the majority of markets we track, and we also reached September quarter revenue records across both developed and emerging markets. As John mentioned, it was a record year for the total company, and we also had our best year ever for iPhone, both worldwide and in every geographic segment. The iPhone active installed base grew to an all-time high, and iPhone had a record year for upgraders globally and in several markets, including the U.S., China Mainland, India and Japan. According to a recent survey from Worldpanel, iPhone was a top-selling model in the U.S., Urban China, India, the U.K., Germany, Australia and Japan.

Mac revenue was $10.8 billion, up 24% year-over-year despite supply constraints. This performance was driven by the strength of the MacBook Neo and MacBook Pro. We saw double-digit growth in both developed and emerging markets with all-time records in markets like India and Southeast Asia. Emerging markets continued to see strong performance on Mac, resulting in Mac's best fiscal year there, driven by record upgraders and customers new to the Mac. iPad revenue was $6.2 billion, down 10% year-over-year, driven by the supply constraints I mentioned earlier as well as a continued difficult compare against the launch of the A16-powered iPad in the prior year. The iPad installed base reached an all-time high during the quarter and over half of the customers who purchased an iPad were new to the product. Wearables, Home and Accessories revenue was $8.3 billion, down 8% year-over-year as we faced a difficult compare against the launch of the Watch SE 3 and the AirPods Pro 3 in the prior year. The wearables installed base reached a new all-time high and over half of customers who bought an Apple Watch in the quarter were new to the product.

Services revenue set an all-time record of $31.6 billion, up 10% year-over-year despite over 1.5 points of sequential FX headwinds. We set all-time revenue records in the majority of markets we track, including several emerging markets like Latin America and India. We are optimistic about the long-term future of our services business. With our large installed base of over 2.5 billion active devices, we have an incredibly strong foundation for growth opportunities. Our services continue to attract more customers and both transacting and paid accounts reached new all-time highs in the quarter. We also have over 1.5 billion paid subscriptions, which grew double digits during the quarter, reaching an all-time high. And we continue to improve and expand our services offerings from iCloud+ plans that now include Apple TV and Apple Arcade in more than 100 countries and regions to Ads and Apple Maps now live in the U.S. and Canada, which will give local businesses a new way to reach customers while respecting our users' privacy.

Turning now to enterprise. Organizations are continuing to expand their fleets of Apple devices to transform operations and drive productivity. Duke Health performed the first surgical procedure using Apple Vision Pro for hip arthroscopy with an FDA-authorized app from Stryker. American Airlines is deploying over 37,000 iPhone 17 devices to flight attendants for in-flight purchases with tap to pay in addition to 25,000 iPads for pilots and mechanics. And more companies are choosing Mac across a growing range of use cases, including for on-device AI. For example, Gap Inc. is running AI entirely on Mac Mini for loss prevention across hundreds of stores, eliminating cloud token costs. Christie's, a world-leading auction house, is running local models on Mac Studio to improve core productivity workflows such as pricing estimates.

Let's turn to our cash position and capital return program. We ended the quarter with $137 billion in cash and marketable securities and $80 billion in total debt. During the quarter, we returned $28 billion to shareholders. This included $3.9 billion in dividends and equivalents and $24 billion in share repurchases.

As we move ahead into the December 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 December quarter total company revenue to grow between 7% and 10% year-over-year, which reflects our best view of constrained supply. We expect this to be the best quarter for revenue in the history of the company. We expect services revenue to grow between 8% and 9% year-over-year in the December quarter. This contemplates sequential headwinds, primarily driven by third-party licensing and foreign exchange. We expect gross margin to be between 45% and 46%. This includes primarily the impact of higher memory costs as well as some costs related to the ramp of Siri AI. We expect operating expenses to be between $20.4 billion and $20.8 billion. We expect OI&E to be around $300 million, excluding any potential impact from the mark-to-market of minority investments and our tax rate to be around 17%. Finally, today, our Board of Directors has declared a cash dividend of $0.27 per share of common stock payable on November 16, 2026, to shareholders of record as of November 12, 2026.

With that, I'll hand it back to John.

Thanks, Kevan. Before we get into questions, I'd like to introduce Sabih Khan, Apple's Chief Operating Officer. Many of you know Sabih from his work with worldwide operations and supply chain, leading many important functions at Apple, including manufacturing, AppleCare, environmental efforts and supplier partnerships around the world. Sabih and his team are the reason we're able to build and deliver products at a scale and of a caliber unlike anyone else out there. I've asked Sabih to join Kevan and me on these calls as we take your questions.

Thank you, John. We ask that you limit yourself to two questions. Operator, may we have the first question, please?

Our first question is from Michael Ng of Goldman Sachs.

I have two. First, on the iPhone 18, the standard model was left out of the September lineup. I was just wondering if you could share some of the reasons why, whether there were some supply constraints and component-related things that led to that decision or if it had to do with the launch of the Duo? Any color there would be helpful. And then I have a follow-up.

Yes. Thanks, Michael. Look, we were thrilled to introduce the iPhone Duo and 18 Pro earlier this year in September. And we have iPhone 17, iPhone Air and 17e continuing to kind of round out this incredibly strong lineup for the holidays. So obviously, we don't make any comments about future road map, but we're excited about where we're at.

Great. And then my second question is just around iCloud+. It seems like it's becoming a more strategic product just given the tie-in with home security as well as the potential monetization opportunity for Apple Intelligence. So I was just wondering, what are you seeing on iCloud+? Are there any tailwinds in terms of attach rates, just particularly given the rising cost for increased storage options on iPhone and the company's push into home products?

Yes. Thanks for the question. I think we just, in the September quarter, had an all-time record for our cloud services for revenue. And you mentioned iCloud+. This is something we're very excited about. We have these iCloud+ plans that now include Apple TV and Apple Arcade in more than 100 countries and regions where we think we can really reach new potential subscribers.

And then as you mentioned, we think there's good opportunities on Apple Intelligence. There's going to be some usage limits on features that rely on server side models, which include Siri AI and intelligent photo editing and some other things like that. And so anyone who needs greater capacity will be able to purchase expanded access in the future. So kind of to your point, in the beginning, iCloud tiers were largely about storage, but we've been adding more capabilities and features to it.

Awesome. Thank you, Mike. Operator, could we get the next question, please.

Our next question is from Erik Woodring from Morgan Stanley.

John, congrats on your first quarter here. So as the world of AI evolves from chatbots to consumer agents, it seems like there are growing opportunities for Apple. It also seems like there are risks. And John, I'd just love to get your perspective on what role you want Apple and Siri AI to play in kind of this consumer-agentic AI landscape? And just how you look at any potential risks of some of these agents trying to encroach on your services business? And then a quick follow-up, please.

Sure. Thanks, Erik. Look, we -- first and foremost, we are incredibly excited to launch Siri AI alongside the latest generation of Apple Intelligence features. Siri has long been popular with our users with more than 2.5 billion requests every day. And with Siri AI, we really have the kind of the Siri that we always wanted. It's primarily request-based today. But as we talked about at WWDC, it's built on a modern orchestrator-driven architecture that gives us real room to expand its capabilities over time.

As far as agentic capabilities, we think these are promising tools for users. We just want to make sure that users are aware of what they're giving access to. We want to make sure this is done in a way that protects security and privacy. So we're pushing really hard on that with Siri AI, but we're also really encouraged the fact that Apple devices, we think, are the best places to use all forms of AI.

Okay. Awesome. I appreciate that, John. And then just quickly as a follow-up, how should we -- if we take a big step back, how should we think about the durability of services growth? Just I realize that was 10% in the September quarter. We're a little bit below that in the December quarter. As certain things like search evolves and regulatory changes impact App Store monetization, are there new services that we should be looking towards that you believe can become a more sizable offset to maybe take some pressure off these historically important revenue streams?

Erik, it's Kevan. Thanks for the question. Let me take this one. Let me start by just talking through kind of what we did -- we talked about during the December quarter. Services grew by 10% year-over-year. And we look at that relative to the June quarter, foreign exchange was the main driver in that change on year-on-year growth rate sequentially. We saw -- we continue to see strong performance in September in many of our service categories, all-time records in video, cloud services, payment services and advertising, including our first-party Apple Ads and September quarter record in music.

But I think it's important to kind of step back also and look at the progression of what we've seen in our services business over the last several quarters. I think it's an important backdrop. And so we spoke about on the last call, we expected foreign exchange to be the largest driver of the change in the year-on-year growth rate from the March to September quarter. This ended up being a significant headwind of about 4 percentage points, and we expect additional sequential headwind of about another 0.5 percentage point for the services business as we go into the December quarter.

We've also seen some factors that impacted the performance of the App Store. And during the September quarter, the performance on the App Store was similar to the prior year, and we had a record number of paid subscriptions with double-digit growth for third-party apps on the App Store. At the same time, we did see some headwinds in mobile gaming that we've talked about before and expect to see those continue into the December quarter. And keep in mind, we also made some changes to the App Store business model in certain countries. And in the U.S., we continue to operate under a court ruling impacting the link-out transactions.

As we move ahead, we expect services growth to be between 8% to 9%, as I mentioned in the prepared remarks, in the December quarter, and this outlook contemplates our best estimates on sequential headwinds, primarily from third-party licensing and the additional 0.5 percentage point of foreign exchange I just mentioned. And I'll turn it over to John to talk about some perspectives as we look ahead.

Yes. Thanks. I guess I'd like to add to that, Erik. I think fundamentally, we feel really good about the long-term opportunity that we have in our services business. We see continued growth in the installed base of over 2.5 billion active devices, which is fundamentally the foundation for future growth as more customers are able to experience our products and services. Example of this during the September quarter, App Store saw a record number of nearly 1 billion average weekly visitors, and we saw growth in the number of users who are paying for at least one service, reaching an all-time high.

Another good example of this in India, we recently launched Apple Pay with Axis Bank, bringing the seamless, safe, secure way to pay to one of the biggest markets in the world. And then on top of all this, as we talked about, we think intelligence is going to be another opportunity as well. So overall, we're feeling really good about where we're headed in the long term.

Thank you, Erik. Operator, could we take the next question, please.

Our next question is from Amit Daryanani from Evercore.

Congrats on mine as well, John, on your first earnings call here. John, you sort of described the iPhone as an intelligent personal hub in your opening comments. And as personal AI agents become more prominent, do you see the potential for the primary customer relationship to shift from the device to the agent over time? And really, given Apple's integration of silicon, hardware and software, where do you see the greatest opportunity to combine things like personal context and on-screen awareness into an agent that can perhaps move beyond answering questions? And how far along do you think Siri is in bringing those pieces together right now?

Yes. Thank you, Amit, for the question. Like as I said before, and we said in our announcement, we really do think of the iPhone as the intelligent personal hub. I mean if you think about it, so much of your personal data is on your iPhone, whether it's your contacts, your communications, health data, financial data, all of that. And Siri can tap into that and help you access it in a way that's very secure and private and that nobody else has access to, even Apple doesn't have access to it. And so we think that is a core kind of differentiator that we're excited about. And we're going to continue to push on that. And so I think this is an area that we feel really, really good about.

Got it. And then, Kevan, the December quarter gross margin, I'm wondering if you could spend a bit of time on that. I think if I exclude all the tariff refunds, you start of implying gross margins will be down about 140 basis points sequentially at least. Can you just separate how much of this is maybe commodity memory inflation versus mix versus -- you called out Siri AI ramp costs as well. Can you just talk about what the different moving parts are as we think about the sequential gross margins, that would be helpful.

Yes, Amit, sounds good. Let me try to address that for you. So as you alluded for the December quarter, we talked about a gross margin outlook of between 45% and 46%. As you said, when you remove the benefit of the tariff refunds in September, the midpoint of the range is a decline sequentially in the magnitude you mentioned.

We expect most of that decline to be driven by higher memory costs, and I'll give John kind of the mic here to give you a perspective on that, and then I'll take the balance of your question.

Yes. Let me give you an overall view on memory. What we're seeing with memory pricing right now is unprecedented. And as we said earlier in the September quarter, we did see higher memory costs as compared to the June quarter, which were partly offset by the benefit of carrying inventory and lower costs on certain non-memory components. Now for the December quarter, we expect even higher memory costs, partly offset by a few factors. So as you know, we changed the price on many of our products, including Mac and iPad at the end of June and iPhone in September, and these price increases provided some offset. We also expect to see some benefit from carry-in inventory in the December quarter as well, as well as lower costs on certain non-memory components. And looking beyond the December quarter, we see the pricing for memory purchases continuing to increase. As we've said before, we do believe we'll see a decreasing benefit from the carry-in inventory on memory over time.

And there's one more thing I wanted to add, as we work to improve supply, our manufacturing purchase obligations have increased by $33 billion from June to the September quarter, which you'll see in our annual filing when it comes out tomorrow.

Now back to Kevan for the other parts of it.

Yes, Amit, you mentioned Siri AI and what I alluded to in the prepared remarks. So as we continue to roll out Siri AI to more customers, the associated cloud costs will be recognized through services cost of sales. And consistent with how we've always accounted for Mac, Siri and iCloud for the devices we sell that include these bundled services, we defer a portion of the revenue and recognize it over the life of the device. So our hardware deferrals as of the December quarter will reflect the addition of Siri AI. Both of these items will have an impact to the gross margin.

But as always, we look to continue to make the investments necessary to support the business. And we also see a wide range of ways that AI can contribute to revenue growth over time. So on the product side, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities. And we also feel there's opportunities across third-party apps and partnerships as well as first-party opportunities, as John highlighted earlier, with the expanded access to server side features of Siri AI and Apple Intelligence features as well.

Thank you, Amit. Operator, could we have the next question, please.

Our next question is from Ben Reitzes from Melius Research.

John, my first question, I wanted to ask you about your cash-neutral policy. On one of the previous calls, you guys said that you weren't going to focus on that anymore and that, that was not no longer the policy. What do you -- how -- under your leadership, what do you mean by that? Do you mean like you may go to net debt to buy back stock or do some M&A or go the opposite way and hoard some cash again? Your thoughts on that would be welcome.

Ben, it's Kevan. Let me take that one. As you know, we did talk about the fact that we were no longer using net cash neutral as a target. I think as we explained on the last call or the last time we talked about that was the fact that we think it makes sense to evaluate our cash and debt position independently and making sure we can optimize that and giving us the right flexibility. We remain committed to our capital allocation philosophy, which is we're going to invest everything we need to put -- invest in our business and return excess cash to shareholders. And so we continue to maintain that discipline. And we do think this removal of net cash neutral gives us flexibility to optimize so we can make the right investments for the company.

All right. And then I wanted to ask about services. I realize you only guide one quarter at a time. But from the 8% to 9%, when you think long term, I was wondering if you're willing to say you think whether it can accelerate from there and whether AI could help you launch new services we haven't thought of yet that are accretive to the growth rate there?

Yes. I think, Ben, on that one, I think you heard John talk about a lot of the long-term attributes that really feel give us optimism about the long-term opportunity in our services business. Again, I think we talked about things like the installed base of over 2.5 billion active devices. We obviously saw a record number of weekly visitors in the App Store in the September quarter. We also continue to see growth in users who are paying for at least a service, reaching an all-time high in both transacting and paid accounts. We're excited about emerging markets. We talked about the launch of Apple Pay in India, but we continue to see good momentum in emerging markets in our services business, where we had double-digit growth.

And so we continue to feel really bullish about all the different elements as we look ahead over the longer arc of time. And I think as John mentioned, we are continuing to improve the features and reach of the existing and new services as well. The example was the expansion of iCloud plans to include Apple TV and Arcade, obviously reaching a lot of new potential subscribers. AppleCare One family is another example of that. And so we continue to look for opportunities to grow our services business.

Thank you, Ben. Operator, could we have the next question, please.

Our next question is from Wamsi Mohan from Bank of America.

John, great to have you on the call as CEO. I appreciate the comments on memory. Clearly, you're now competing for memory more so versus historically from pretty well capitalized companies who are signing long-term agreements. So my question is, is Apple changing anything in the way that you are procuring memory? How do you think about the progression of memory over time? And if it continues to be a headwind, is pricing also going to remain dynamic and potentially move higher? And I have a follow-up.

Wamsi, this is Sabih. Let me take that one. So as you know, we have worked with many of our suppliers for decades, and we deeply value their partnership over the years. We know our products would simply not be possible without them, and we look forward to continuing to work together. We're always working hard to improve supply. And as John said earlier, we -- our manufacturing purchase obligations have increased by $33 billion from the June to the September quarter.

And Wamsi, maybe I'll add here because you asked the question about pricing and how we're managing it. So look, we're trying to manage through this with a number of actions. You heard us talk about the fact we're continuing to pursue lower cost and non-memory components. John mentioned the fact that we have some benefit of carrying inventory. And we did reluctantly make the decision to change pricing in a number of our products, starting with the iPad and Mac in the June time frame and then iPhone more recently in September.

I think what we try to do is evaluate in doing all that, we evaluate the unit revenue and margin. And we're really being thoughtful and deliberate at evaluating kind of the short-term and long-term considerations, and we really believe we're balancing this well.

Okay. And I guess my follow-up is on Siri AI. In the early days of launching this, can you give us some sense of how the token consumption associated with Siri AI is being done on-device versus private cloud compute versus GCP? And have you started to see any acceleration of usage? And if it does accelerate really fast globally, would it change your outlook on what you need to spend for compute?

Yes, Wamsi, I can take that one as well. So we do envision Siri AI to kind of have queries that kind of are managed on device and also in the private cloud compute environment that we've outlined. The mix of that is still very early days, and so it's hard to predict exactly what the mix of those costs are going to look like. Obviously, on device -- it's very, very efficient. No real costs associated with that. But on the server side, we would have some inference costs, and that's really the connection of the Siri AI-related costs that I mentioned that will be recognized as services cost of sales. But I think, again, we've just recently launched it and made it available to more users. And so in very, very early stages of understanding the kind of mix of those costs as well as any further requirements we might have on the compute side.

Thank you, Wamsi. Operator, could we have the next question, please.

Our next question is from Samik Chatterjee from JPMorgan.

John, Sabih, good to get a chance to talk to you guys and Kevan, same there. Maybe on the Duo, can I just ask in terms of maybe your thoughts in terms of our learnings from the launch of the Duo and the demand that you've seen on that front? And what are the sort of supply chain-related issues that you're facing right now that you probably need to iron out if you're trying to meet demand on that front? Any more visibility there? And when you reach supply-demand balance on the Duo as well will be helpful. And I have a quick follow-up.

Samik, this is Sabih. Let me start with that question. So we're thrilled with the initial response on the iPhone Duo. iPhone Duo is constrained as of today. The ramp is going well, and we're working hard to get this revolutionary new product into the hands of our customers as quickly as possible. But at this time, it's really hard to predict when supply and demand will be in balance.

Okay. Perfect. Got it. And then maybe, Kevan, for you, just in terms of -- you have mentioned supply chain constraints impacting September quarter and going into December, but any way to sort of help us think about whether those are getting overall for the company, are those increasing in terms of magnitude relative to sort of the impact on revenue? And if you are willing to sort of quantify those impacts for September and December?

Yes. Let me start with that. This is Sabih. So during the September quarter, we experienced supply constraints on iPhone, Mac and iPad. And this was driven by the high levels of demand. And as we have said before, we're seeing less flexibility in the supply chain than normal. The Q4 constraints were primarily driven by the availability of the advanced nodes our SoCs are produced on. But as we have transitioned more of our lineup to the latest 2-nanometer technology nodes, our constraints on advanced nodes are easing. And for the December quarter, we expect constraints on Mac and iPad, primarily driven by memory as demand has been higher than what we expected.

Thank you, Samik. Operator, could we take the next question, please.

Our next question is from Krish Sankar from TD Cowen.

First one is for either Kevan or Sabih. I understand the memory price inflation. Kevan, it seems like it's probably hike 1 to 1.5 or 2 percentage points. A, is that true? And Sabih, I'm just wondering, I understand that -- is there an availability issue with memory? Are you signing LTAs with memory suppliers so that availability is not an issue even though pricing could still be an issue down the road? And then I had a quick follow-up.

Yes. Thanks, Krish. So as we said earlier, we are continuing to work to improve supply, and you'll see that our manufacturing purchase obligations have increased by $33 billion from the June to the September quarter.

Got it. Got it. And any comments on the margin impact to think about going forward, Kevan, or?

Well, I think, Krish, let me maybe take that one. I know you asked about it. So when we look at the margin change from the June quarter to the September quarter and you remove the impact of the tariffs from both the June quarter and September quarter, we saw about a 1 point sequential change in margin, and that was driven entirely by memory impacts. Now we did have some offsets because the gross memory impact was larger than that, but we had some offsets as John talked about earlier, driven by the benefit of carrying inventory, some offsets from nonmemory costs as well as some of the benefits of pricing.

And so as we talked about, we expect the memory costs to continue to be a challenge for us as we look in the December quarter, and our guide contemplates that right now. If you look at the midpoint, most of the sequential decline we're expecting for the December quarter, we expect to be driven by higher memory costs.

Got you. And just a quick follow-up for John. And John, congrats on the first call. It seems like consumer AI agent space is seeing increasing competition with several app-based options. I'm just wondering, when you look at the agentic capability of Siri built into the OS platform versus AI agents that are confined within an app architecture, how do you see that evolving?

Yes. Thanks, Krish. I think as I said before, Siri right now is primarily request-based. And as we talked about before, it is built on a modern orchestrator-driven architecture. So we see opportunity to expand its capabilities over time. We think fundamentally, what's most important to us is that we're giving people these capabilities that are private and secure, and we're really focused on protecting people's data.

Thank you, Krish. Operator, could we take the next question, please.

Our next question is from David Vogt from UBS.

Congrats, John. And maybe one to start with Kevan. If I kind of unpack the comments around supply chain about availability of components and your outlook for the December quarter, can you help us understand sort of the difference or maybe the delta of quantity versus price across sort of the product lineup? Because it certainly looks like you're looking at double-digit growth across the iPhone and the Mac business. And we all know, I think, in the industry that there's been pretty strong price inflation across the PC Mac ecosystem, and you guys mentioned that you're reluctantly taking price as well. So can you help us understand kind of what's the driving dynamics in that market? And then I have a follow-up.

Yes, David, thanks for the question. This is Kevan. We don't normally provide that level of detail or color as we look at the outlook other than to say, again, we did guide to the 7% to 10% year-on-year. And again, just as a reminder, that is on top of a phenomenal December quarter last year where revenue grew 16% -- and so we don't provide the level of detail, but I would say it's early to really read price elasticity at this point in time. The iPad and Mac were constrained since kind of we have made those adjustments. And again, we just recently just adjusted the price on iPhone. So it's really early to really assess any elasticity impact at this stage.

Great. And then maybe just as a follow-up, going back to the investment cycle, whether it's agentic, Siri related. It looks like you guys had -- you're coming off of a year of very aggressive investments in R&D to fund the business going forward and to grow the business. If I just think about kind of the commentary on Q1 of fiscal '27, it certainly sounds like that spending is moderating a little bit. Can you maybe walk through some of the puts and takes in terms of what's driving that moderation in spend across the operating line items?

Yes, David, again, here, we don't break out detail on our outlook, but I would reiterate the fact that for the December quarter, we do expect OpEx to grow between 11% and 13% year-over-year, which is driven by increased and continued investment in R&D, in particular, AI. This growth rate is coming down, as you alluded, from the levels of growth that we had in FY '26. But as we've said before, we continue to significantly increase our overall investments in AI while continuing to invest in the product road map. And our December guide is a continued reflection of that.

Yes. And I'll just add, we feel confident that we're spending what we need to spend to achieve our road map.

Awesome. Thank you, David. Operator, could we have the next question, please.

Our next question is from Richard Kramer from Arete Research.

John, your latest MacBook Pros included more iOS features like touch and dynamic island as well as obviously Siri AI. Should we anticipate further close linking of Mac OS and iOS features, maybe even pointing at some point to a single unified OS either for simplicity or to reduce costs? And then I have a follow-up.

Yes. Thanks for the question, Richard. Look, we are very proud of both the Mac and the iPad. And I think what you've seen over the years is we've really enjoyed the ability to bring features and capabilities across the ecosystem and create really compelling features that span things between -- handoff between iPhone and Mac and iPad.

And so when we design the product, we're looking at how can we make the best version of each and every product. And if you look at what we just did last week with the MacBook Pro, we took a huge leap forward. These MacBook Pros are better in every way than the ones that came before them. And we're really proud of that. And so we don't have any fundamentally different changes that we're planning right now nor would we talk about it anyway.

Okay. And then we saw two years of declines in China sales. And then this year, Apple obviously grew very healthy 28% in FY '26. Can you talk through to what you attribute that recovery and whether you think Greater China can sustain these sort of elevated levels of growth, which are really leading the company regionally now?

Yes. Let me give you some color on China. We were very pleased with the performance in Greater China, right? Revenue was up 21% during the September quarter, which was a quarterly record. The performance was primarily driven by iPhone, where we set a September quarter record and by Mac, where we saw very strong double-digit growth. And taking a step back, Greater China was up 28% for the full year. Tim and Sabih were just in China meeting with customers and developers and partners, and it has been wonderful to see the customer reaction to our latest lineup of products, including iPhone Duo. Our installed base of active devices has reached an all-time high, and we had a record year for iPhone upgraders in Mainland China.

According to a survey from Worldpanel, iPhone models were the top 3 selling smartphones in urban China. and we think we gained share on iPhone and Mac. A couple of other really compelling things. On Mac, we had a record year for both upgraders and customers new to the product. And according to Counterpoint, MacBook Air and MacBook Neo were the top 2 selling laptop models and Mac Mini was the top-selling desktop model in the September quarter. So I guess to answer your question, we think the success comes from having really great products.

Awesome. Thank you, Richard. Operator, may we have our last question, please?

We will now go to Ben Bollin of Cleveland Research.

John, I'm interested in your thoughts with higher device prices, how you think about the environment around affordability programs and the importance to volumes with respect to trade-ins, subsidies and other options and what Apple can do to encourage more of that independently of funding it yourselves?

Yes. Look, when we're building products and then when we're pricing them, we're always focused on building the best products and services in the world and delivering incredible value to our customers. Obviously, as we talked about, these memory prices are unprecedented, and so that has put pressure on our prices. But it's been great to see the success of the products. And we have been investing in programs like Apple, the Apple upgrade program, which is a great way to help affordability. And so these affordability programs are definitely an important factor.

And the last one for me would be, when you look at, I guess, the level of supply-demand balance, could you speak to where you see that at, not necessarily where it is, where you'd like it to be and how you're thinking about the opportunity to get there across the portfolio?

Yes. Let me take that one, Ben. This is Sabih. So for the December quarter, we expect constraints on Mac and iPad, and it's primarily driven by memory. And that's because the demand has been higher than what we expected. And beyond December quarter, we're not providing an outlook.

All right. Thank you, Ben. A replay of today's call will be available on Apple podcast and at apple.com/investor. Thanks again for joining us today, everyone.

Once again, this does conclude today's conference. We do appreciate your participation.

Open on an aerial shot, high above the California coast. A car drives down the highway, then it disappears into a tunnel. Cut to an interior. Camera follows a mysterious figure, before revealing our main character.

No, no, no. Not me. That's your guy. That's your opener.

Hello, and welcome to Apple Park. I am so thrilled to be here today. Before we get going, I want to take a moment to express what an extraordinary privilege it is to represent the remarkable teams here at Apple. I have spent much of my life at this company, and I continue to be inspired every single day by the curiosity, invention and relentless pursuit of excellence that define Apple. Our teams bring an incredible level of collaboration and care to everything they do, all in service of a mission that has guided us from the very beginning to make the best products in the world.

Every day, people around the world rely on our products to create, learn, live healthier lives and stay connected to the people and things that matter most. And the values at the heart of Apple continue to guide everything we do.

As we look ahead, we see a future filled with enormous discovery and transformation. AI makes entirely new kinds of experiences possible. And AI can become even more useful when it brings together your life with the apps, services and products you use every day. And this means the product at the center of your experiences becomes even more essential, what I like to think of as an intelligent personal hub. It's the intersection of broad new capability and a deep understanding of your personal context that makes this idea so powerful.

Now if you were designing the ideal version of this hub from scratch, how would you do it? Well, first, you would want something that is always with you, deeply personal and able to bring intelligence to the moments when it matters most. You require a powerful processor that can run incredibly capable on-device models to quickly answer questions in the moment and pervasive networking to access knowledge and even more capable models in the cloud. You need a large beautiful display to show rich content. You'd add high-quality cameras and microphones, so we could see and hear and reason over the sights, sounds and the world around you. Of course, you give it all-day battery life. You'd want it to be super easy to use without a big learning curve.

And finally, you'd want it to work seamlessly with your other devices, apps and services. So it feels like one integrated experience. In other words, you would arrive at something remarkably familiar because there's no product in the world better designed to be your intelligent personal hub than iPhone.

As your personal hub, your iPhone can do so much more for you because it understands your context. This includes your calendar, your relationships, your routines, the most private details of your daily life. Now others see that data as something to collect and store. They move it to their servers and ask you to trust them. But honestly, trust only goes so far when your data is no longer yours to control.

That's why Apple Intelligence runs on device whenever it can. When greater capability is needed, Private Cloud Compute extends that same level of privacy protection, ensuring that nobody, not even Apple can access what's yours. It's personal intelligence that's actually personal. iPhone sits at the center of an amazing ecosystem of intelligent features and experiences that work seamlessly across the products you use every day, from Siri becoming more capable and more personal across your Apple products to meaningful health insights with Apple Watch to powerful new AirPods features like Live Translation and so much more.

Simply put, iPhone brings powerful AI capabilities together with your personal context on the device you have with you all the time. So today, we're going to take these experiences even further with the next generation of iPhone. And here it is.

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Introducing iPhone 18 Pro and iPhone 18 Pro Max. We made massive advancements in the most important areas: intelligence, performance, battery and camera. iPhone 18 Pro's gorgeous design now includes color-matched aluminum and back glass for a more cohesive look. It comes in an incredibly deep Black. A Silver that's now even more refined. A fresh new color we call Glacier. And we're excited to introduce Burgundy, a sophisticated and unique new color.

iPhone 18 Pro introduces helpful AI that's centered around you and your needs. Here's Lilian to tell you more.

iPhone 18 Pro is built to take full advantage of all the capabilities of Apple Intelligence and deliver experiences that are more powerful and delightful. You get access to our latest Apple Foundation Models, including the most advanced on-device model we've ever created, plus you can draw on even more powerful AI models on Private Cloud Compute. These Apple Intelligence models and capabilities unlock Siri AI, an entirely new version of Siri.

Let's take a closer look at how Apple Intelligence makes Siri more personal and capable for you, how it boosts your productivity and how it lets you express yourself visually.

Siri is already one of the most widely used assistants in the world. In fact, our users make over 2.5 billion requests every single day. And our new version of Siri goes further than ever before.

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Siri finds your personal context across apps, like Mail and Messages.

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You can let Siri see what you see and combine it with up-to-date broad world knowledge to answer your questions.

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And Siri can take action in the apps you already use, including third-party apps like Stuff. Siri AI can find what you need and get more done than ever. And it already works seamlessly with over 300,000 apps. You can continue to take action in apps you already use with Siri, like texting a friend in WhatsApp or playing a book on Audible, and it's easy for developers to adopt new capabilities too. So you can ask Siri AI to draft an e-Mail in Outlook, search for a homework assignment in Notability, or add a restaurant recommendation to Tripsy.

You can have rich conversations with Siri using voice or typing across your iPhone and in the all-new Siri app that's right on your Home Screen. The Siri app is great for revisiting a past conversation or kicking off a new one. And it uses iCloud to sync conversations privately across your Apple products.

As you just saw, Siri is also built right into the Camera app on your iPhone. So you can ask questions and take actions, like adding multiple events to your calendar, all in one go. Not only that, you can write and edit with Siri virtually anywhere you type, like generating an e-Mail to your kid's soccer coach while on the go. Plus, Siri AI sounds incredible. That's because iPhone 18 Pro takes advantage of our most advanced on-device model ever, which powers expressive voices. You can pick from multiple options, then customize the pace and expressivity.

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This on-device model also enables more accurate system-wide dictation, making it easy for you to get punctuation, spelling and capitalization just right. Beyond Siri AI, Apple Intelligence also boosts your productivity. In Safari, it powers Notify Me to monitor a web page and automatically let you know about a change. In Shortcuts, you can make personalized automations just by describing them, like updating your calendar and reminders each time you receive an e-Mail from school. And in the Phone app, Apple Intelligence can automatically surface relevant information when you call a business, like a flight confirmation code right when you need it.

Apple Intelligence also lets you express yourself visually in all new ways. You can use the reimagined Image Playground to generate high-quality images in almost any style. And in the Photos app, Apple Intelligence powers a host of incredible photo editing tools that make the new Pro camera system even more versatile, like the upgraded Clean Up tool with higher quality infill for complex scenes, extend, which expands your images to give subjects more breathing room, and the powerful Spatial Reframing tool, which lets you change the camera's perspective after the photo was taken. So you can adjust the composition to make a big difference in the framing.

We couldn't be happier for how iPhone 18 Pro delivers deeply personal intelligence with the power to transform so many things that you do every day. Apple Intelligence will be available in 16 supported languages with our OS releases this month. Siri AI is rolling out in beta in English with support for French, Japanese, Korean, Portuguese and Spanish coming in October. Some features will have usage limits because they rely on powerful server models. Increased access will be available with most iCloud+ plans.

Now over to Sri to tell you about the powerful Apple silicon at the core of iPhone 18 Pro.

The new on-device capabilities of Apple Intelligence and Siri AI demand even more compute. To power these, we had to push performance to a whole new level and advance the way we build chips for iPhone. The result is A20 Pro, an exceptional chip that sets a new bar for mobile computing. It starts with a brand-new architecture that's built on the latest 2-nanometer technology. These smaller, more densely packed transistors enable upgrades across the entire chip. A20 Pro has our latest 6-core CPU featuring 2 of our new super cores that are up to 20% faster and 4 efficiency cores, all integrated with neural accelerators that power low latency, on-device AI workloads.

Our newest super cores are desktop class and by far the fastest in any smartphone. A20 Pro has a significantly advanced GPU with faster graphics rendering and improved AI performance for image generation. The new GPU has a 7-core design, enabling up to a 40% increase in performance. This is a huge gain in just 1 generation. We increased internal bandwidth, added micro-architectural improvements that specifically target high-end games and introduced a new version of our neural accelerators with 2x faster 8-bit floating-point band.

These neural accelerators power advanced AI like running third-party LLMs on device. A20 Pro has another massive upgrade. The Neural Engine is a dedicated highly focused AI accelerator that we've been advancing year after year. We've added a second Neural Engine for a total of 32 cores. This provides 2x the compute power. A20 Pro is the ultimate chip for running advanced on-device models. These CPU, GPU and Neural Engine improvements all leverage a 50% increase in memory bandwidth. This is the widest memory interface we've ever shipped in an iPhone and an important enabler for all of the performance gains on A20 Pro.

In order to unlock these capabilities, we had to redesign the physical package of the silicon. A20 Pro introduces custom packaging inspired by our M-series chips with the silicon die now placed side-by-side with memory. This removes the memory from the thermal path of the SoC and lets us connect the silicon directly to the vapor chamber, for dramatically improved thermal performance.

This new chip packaging is just one piece of a brand-new thermal design. And here's Rich to tell you more.

Effective thermal management is critical because efficient heat dissipation is what enables the maximum performance from this incredible chip. It benefits just about everything you do on iPhone, from sustaining graphics for AAA games to ensuring high throughput cellular connections and providing advanced computation to run our most powerful on-device models.

iPhone 18 Pro has a next-generation vapor chamber that helps the system manage even more heat. It has 3x the surface area as the one in iPhone 17 Pro. The ionized water is constantly cycled throughout the system for significantly improved thermals. The new vapor chamber uses 80% recycled stainless steel and is paired with more thermally conductive graphite. There's also an industry-first nano-twin copper material that more effectively moves heat away from the display while providing strength.

This innovative thermal management system delivers the highest sustained performance on iPhone ever with up to a 40% gain compared to iPhone 17 Pro. It's up to 2x better compared to iPhone 16 Pro and older. This goes beyond improvements. These are giant leaps in sustained performance.

Now let's talk about battery life. Last year, iPhone 17 Pro offered a huge jump. This year, iPhone 18 Pro takes another massive leap enabled by A20 Pro silicon efficiencies, advanced system improvements and new battery designs. Despite iPhone 18 Pro's smaller size, it delivers the same great all-day battery life as iPhone 17 Pro Max. iPhone 18 Pro Max has the largest increase in battery life ever on iPhone.

When you look at video playback for eSIM-only models, iPhone 18 Pro offers 36 hours, while iPhone 18 Pro Max has a whopping 45 hours. We've also developed a new battery usage model by looking at real-world data from how people use their iPhones, taking photos to using AI. iPhone 18 Pro provides up to 24 hours per charge and iPhone 18 Pro Max has up to 30 hours of usage per charge. We're also making wire charging faster. iPhone 18 supports 50% charge in around 15 minutes. Just 5 minutes of faster wire charging provides around 6 hours of video playback, great for topping off before a long flight.

The new thermal management system and best battery life yet bring amazing experiences to iPhone. Here's Kaiann to tell you more.

All that performance and efficiency means game developers can push further than ever on iPhone. This is Monster Hunter Outlanders by Tencent Games and Capcom, a gorgeous open world co-op game. It uses a 7-core GPU of A20 Pro to render iOS exclusive cinematic graphic for console level lighting and detail at up to 120 frames per second. It supports MetalFX Upscaling, spatial audio and will be available later this year.

One of the most important parts of the iPhone experience is the camera. And with iPhone 18 Pro, we're introducing our biggest camera improvement in years, making stunning shots easy for everyone and adding new levels of creativity. One of the fundamental pillars of photography is aperture. It controls how much light enters the system and affects every photo and video we take. Being able to change the aperture provides more control for light intake and depth of field. So iPhone 18 Pro has a new 48-megapixel Fusion main camera with variable aperture for creative control that wasn't possible before. This is the most advanced camera we've ever made.

To create variable aperture, we developed a system of 6 laser-cut blades each thinner than a human hair. The blades are made of a specialized polymer composite for the right balance of mass, flexibility and durability. There's a new rotor mechanism to control movements and a custom design lens to ensure image quality at multiple apertures.

The aperture adjusts automatically based on the scene. When you're in a darker environment, the aperture opens to letting around 50% more light, like in this portrait with impressive detail and color range. Night mode captures are faster with better quality, like this astrophotography shot. This was shot at f/1.8, an aperture we've optimized for the best balance of light gathering and depth of field. And the aperture can narrow for more depth of field, which means crisper detail further back in the scene for better group shots.

This new camera is paired with intelligent camera software to do even more. Here's Maryam to tell you about it.

Together with state-of-the-art hardware, we're using advanced software to deliver powerful new capabilities that are so easy to use. You can now get stunning cinematic mode effects from regular video after you capture. And it now supports 60 frames per second for this half-speed effect. Time-lapse now offers 4K resolution in Dolby Vision HDR for breathtaking videos and Audio Mix has updated algorithms for higher-quality voice recordings and now supports music.

For even more creative photo and video options, we're introducing Pro Controls. Pro Controls lets you customize your camera experience, making it easier than ever to access your most used settings and introduces new options for manual control. You can change white balance for the most accurate color, or use a histogram to check exposure levels throughout the scene. You can manually adjust the aperture between 4 versatile options and change shutter speed to create artful motion blur, for truly unique shots that weren't possible before on iPhone.

In this portrait, the photographer used Pro Controls to intentionally capture a dazzling starburst on the subject's earring, shaped by the unique aperture blades of iPhone 18 Pro. And here, the photographer has adjusted shutter speed to freeze the perfect moment without motion blur. Pro Controls work for video as well, making iPhone 18 Pro ready for everything, from professional film sets to the things you shoot every day. You can adjust shutter speed for more motion blur, a classic film-making technique.

We're also making it easier to maintain focus on moving subjects. Smart focus tracking uses on-device AI models to lock onto a subject and maintain detail, even if they change depth or exit and reenter the frame.

And now let's talk about an exciting upgrade to Photographic Styles. This feature brought breakthrough customization for photos, and we're now enabling even more unique looks with texture and grain control. Texture is essential in photography. It enhances the interplay between light and shadow and can elevate the overall emotion of a scene. These new options let you further dial in your desired appearance in photos like adjusting skin texture. You can balance color and texture in unison and you can reverse or change it any time.

Finally, let's talk about image authenticity. This is vital for photo journalists and photographers. We will be supporting the SynthID standard to help identify images generated or edited with AI. But to ensure the authenticity of captured photos, we realized we needed to go even further with Apple Reference Image. Now you can prove the authenticity of a photo taken on iPhone 18 Pro. Apple Reference Image starts in the most secure way possible with the sensor. The new main camera securely signs photo data at a pixel level right at the time of capture.

Private Cloud Compute develops the signed data into an unalterable image that you can view in the Photos app. This reference photo lives with the regular editable photo for overall flexibility. This is like having a digital negative that you can use to visually confirm what was actually in the shot. From cameras that capture incredible levels of richness and texture to the use of Pro Controls that enable looks like these artful silhouette shots, to photos that highlight beautiful gradients of light and jaw-dropping detail. Our new Pro camera system is more versatile than ever.

Now back to Kaiann.

This Pro camera system is incredible and was actually used to film the event you're watching today, taking advantage of many of the new features like variable aperture. iPhone 18 Pro also features an upgraded Dynamic Island. Redesigned to be smaller, more useful and even better for seeing live information at a glance. It can now show 3 live activities and help you keep track of multiple things at once like your flight status with Flighty, navigating with Maps or simply checking your timer.

In addition to Apple Intelligence and Siri AI, iOS 27 brings more useful capabilities such as intuitive child safety features that give parents more flexible ways to manage what kids can see, who they can talk to and when they have access. iOS 27 gets even better with customizable liquid glass, improvements to search in places like Mail, and performance boosts like up to 80% faster AirDrop transfers.

iOS 27 improves connectivity with smarter transitions between cellular and Wi-Fi networks and introduces iPhone Handoff that lets you use a single phone number across 2 iPhones. The number is instantly active on whichever iPhone you pick up. iPhone Handoff launches with T-Mobile and Telekom Germany. Verizon and EE will add support by the end of the year, with more carriers to follow.

And that's iPhone 18 Pro and iPhone 18 Pro Max. We made impactful upgrade to the most important areas of iPhone. A20 Pro and a next-generation vapor chamber deliver a huge boost in performance. Our most advanced camera now with variable aperture. And our longest battery life by far powers it all, including intelligent capabilities like the new Siri AI.

We've also designed new accessories, starting with an updated clear case and new colors for tech-woven and silicone designed to pair perfectly with matching colors of cross-body strap and a new wrist strap that works with both iPhone cases and AirPods Pro. iPhone 18 Pro starts at $1,199, and there's now a 2-terabyte option. An iPhone 18 Pro Max starts at $1,299. And we have great offers from Apple and our partners.

In the U.S., iPhone 18 Pro is available with Apple Upgrade, a new leasing program, which offers customers monthly payment options over 12 or 24 months, and an easy way to upgrade to a new iPhone at the end of their lease. You can also get up to $1,200 off when you trade in an iPhone 14 or newer. And for effortless peace of mind across your family's products, we're introducing AppleCare One Family in the U.S. with easy sign-up right from your iPhone. You can preorder iPhone 18 Pro this Saturday, September 12, and it will be available on September 18.

Now back to John.

iPhone 18 Pro delivers innovations that make it more capable and more intelligent. And it makes products use every day like AirPods even better. With AirPods, it's so easy to enjoy music, stay connected and use intelligent features like Live Translation, all hands-free. An active noise cancellation helps to quiet the world around you, making it one of the defining features of AirPods Pro.

Now for those who prefer AirPods without ear tips, we introduced an AirPods 4 model with ANC. Well, this year, we're making that experience even better and bringing it to more people with our newest AirPods.

[Presentation]

This is AirPods 5. And to tell you more, here's Dave.

AirPods 5 feature our beloved open-ear fit, redesigned from the inside for an even better audio experience. With a new multiport acoustic architecture and next-generation adaptive EQ, AirPods 5 deliver richer, more detailed sound across a wider range of ear geometries. This makes Personalized Spatial Audio sound more immersive and dynamic so it feels like you're surrounded by whatever you're listening to. And it gets even better with active noise cancellation.

Thanks to the new acoustic architecture and advanced computational audio, it now has 50% more noise reduction than the previous generation, which means AirPods 5 deliver the industry's best ANC in an open-ear design. Along with ANC, transparency mode lets in voices and sounds around you.

[Presentation]

It's now even more natural, so you can easily engage with others and stay aware of your surroundings. And with adaptive audio, you never have to worry about changing modes as AirPods 5 automatically adjust between ANC and transparency in response to background noise.

AirPods 5 deliver more than just a world-class listening experience. They're also a seamless extension of Apple Intelligence on your iPhone.

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With Siri AI and AirPods, you can draw on your personal context and get answers with broad world knowledge entirely hands-free.

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AirPods 5 also feature Live Translation, which has been a big hit since it first launched last fall.

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Together with iPhone, AirPods enable you to leverage the power of intelligence while staying present with those around you.

Next, we know users care a lot about durability, and AirPods 5 are reengineered to be more durable than ever, helping them stand up to more rain, sweat and dust. And they get up to 4 hours of listening with ANC and up to 20 hours with our incredibly small charging case. With all these features, we're so excited that AirPods 5 with best-in-class ANC are only $129, the same price as the previous generation without ANC, making it an outstanding value.

Now for those who want even more, we've created a second model with some great additional features, starting with on-stem volume control, a first in this style of AirPods, enabling you to adjust the volume simply by swiping up or down on the stem. Users love this feature on AirPods Pro, and once you use it, you can't imagine being without it. This version also has longer battery life, up to 5 hours with ANC, thanks to a reengineered battery cell that packs even more energy into the same design. And it comes with a wireless charging case with support for Apple Watch and Qi chargers, making it even more convenient to charge whenever you need to.

AirPods 5 with wireless charging case, longer battery life and volume swipe are only $149, $30 less than the previous generation. You can preorder both today, and they'll be available on September 18.

With leading ANC at a lower price, along with immersive Personalized Spatial Audio, Live Translation and hands-free access to the new Siri AI, plus the option of wireless charging, longer battery life and volume swipe. These are the best open-ear AirPods we've ever made.

And now back to John.

We're thrilled that with AirPods 5, active noise cancellation is now standard across our entire AirPods lineup. AirPods 5 are a great example of how we take the innovations from our most advanced products and bring them to the rest of the lineup, making them accessible to even more people.

Next, let's talk about Apple Watch. We hear from so many people about the profound impact it's had in helping them take charge of their health, stay active, keep connected to the people who matter most and in some cases, even help save their lives. Because Apple Watch is always on your wrist, it can monitor how you sleep, notify you if it detects a high heart rate and track your workouts. And it's in constant communication with your iPhone. So it extends the power of Apple Intelligence to even more aspects of your everyday life.

And this year, we're bringing huge advancements to health and fitness and Apple Intelligence. Introducing the new Apple Watch Series 12 and Apple Watch Ultra 4. Both have been reengineered with our most advanced health sensors and all-new Apple silicon, enabling features that enhance your life every single day.

Here is Deidre to tell you more about the big updates to health and fitness in Apple Watch.

These new capabilities start where Apple Watch touches your wrist. The advanced sensor array that helps you track your heart rate and rhythm, your sleep, advanced workout metrics and so much more. Turning every moment of your day and night into meaningful insights. This year, Series 12 and Ultra 4 take health and fitness to the next level with our all-new Health Sensing System.

It's built on our innovative sensing foundation and improves 3 core elements. First, within the same small footprint, the electrode surface area is increased for better skin contact during ECG readings. Second, for better optical sensing, redesigned photodiodes are organized in a ring to capture light more efficiently. And third, larger, more power-efficient green LEDs support accurate heart rate measurements all day even during motion.

The new Health Sensing System delivers higher frequency continuous heart rate data, which is a key indicator of your overall health. Background heart rate readings are now taken every 5 seconds all day long even while you're on the go. That's 60x more frequent than before. It also samples heart rate variability or HRV as often as every 5 minutes. That's 24x more frequently. HRV is an indicator of how your body responds to stress and recovery. Higher variability is generally associated with better overall recovery.

Accuracy of health data is critical to providing helpful insight. So we tested Apple Watch's Health Sensing System in a head-to-head study against other wearables using an ECG chest strap as reference with hundreds of participants running, cycling, doing HIIT workouts. We are excited to say the results were clear. Apple Watch has the most accurate heart rate sensing in a wearable.

The Health Sensing System will also enable completely new experiences on Apple Watch Series 12 and Ultra 4. Here's Sumbul to share more.

Your heart rate reveals invaluable information about your fitness and current physiological state. So we're featuring high-frequency heart rate data in the updated Heart Rate app and new watch-based complications. HRV is now included in the vitals app for a more complete look at your health status. It's in the overnight view and in a new daytime view to help you spot shifts even before they show up in your overnight metrics.

And the Health Sensing System brings a completely new experience to Apple Watch: Readiness. Whether you're training for a race or juggling a busy week, Readiness can tell you when to push and when to hold back. Each morning, Apple Watch analyzes your recent activity, vitals and sleep to give you one score with a clear call on your body's capacity to take on the day. Recover, pace yourself, ready, go for it.

Your score can also update during the day. And you can view it on Apple Watch or in the Fitness app on iPhone. Everything the Health Sensing System measures flows into the Health app on iPhone. Because it's a central and secure location for your health and fitness data, it can uniquely provide a richer understanding of your health.

This year, the Health app gets a completely new design, turning your metrics into personalized guidance with Apple Intelligence at its core. The new Insights tab has an Apple Intelligence-generated summary that highlights the most timely information, surfacing details like the latest on your sleep or a new peak in your VO2 Max. You can go deeper on topics like Readiness, fitness or heart health.

You'll also get personalized guidance powered by Apple Intelligence. So if you're working on your cardio, you might see a suggestion to incorporate intervals into your regular morning run. And these recommendations dynamically adapt to you and your data.

Understanding your health over the long term is also important, so we've developed Health Age, a simple way to discover how key health metrics align with your actual age, informed by the best available science. Metrics from your Apple Watch, like VO2 Max, sleep and more, combined with biomarkers from your blood work to give you insight into what habits are having the biggest impact on your Health Age and how to improve it.

And to help you build a foundation for a healthier future, there's a new Longevity tab, which uses metrics from your iPhone and Apple Watch to assess your overall health across sleep, movement, heart health and more. The shading shows how well you're doing in each category. And you'll see how each metric is classified against the latest clinical guidance. You'll be able to unlock deeper insights by integrating recent lab results too. You can add them manually, sync your medical records or, in the U.S., order a full panel from Quest that features over 50 key biomarkers for $119. Once you've completed your labs, your results are combined with your data from Apple Watch and analyzed on your iPhone, with videos from clinical experts related to your results.

Your movement and mobility add another layer. Using just your iPhone and Apple Watch, you can take in-depth assessments of how well your body is moving and even track your progress as you come back from an injury. For example, here's how the VO2 Max test works.

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As you take the test, your iPhone camera detects your precise movements. You'll see the moves demoed by a trainer.

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The app guides you in real time with on-screen and voice cues on your form. It's like having a coach right there with you.

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As soon as you're done, you'll get your results. And you can retake these assessments anytime.

Your iPhone, Apple Watch and Apple Intelligence all work together in the redesigned Health app to help you live a better day and a healthier life. The new Health app is coming later this year, starting in U.S. English with more languages to follow.

And those are all of the health and fitness updates. To tell you about the new intelligence features of Apple Watch, here's Ron.

Apple Watch is always on your wrist. And with Apple Intelligence on your iPhone, it's the perfect device to help you stay aware of the sounds around you and keep track of your conversations. With the built-in microphones of Series 12 and Ultra 4 plus the power of Apple silicon and our latest AI models, we are able to create a brand-new class of Apple Intelligence features.

Introducing Audio Intelligence. Just as Visual Intelligence makes sense of what you see, Audio Intelligence makes sense of what you hear. It harnesses the power of Apple Intelligence right on your wrist in a private and secure way.

First, having increased awareness of the world around you is especially important for those who are deaf or hard of hearing. So we're bringing sound recognition to Apple Watch. Series 12 and Ultra 4 can listen for sounds like sirens, alarms, doorbells, a baby crying and more, and uses on-device AI to notify you when they are detected even when your phone is not with you.

Next, we've all been in situations where you missed the key detail of what someone just said and wished you could go back. Now you can use Live Rewind, which lets you go back in time for 15 seconds.

[Presentation]

Just double press the digital crown, and Live Rewind transcribes what was just said. You can ask Siri about the content of that transcript or save it to the new Siri app to revisit later. This is great for when you're trying to recall a book recommendation, a colleague's brilliant idea or something you didn't hear the first time.

The next Audio Intelligence feature will help you remember key moments from daily conversations, so you can be more present and engaged. Introducing Siri Recap. It uses ambient listening to take high-level notes of your conversations, like takeaways from a team meeting or a parent-teacher conference. Conversations will have an Apple Intelligence-generated title, summary and key points. You can review them in the Siri app. You control if and when Siri Recap takes notes. When you enable it, you can choose always or set up a schedule, such as only at work or never at night. You can also turn it on and off at any time right from Control Center.

Privacy is protected at every step. These Audio Intelligence features do not create or store audio recordings, and raw audio used for processing is completely inaccessible, even to Apple. Audio Intelligence does not identify and attribute the speakers. And all your Live Rewind transcripts and Siri Recaps in the Siri app are end-to-end encrypted with iCloud syncing.

You can access these intelligence features with the new Siri Modular face. It features the dynamic top widget of the Smart Stack, and you can tap for past Siri conversations to quickly invoke Siri or view your Siri Recaps. Audio Intelligence will help you detect important sounds, catch up, take notes and even instantly discover new songs with Shazam.

Live Rewind and Siri Recap require Siri AI and will be available in beta later this year starting in English with more languages to follow.

Now back to Deidre.

Audio Intelligence is only possible because of our new S11 chip, which is custom built to power these intelligence features while keeping your data private and secure. These features are enabled by the S11 chip's power-efficient, always-on processor. The processor includes a new Secure Exclave where a dedicated audio buffer securely manages raw audio exclusively for processing. With a faster CPU, GPU and neural engine all derived from the A20 Pro, S11 is our most powerful wearable chip yet.

Internal innovation is matched by extraordinary design, creating a device you genuinely love to wear. Apple Watch was designed to be as individual as the person wearing it. With thousands of case and band combinations and millions of watch-based customizations, it's not just a watch. It's your watch. That's more true than ever with stunning new colors and materials. Apple Watch Series 12 comes in space gray, black, light gold and a stylish new dark bronze, all made using 100% recycled aluminum.

Plus, the aluminum cases now have Ceramic Shield 2, making the front glass on Series 12 60% tougher than our previous Ion-X glass. Two polished finishes in radiant gold and natural are made with 100% recycled titanium. Series 12 is also available in another stunning material, ceramic. It's sophisticated and unmistakable on your wrist, available in pearl white and night blue.

We also have an assortment of new band colors, including styles from Nike. And Apple Watch Hermes is introducing radiant gold titanium to their series collection.

And that's Apple Watch Series 12, the ultimate device for a healthy life.

With our most powerful wearable chip for audio intelligence, new health and fitness insights with the most accurate sensing, Ceramic Shield 2 and beautiful new finishes and still with up to 24 hours of battery life, Apple Watch Ultra 4 is the ultimate sports and adventure watch. With a larger battery, the power efficiency of S11 and the Health Sensing System, Ultra now gets over 2 days of battery life. For workout tracking with full GPS and heart rate, you now get up to 18 hours or with the new Max Extended Workout mode, up to 45 hours, which is enough time to conquer a 100-mile race.

Ultra comes in black and natural titanium. We have new colors across the bands lineup and a new titanium Hermes band. And that's Apple Watch Ultra 4 with the S11 chip bringing Audio Intelligence to your wrist, the Health Sensing System to take your health and fitness journey further and longer battery life for workouts.

Series 12 starts at the same price of $399, and Apple Watch Ultra 4 remains at $799. Both can be preordered starting today, and they'll be available on September 18.

Before I hand it back to John, I'd like to share an ad that highlights the new impactful features of Series 12 and Ultra 4.

[Presentation]

This new Apple Watch lineup brings an extraordinary amount of technology to a remarkably small and beautiful design. It brings new Audio Intelligence features built for the moments you need them. It leads the industry with the new Health Sensing System and science-backed health and fitness features. And by working seamlessly with your iPhone, it extends those capabilities even further.

So that's what we have to share about iPhone 18 Pro, AirPods and Apple Watch. But actually, there is one more thing. I started the day with the idea of an intelligent personal hub and why there's no product in the world better designed to be that hub than iPhone. And for a device that plays such a central role in your life, a larger display would open up entirely new possibilities, whether you're enjoying content, reliving memories, getting help from Siri AI and Apple Intelligence or immersing yourself in your favorite apps and games.

Now at the same time, you'd still want it to fit in your pocket and in the palm of your hand. And we think the best way to achieve that is with a foldable design. Others have created foldables that just feel like 2 phones awkwardly stuck together. This results in a square screen that's poorly suited for the way people use them. Scrolling through vertical content feels compromised, and movies are boxed in by oversized black bars, making a larger screen feel much smaller.

We started with the experience that we wanted for ourselves, a larger display that feels as natural and intuitive as iPad. Then, we brought together thoughtful design with breakthrough engineering in a way only Apple can. And the result is a series of remarkable innovations that we believe will redefine the experience of using a foldable phone. And here it is.

[Presentation]

This is iPhone Duo. To tell you more about the thinking behind the Duo's design, here are Molly and Steve.

iPhone Duo is unlike any iPhone you've experienced before. It's entirely new and at the same time, remarkably familiar. A similar size to your passport, it feels familiar to hold and comfortable to use with one hand. Its distinctive asymmetric shape with 2 rounded corners invites you to open it. The 2 sides connect into a continuous frame surrounding the largest iPhone display we've ever designed, inspired by the versatility of iPad with a narrow uniform border creating a spacious inner display that's immersive for both landscape and portrait use.

We wanted the experience of using iPhone Duo to feel uninterrupted. With 2 screens, the transition between open and closed had to be fluid and completely intuitive. To achieve this continuity, we designed iPhone Duo around a consistent aspect ratio that is the same across both displays. For the first time, the FaceTime camera is designed to fit discretely behind the display, hidden until you need it.

We've also designed a remarkable hinge, which supports the center of the display as it articulates, holding it flat when opened. The hinge mechanism has a custom variable talk profile, which precisely controls opening and closing. The motion is designed to feel effortlessly smooth, combined with an integrated magnet array for a satisfying and secure closure.

When open, it's our thinnest iPhone ever, enabled by an architecture that tightly packages key components into the camera plateau, providing space for an impressive battery system. The frame is made from aerospace-grade titanium required for strength at this thinness that's been precision machined and polished to an elegant mirror finish. The convenience of iPhone Duo is combining the utility of 2 products into 1, the largest display for an iPhone in an incredibly compact pocketable form.

With the unique form factor of iPhone Duo, we took advantage of Liquid Glass to fluidly adapt to this new aspect ratio and larger inner display. For example, iOS 27 moves essential controls to the side. This maximizes vertical space for content and places controls within easy reach of your thumb. This meant adjusting every app's layout and reconsidering iPhone design principles that have existed for years, all to make the software and new hardware work elegantly together. The dock on the home screen is now oriented vertically. The status bar retains all the information you need in a more compact, flexible system that nestles into the corner of iPhone Duo.

As you move between displays, the software gracefully expands and transitions from the outer to the inner display. Controls remain at a consistent location on the side, while content scales to take advantage of the larger screen. With the larger inner display, we also expanded the capabilities of iOS, whether it's viewing 2 home screen pages at once, seeing your inbox and messages at the same time or even opening 2 apps side by side.

We also made iOS more flexible than ever. The system reacts as you fold iPhone Duo, reorients when you turn it on the side and transitions to the appropriate display when you flip it over. We designed the hardware and software together to create experiences like this across the system. As a result, iPhone Duo and iOS 27 redefine what an iPhone can do while still feeling natural and familiar.

iPhone Duo brings an entirely new design while preserving everything you love and expect from iPhone. It gives you the largest display ever on an iPhone while still fitting easily in your pocket. It reflects extraordinarily complex engineering. It feels effortless to use. And it makes new experiences possible.

To tell you more about the amazing iPhone Duo, here's Joz.

Everything you'd love to do comes to life on iPhone Duo's 2 beautiful displays. It opens to a massive 7.6-inch Super Retina XDR display that is 50% larger than iPhone 18 Pro Max and a whopping 80% larger than iPhone 18 Pro. Not only does everything look incredible on this display, but you'll also get a larger canvas for your apps to fit more content.

The beautiful 5.4-inch outer display provides 90% of the screen area of iPhone 18 Pro. And these displays do more than just look great. Later this year, you'll be able to use Apple Pencil with USB-C on either display for jotting notes, sketching or marking up documents, the first time iPhone offers the great Apple Pencil experience that iPad users love.

We wanted to provide an easy, secure and consistent way to authenticate iPhone Duo, whether it's closed or open. So we determined that Touch ID integrated into the side button and positioned right under your thumb would be the best way to achieve that. And to account for the different ways you might hold it, you can enroll multiple fingers. And for added convenience, you can also unlock iPhone Duo effortlessly using your Apple Watch.

iPhone Duo sounds amazing, too. With speakers at the top and bottom, it delivers immersive spatial audio in both landscape and portrait. It comes in 2 refined colors, star white and night sky.

iPhone Duo is beautiful and durable. It's crafted from Grade 5 titanium that offers incredible strength. The central structural plane has support ribs for added stiffness. To make the frame even more rigid, the antenna splits are reinforced with high-performance inserts. They're made from ceramic fibers that are 3x stronger than Grade 5 titanium. Together, these structural details make iPhone Duo feel exceptionally solid every time you use it, and also a Ceramic Shield on the back, Ceramic Shield 2 on the front and is rated IP68 for dust and water resistance.

Of course, groundbreaking hardware deserves an equally groundbreaking software experience. Here's Craig to tell you more.

We looked at every aspect of iOS to see how we can make it even more useful on iPhone Duo. Like you saw, essential controls are on the side to free up vertical space for content. This approach benefits your entire experience. For example, on the lock screen, it puts more focus on your wallpaper, especially with this minimalist view that lets you really celebrate your favorite images. And we brought this efficient use of space across the entire system, optimizing each of our apps specifically for iPhone Duo.

The expansive display also supercharges productivity by letting you do more at once. You can move an app over to one side and launch a second app on the other for powerful Split View multitasking; or launch a second window of the same app, like Safari, for comparison shopping. With the same gesture you already know, swapping apps is easy and so is changing sides. And with a simple tap on the divider, you can pair the apps, so it's easy to get back to them later.

Using the large screen in portrait also feels great. If you're multitasking while watching a video, you can pin it to the top for a much larger view with plenty of space left below for your other app.

As you can see, iPhone Duo is truly the most versatile iPhone ever, and we've taken it even further. You can use it in any orientation or pose. iOS intelligently reacts to the device angle, leveraging the sensors in each half. Set it on the table and launch a show hands-free on the outer display without a stand, or enjoy it with the perfect viewing angle and easy access to the controls on the bottom.

Custom tuning algorithms account for the changing distance between the speakers and different poses to deliver an amazing audio experience no matter how you use iPhone Duo. You can also use iPhone Duo partially folded. iOS gracefully adapts, sliding the content away from the folding area where it can be difficult to tap.

We've also reimagined standby for iPhone Duo. Set it down and it will enter standby even when it's not charging. You can customize it with new faces, including weather and calendar as well as widgets like music to enjoy your favorite songs or stay on top of your notifications at a glance.

And iPhone Duo can transform into a delightful bedside clock with the ability to wake you up with a gentle glow timed perfectly with your alarm. We've also made it easy for developers to adapt their apps for iPhone Duo with new and updated APIs. Zoom could turn the display into an immersive video conference room. You can easily see both the content being shared as well as the other participants on the call. Slack brings your whole workspace into view. Detail uses the new core AI framework and runs its AI models on device to make content creation fast and easy on the big screen. And Netflix takes advantage of the versatility of iPhone Duo to make finding shows even more fun and engaging, scroll through clips on the outer display or open up to get a captivating experience on the large screen.

These are just some of the amazing apps being updated to take advantage of iPhone Duo, and we can't wait to see what developers are going to create. Of course, none of this is possible without amazing hardware innovation. To tell you more, here's Johny.

For iPhone Duo, our goal was to deliver the best possible experience when it comes to the display. This includes how it looks and feels. We wanted to provide the highest quality for viewing content and address what people dislike about foldable displays: the distracting crease, the plastic feel and susceptibility to scratches and dents.

Drawing on our learnings from iPad and Mac, we developed a custom nano-texture finish that significantly reduces glare and reflections. The unique texture creates a perceptually flat, matte surface that minimizes crease visibility and also feels premium to touch. We created this by using maskless laser lithography where every micro-lens is written pixel by pixel.

iPhone Duo uses a novel structural system with a multilayer lamination design that keeps the display flat and provides durability. The nano-textured cover layer is made from a custom polymer that has up to 40% higher stiffness than other materials used in the industry and has an Apple-designed coating for scratch resistance. There is high-strength glass above and below the OLED panel for added protection. Viscoelastic adhesives allow these layers to glide relative to one another during folding like pages in a book, so the panel doesn't distort over time. A titanium plate serves as the bottom layer to bring further durability.

And bringing it all together is the hinge with over 100 tiny precision components. Carbon fiber support plates create a stiff, lightweight platform for the display to rest on.

During manufacturing, we used AI algorithms to precisely match each individual hinge with its best-fit housing to ensure perfect alignment. And a confocal laser progressively scans the topology of every single unit and 3D prints up to 25 micro layers of a custom photopolymer to eliminate residual waviness. The result of all of these innovations is a folding display with superior viewing quality that feels premium and flat, resists wear and meets the high standards of iPhone.

Powering iPhone Duo is A20 Pro, built to handle demanding workloads. A20 Pro also features a new display engine that drives both displays simultaneously with smooth transitions between them and blends the unique pixel layout in the under-display camera area to deliver a consistent viewing experience.

Our new chip package with the direct die-to-thermal design lets A20 Pro reach peak performance for on-device AI immediately, while a vapor chamber sustains it for high frame rate gaming on the large display. The result is up to 35% higher sustained performance than iPhone 17 Pro.

iPhone Duo also feature C2, our most advanced cellular modem. C2 delivers big updates to all the primary components, including baseband, transceivers, power management, firmware and software working together as one platform. With our fully integrated approach, it's optimized to improve everyday user experiences, including using AI algorithms to improve cellular reliability, like reconnecting faster in low coverage areas. This is possible because we designed A20 Pro, C2 and iOS together as an end-to-end system.

C2 also delivers faster uploads. When compared to C1X, it's up to 50% faster and adds 5G millimeter wave support in the U.S., all while consuming 15% less energy. This level of efficiency is critical for battery life.

iPhone Duo is eSIM-only worldwide. This allowed us to use every bit of internal space to maximize battery capacity. There is a high-energy battery on each side. Custom silicon and algorithms handle all of the charging, discharging and rebalancing, so these 2 batteries operate seamlessly as 1.

The result is an impressive all-day battery life. You get up to 31 hours of video playback when using the inner display and a massive 44 hours when using the outer display. And with our new battery usage model, iPhone Duo provides up to 24 hours per charge when using both screens equally. It also supports fast charging, up to 50% in around 20 minutes and gives you up to 5 hours of video playback when using the outer display after just 5 minutes of charging.

Bringing iPhone Duo to life has involved some of the most complex and innovative engineering we have ever done, and there is still more to tell you. So let me hand it back to Joz.

A key part of what puts iPhone at the center of your personal world is its incredible camera system that captures the moments that matter most. The new Fusion Main camera captures incredible details, like in this person's shirt and the blades of grass. Thanks to the 0 shutter lag, this 48 megapixel photo captured the exact peak of this jump while maintaining sharpness in the leaves and hair.

The 2x optical quality telephoto lets you get closer to the subject and captures the texture of the rocks and the fine details in her dress. This camera also excels in low light, thanks to its large sensor, fast aperture and sensor shift optical image stabilization. Even in the dark theater, it's captured the details in her jacket.

The main camera also supports 4K 120 video for the slow motion effects users love in our Pro models that make even playtime look cinematic. Because iPhone Duo can stand on its own, it opens up entirely new creative possibilities, like capturing memorable time lapses in 4K Dolby Vision HDR.

The 48 megapixel Fusion Ultra Wide is the same camera that's in iPhone 18 Pro. It captures the scene with stunning detail. The light interface beautifully complements the playful nature of the scene. With the power of computational photography, iPhone Duo also supports the updated photographic styles with texture and grain control. The new film texture gives this already striking portrait a classic vintage look.

The Center Stage front camera lets you easily take photos and videos in any orientation without having to rotate your phone to take a landscape selfie. Under the inner display is the new FaceTime camera. So you can use the big screen to connect with family and friends, both when iPhone Duo is fully open or propped on a surface for a hands-free experience.

With Dual Capture in FaceTime, you can share both your front and rear camera feeds simultaneously. So your friend can see you and what you're looking at. And Duo FaceTime makes video calls even more fun by letting someone with you join the conversation on the outer display. So you can share the moment without crowding around one screen.

iPhone Duo gives you fun new ways to use the camera that simply aren't possible on any other iPhone. It makes it so much easier to take selfies with the high-resolution rear cameras because the outer display lets you preview and perfectly frame your shot. With Duo Preview, your subject can see themselves in the outer display, so they can pose, check the framing and help guide the shot.

Kid Cue plays fun animations to grab your kids' attention, getting them looking at the camera and brings out their big smiles and laughs.

With just a tap, iPhone Duo can become your personal photographer. Powered by A20 Pro and on-device models, our new Smart Take feature follows the scene in real time and automatically snaps the photo when everyone is posed and ready. Now you don't have to miss out on being in the shot because you had to press the shutter and outrun the timer to get in the frame.

And getting full-body, wide-angle selfies is so easy. It also enables creative shots like these. And they look stunning on the large display. This is such a powerful, versatile and intelligent camera system.

We've also designed some amazing accessories. The iPhone Duo Folio has an integrated kickstand that folds away neatly when not needed. And the iPhone Duo case has 2 parts that wrap around each half to protect against drops and everyday wear.

So that's iPhone Duo, the most transformational iPhone experience since the original. It features the largest display ever on iPhone, along with a beautiful outer display and a reimagined iOS experience that makes the familiar feel entirely new. With pro performance, unique camera experiences, amazing durability and unparalleled versatility, it's an iPhone like no other iPhone.

iPhone Duo starts at $1,999, with storage capacities ranging from 256 gigabytes to 2 terabytes. And of course, we'll have great trade-in offers from Apple and our partners. Preorders begin October 16, and it will be available on October 23.

With iPhone Duo and iPhone 18 Pro, we pushed our entire iPhone lineup forward, making it more capable, more versatile and more exciting than ever before.

Now back to John.

I hope you're as excited as I am about the all-new iPhone Duo. Let's take another look.

[Presentation]

iPhone Duo represents the incredible creativity, ingenuity and dedication of teams across Apple. It reflects what's possible, and we bring our very best work together in service of creating something truly meaningful for our customers. The new iPhone Duo, iPhone 18 Pro and iPhone 18 Pro Max are purpose-built to serve as your intelligent personal hub, with powerful performance and capabilities at the center of the experiences that matter most to you.

Together with the new lineups of Apple Watch and AirPods, these products will help people create, communicate and be more productive and entertained while staying healthy and active in ways that are more personal and intelligent than ever. They represent the very best of Apple: the curiosity to imagine what's possible, the care to get every detail right and the conviction to build products that make a real difference in people's lives. I couldn't be more proud of the teams across Apple who made today possible.

So thank you for joining us. Have a great day.

Good afternoon, and welcome to the Apple Q3 Fiscal Year 2026 Earnings Conference Call. My name is Suhasini Chandra, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple's CEO, Tim Cook; followed by CFO, Kevan Parekh. Also joining us on today's call is incoming CEO, John Ternus. After the prepared remarks, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures and legal and regulatory proceedings.

For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-Q for the quarter ended June 27, 2026, to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made.

I'd now like to turn the call over to Tim for introductory remarks. .

Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Today, Apple pleased to report $109.4 billion in revenue, up 16% from a year ago and a June quarter record. We were able to achieve this despite supply constraints and sequential foreign exchange headwinds. We continue to see enormous customer enthusiasm for our most popular lineup ever with iPhone revenue growing 22% from a year ago to reach a June quarter record. .

We saw so much excitement around the best Mac lineup we've ever had, growing a strong 29% to achieve a June quarter revenue record. Services also set a June quarter record with $30.7 billion in revenue. We achieved June quarter revenue records in every geographic segment. We were pleased to see strength across the board with June quarter records in the U.S., Latin America, Western Europe, India, China mainland, Japan and Southeast Asia. We also achieved June quarter revenue records in both developed and emerging markets and saw double-digit growth in most emerging markets.

This year's WWDC was a wonderful showcase of our latest innovations. We were tremendously excited to unveil the all-new Siri AI, a completely reimagined version of Siri that is profoundly capable, deeply personal and integrated seamlessly across our platforms. And we've been absolutely thrilled by the response from people who've been using Siri AI in the developer and public betas. The reviews from early users have been phenomenal, and it's been so wonderful to hear from people who are excited about the capabilities we've built. And it underscores our philosophy that building AI that is private and based on personal context can change how users find information and get things done with our products in a way that truly enriches their lives.

We really couldn't be more excited about it, and we are feeling incredibly enthusiastic about the impact it's going to have. At WWDC, we also announced new tools to help parents keep kids safe online, and we were pleased by the overwhelmingly positive reaction. New child safety features like as to browse and time allowances will help parents encourage kids to develop healthy digital habits. These new tools integrate guidance from leading clinical and child development research, including the American Academy of Pediatrics.

Our goal is to make it easier for parents to manage what their children see who they interact with and how and when they can use their devices. We're looking forward to bringing these new capabilities to users this fall in addition to amazing new updates across our operating systems. Now let me turn to the results for the quarter, beginning with iPhone.

IPhone revenue for the June quarter was $54.3 billion, up 22% from a year ago. We achieved June quarter records in every geographic segment and set a June quarter record for upgraders. According to IDC, we gained share globally during the quarter. As I've said before, this is the most powerful and most popular iPhone lineup we've ever had. More people are relying on iPhone every day for AI powered by the outstanding performance of A19 and A19 Pro.

Across the lineup, iPhone continues to deliver the performance, battery life, durability and camera capabilities that people count on every day, whether it's the extraordinary camera system of iPhone 17 Pro and Pro Max, the remarkably thin design of iPhone air the balance performance and durability of iPhone 17 or the exceptional value of iPhone 17A, there's an iPhone for every customer. Mac delivered its best June quarter yet with $10.4 billion in revenue, growing an impressive 29% from a year ago despite significant supply constraints.

This revenue growth was driven by the incredible strength of our latest lineup with MacBook Pro and the all-new MacBook Neo. According to IDC, we gained share globally. We also set a June quarter revenue record in developed markets and an all-time record in emerging markets with particular strength in Greater China, where we had an all-time revenue record. In addition, we achieved all-time records for upgraders and customers new to Mac.

With the power of Apple Silicon, the MAC lineup delivers outstanding power-efficient performance massive memory bandwidth and next-level AI capabilities. Mac continues to be the ultimate AI powerhouse, excelling at high throughput on-device inference and creation across a broad range of AI workloads. And we're seeing customers increasingly put those capabilities to work from using Mac Mini as a powerful platform for a genetic AI to deploying clusters of Max Studio systems to run frontier class models locally. Across the lineup, customers continue to embrace the MAC family.

MacBook Neo has been especially popular with its distinctive design and excellent value resonating with customers around the world, and we're continuing to work hard to meet man. MacBook Air the world's most popular laptop continues to deliver the portability and performance customers love with M5. And MacBook Pro, powered by M5 Pro and M5 MAX remains a go-to choice for professionals tackling the most demanding AI development and creative workflows.

In iPad, revenue was $6.2 billion for the June quarter. iPad continues to be the ultimate go-anywhere, do-anything device for students, entrepreneurs and creators of all kinds, thanks to its incredible power, portability and versatility. The addition of M4 to iPad Air has made it even more capable, delivering a significant performance boost for everything from personal productivity and immersive learning to advance creative workflows. Together with the remarkable performance of iPad Pro, the amazing value and versatility of iPad and the ultra portable iPad Mini, we're offering customers our strongest iPad lineup ever.

Revenue for Wearables, Home and Accessories was $7.9 billion, up 6% from a year ago. We grew in every geographic segment and achieved a June quarter record for upgraders for Apple Watch. Our Apple Watch lineup brings together the most comprehensive set of health and fitness features we've ever had. We're delivering useful features backed by research to enable users to better understand their health and well-being. It's gratifying to receive almost daily reminders of the meaningful impact Apple's Health innovations are having for users all over the world changing, even saving lives.

Meanwhile, we continue raising the bar across our AirPods lineup, whether it's the immersive listening experience of AirPods Pro 3 or the premium listing experience and exceptional active noise cancellation of AirPods Max 2, and with live translation powered by Apple Intelligence, people are crossing language barriers and connecting like never before. As I mentioned earlier, we're excited about the work we're doing on the next generation of Apple Intelligence, including Siri AI, and the AI features we're developing across our platforms. These experiences are intuitive and useful, while also deeply integrated in a way that's personal and private with the latest models running on device and on servers using private cloud compute.

We began laying the groundwork for users to have the best possible experience with AI when we introduced the neural engine in 2017. Ever since then, we've innovated and invested deliberately in silicon systems and scalable unified memory architecture designed with AI at their core. What sets Apple apart is the unique combination of massive unified memory bandwidth, industry-leading power-efficient performance and deep on-device intelligence, all built around the customer experience from the ground up.

The result is that Apple has created the world's best hardware to experience AI, whether using Apple Intelligence including Siri AI or third-party offerings. That's why developers and researchers are increasingly using Apple devices to build ever more advanced tools and models. Turning to services, revenue was $30.7 billion, a June quarter revenue record and up 12% from a year ago despite significant sequential foreign exchange headwinds. We also set an all-time revenue record in developed markets and a June quarter record in emerging markets.

Apple TV continues to leave audiences spell bound with new releases like Windows Bay and Cape Fear alongside returning favorites like silo and sugar. And next week, we're excited that Ted Lasso is back for its fourth season. It was wonderful to see Apple TV earn the industry's top honors adding Tony Awards this year to its Emmy, Grammy and Oscar wins. We reached that milestone faster than any streamer in history. We're also looking forward to this year's Emmy Awards, where Apple has landed a record 89 nominations leading all networks in both the major drama and comedy series categories with 3 outstanding drama series nominations and 3 outstanding comedy series nominations.

Windows Bay also stands out as the year's most nominated new program earning 19 Emmy nominations. In the 6.5 years since launch, Apple TV has earned more than 850 wins and nearly 3,800 nominations. In time for the World Cup, we expanded Apple Sports to include more than 170 countries and regions worldwide and made it easier than ever for fans to follow every moment of the tournament from the opening game to the final whistle, -- at the same time, we're halfway through an unforgettable year of F1 and Apple TV subscribers have been tuning in all season to follow their favorite drivers and teams.

In retail, we were pleased to announce Apple upgrade this week for customers in the U.S. Apple Upgrade is a new hardware leasing program launched in partnership with Klarna, and makes it even easier for customers to get their hands on Apple's latest products with a plan that's right for them. In all of our work, we're thoughtful and intentional in how we show up for our users and across our communities. That means innovating to protect user privacy with the next generation of Apple Intelligence or helping parents keep kids safe as I mentioned earlier.

In honor of Global Accessibility Awareness Day, we unveiled new features to help users get more out of the products they use every day. New intelligent capabilities are coming to voiceover, Magnifier, voice control and accessibility reader to make them more useful and intuitive. We're also using on-device speech recognition to generate subtitles for video content without captions. And Apple Vision Pro is adding a feature for power wheelchair users to control drive systems using just their eyes.

All of these features were born out of Apple's long-standing commitment to ensuring that the benefits of technology are shared with everyone. As we continue to develop new capabilities for users around the world, we're also doing our part to invest in innovation close to home. Last year, we made a $600 billion commitment to the U.S. over 4 years -- and now, as we said before, we plan to reinvest the tariff refunds we've received into the U.S.

We're pleased with the progress we've already made advancing the American supply chain. Earlier this month, Apple announced a new agreement with Broadcom to design and produce custom silicon components and cutting-edge wireless connectivity technologies. The new multiyear agreement with Broadcom which is part of Apple's American manufacturing program is expected to exceed $30 billion. This marks our largest ever American manufacturing program commitment. It's also an important step forward in our work to build an end-to-end silicon supply chain here in the U.S.

We're excited for the upcoming opening of the Apple Advanced Manufacturing Center in Houston. The center is located in a facility where we currently assemble advanced AI servers. Later this year, we'll make Mac Mini there, too. The center will teach students supplier employees and business of all sizes the same innovative processes we use to make our products. The goal is to empower American manufacturers to take their work to the next level and strengthen the entire advanced manufacturing ecosystem. We have an exciting fall ahead and an incredible future beyond. Our road map is phenomenal, and we are so excited about the way Siri AI will enrich our users' lives. Throughout all of it, we will remain guided by our North Star, building the best products and services to enable people to do magical things.

It's a special privilege to be part of people's lives in lasting and meaningful ways helping them to create, connect and experience the world around them. I couldn't be more excited to watch our phenomenal story of innovation continue to unfold. -- and I've never been more confident that the best is yet to come.

With that, I'll turn it over to Kevan.

Thanks, Tim, and good afternoon, everyone. Here's a quick rundown of our key financial metrics. Our revenue of $109.4 billion was up 16% year-over-year, a June quarter revenue record. We saw strong performance around the world with double-digit growth in every geographic segment despite supply constraints. Products revenue was $78.7 billion, up 18% year-over-year, driven by double-digit growth on iPhone and MAC, both of which set new June quarter records. 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 $30.7 million, up 12% year-over-year. We set revenue records in every services category, including all-time records in cloud services and payment services. Company gross margin was 50.1%, up 80 basis points sequentially. This included a benefit from tariff refunds, which had a favorable impact of approximately 2 percentage points. When you remove this favorable impact, we would have at the midpoint of the guidance range we provided last quarter.

Products gross margin was 40.1%, up 140 basis points sequentially, this also included the benefit from the tariff refunds I just mentioned, which had a favorable impact of over 2.5 percentage points. Services gross margin was 75.6% and down 110 basis points sequentially, driven by a different mix. Operating expenses came in at $19.1 billion, up 23% year-over-year, driven by investments in R&D.

Net income was $29.8 million. Diluted earnings per share was $2.02, up 29% year-over-year and included $0.11 of favorable impact from tariff refunds. Operating cash flow was very strong at $34.4 billion. All three of these metrics set June quarter records even when excluding the tariff refund benefit. Now I'm going to provide some more details for each of our revenue categories. iPhone revenue was $54.3 billion, up 22% year-over-year, driven by the iPhone 17 family.

We grew double digits in the vast majority of markets we track and reached June quarter revenue records across both developed and emerging markets. The iPhone active installed base grew to an all-time high and set a June quarter record for upgraders. According to a recent survey from World Panel, iPhone was the top-selling model in the U.S., Urban China, the U.K., France, Australia and Japan. We were thrilled with the response to the iPhone 17 family. Customer satisfaction in the U.S. was recently measured at 99% by 451 Research.

Mac revenue was $10.4 billion, up 29% year-over-year, a new June quarter record, driven by the strength of MacBook Neo and MacBook Pro. We grew in both developed and emerging markets with strong double-digit growth in markets like Latin America, India and Southeast Asia. The customer reception to MacBook Neo has been incredible. We continue to attract new customers to the product around the world.

As Tim mentioned, Mac had its best quarter ever for customers new to the Mac and for upgraders worldwide, including in the U.S., China Mainland and India. And in the U.S. Customer satisfaction for Mac was recently measured at 95%. iPad revenue was $6.2 billion, down 6% year-over-year, driven by the continued difficult compare against the launch of the A16 powered iPad in the prior year. At the same time, the iPad installed base reached a new all-time high, and over half of the customers who purchased an iPad were new to the product, and 451 Research recently measured customer satisfaction at 98% in the U.S.

Wearables, Home and Accessories revenue was $7.9 billion, up 6% year-over-year driven by strength in wearables and accessories, and we saw growth in both developed and emerging markets. The wearables installed base reached a new all-time high. We set a June quarter record for upgraders in Apple Watch and over half the customers purchasing an Apple Watch during the quarter were new to the product. And in the U.S., customer satisfaction in Apple Watch was reported at 95%. Our services revenue reached a June quarter record of $30.7 billion, up 12% year-over-year despite significant sequential FX headwinds.

For the total services business, -- we saw a double-digit growth in the vast majority of markets we track. We set records in every category with June quarter records in advertising, App Store, AppleCare, music and video as well as all-time records in cloud services and payment services. We are optimistic about the long-term future of our services business with a large installed base of over 2.5 billion active devices we have an incredibly strong foundation for growth opportunities.

Our services continue to attract more customers, and we have now surpassed $1.5 billion in paid subscriptions. Both transacting and paid accounts reached new all-time highs in the quarter with double-digit growth for both in emerging markets. And we continue to improve and expand our services offerings from powerful updates to Creator Studio to exciting new features we're bringing to services later this year, like splitting bills with Apple Cash using visual intelligence.

Turning now to enterprise and education. Organizations are using the Apple platform to drive AI innovation and empower the next generation of students. Starting with enterprise, Morgan Stanley has deployed over 20,000 iPhone 17 devices globally as part of a shift from employee-owned to corporate-owned devices for liability and security. More companies are choosing Mac for on-device AI advantages, including lower costs, better performance and enhanced privacy and security. At Disney, creative teams are increasingly turning to Mac for on-device AI workflows that reduce overall cloud token costs and keep their IP secure.

In Credit Agricole, France's leading retail bank is using on-device AI and MacBook Pro to streamline regulatory workflows, reducing manual processing time by over 80%. Our newest addition to the MAC lineup, MacBook Neo is reaching new enterprise users in many environments from bank branches to retail storefronts. In education, MacBook Neo continued to accelerate adoption of Apple products with many districts leveraging Apple Financial Services to deploy at scale. Pinellas County Schools, one of the largest districts in Florida is transitioning 25,000 students from Windows devices to MacBook Neo across its 18 high schools.

In Washington, Peninsula School District 401 moved over 8,000 students from Chromebooks to MacBook Neo. And in Oklahoma, Midwest City, Della City School District purchased over 6,000 MacBook Neos to become an all apple district for students. In fact, in the last quarter, about half of the MacBook Neo large purchases by U.S. education institutions displaced Windows and Chromebook devices. Let's turn to our cash position and capital return program. We ended the quarter with $147 million in cash and marketable securities and $84 billion in total debt. During the quarter, we returned $33 billion to shareholders. This included $4 billion in dividends and equivalents and $25.8 billion in share repurchases.

As we move ahead 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 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 also expect our September quarter total company revenue to be impacted by two main factors.

First, we expect foreign exchange to be a sequential headwind of about 2.5 percentage points to the year-over-year total company growth rate from the June quarter to the September quarter. Second, we expect the impact from supply constraints to increase significantly sequentially. The projected supply constraint in the September quarter affect iPhone, Mac and iPad. As a result, we expect our September quarter total company revenue to grow between 9% and 11% year-over-year. On iPhone, we expect to continue to see high levels of demand. However, we do expect iPhone revenue to be impacted by these foreign exchange headwinds and supply constraints.

Therefore, we expect the September quarter reported growth rate for iPhone to be mid-teens year-over-year. For Services, we expect the September quarter year-over-year reported growth rate to be largely similar to what we reported in the June quarter after removing the negative sequential impact of about 2.5 percentage points from foreign exchange that we just described. We expect gross margin to be between 47% and 48%, this includes an expected benefit of approximately 1 percentage point related to tariff refunds.

We expect operating expenses to be between $19.1 billion and $19.4 billion. We expect OI&E to be around $350 million, excluding any potential impact from the mark-to-market of minority investments and our tax rate to be around 16.5%. Finally, today, our Board of Directors has declared a cash dividend of $0.27 per share of common stock payable on August 13, 2026, to shareholders of record as of August 10, 2026. Before we take questions, let me turn it back over to Tim.

Thanks, Kevan. Before we get into questions, I just wanted to take a moment to say thank you to all of you from our shareholders, particularly our long-term shareholders who have put their trust in us for so many years to the analysts who have followed our company so closely. As you know, this will be my final earnings call, and John will lead these calls going forward. The transition is going seamlessly. And I am beyond excited for John to step into his new role and lead Apple into its next era. He is truly one of a kind, and there is no better person to take the helm of the company.

As I've said, I couldn't be more confident in his leadership in our executive team and in the extraordinary people at Apple who are determined to enrich the lives of our users all over the world. We have a bright future ahead, and I truly have never been more optimistic. So thank you all. And now Kevan and I will be happy to take your questions.

Thank you, Tim. We ask that you limit yourself to 2 questions. Operator, may we have the first question, please.

Certainly, we will go ahead and take our first question from Amit Daryanani from Evercore.

Tim best of luck, it's been a pleasure working with you over the years. Maybe to start with, if I think about the 9% to 11% sort of growth that's guided for September, it's about 500 basis points or so of deceleration versus what you've seen in really in June quarter even through this year, I would say, -- can you just talk about how much of this decel is really supply constrained versus other factors like FX? And if you could just flush out what these supply constraints are the broadening beyond these advanced SoCs you talked about last quarter as well.

Yes, Amit, this is Kevan. Why don't I start with just kind of describing the sequential change, and then I'll let Tim jump into kind of a bit more color on supply constraints. So I think I mentioned in my prepared remarks, we expect the December quarter total revenue to grow by 9% to 11% year-over-year. And then we expect that to impact it by 2 main factors. So first, when we look at kind of going from the June quarter to September quarter, we expect foreign exchange to be a sequential headwind of around 2.5 percentage points to the year-over-year total company growth rate.

And then the second impact is that the impact from supply constraints is we expect that to increase significantly when we go sequentially from June to September. And that protective supply constraint in the September quarter will affect the iPhone Mac and the iPad. And really, when you combine those 2 factors, we get pretty close to the June overall total company growth rate.

Yes, Amit, it's Tim. First of all, thank you for your comments. During the June quarter, we did experience supply constraints primarily on the Mac and to a lesser extent on iPhone and iPad. These were driven by very high levels of demand. And as we've said before, we are seeing less flexibility in the supply chain than normal. And the constraints were primarily driven by the availability of the advanced nodes that our SoCs are produced on.

If you look forward then into the current quarter, the September quarter, -- we are -- we continue to expect high levels of demand. However, with less flexibility in supply chain, we expect the impact from the supply constraints to increase significantly sequentially. The projected supply constraints in the September quarter, as Kevan said, affect iPhone, Mac and iPad. And so we're seeing some very significant constraints currently with limited flexibility in the supply chain to remedy it.

Got it. It's really helpful. And then Tim, I just have a memory question for you. Apple has historically been done a really excellent job about delivering capability and utility to customers without really making them pay disproportionately more. The staging memory inflation seems to challenge that equation for you folks right now. And their report that suggests that you're seeking greater sourcing flexibility for memory -- can you just talk about -- is this sourcing options really about ensuring that you have supply and it's a way to mitigate memory inflation? Or is it more to preserve the value proposition for your customers? Just any light you could shed on this would be helpful.

Yes. Let me back up and talk about memory in general because I know this is a subject on many of your minds. If you look at the -- as I said on the last call, we paid more for memory in the March quarter than the December quarter. And then as I alluded to last quarter, we expect it to pay significantly more in the June quarter than the March quarter, and that is what happened. It was partially offset by the benefit of carrying inventory. For September, we expect to pay even higher memory costs, and we're able to offset partly by a few factors. And let me walk through kind of what they are.

The first is, as you would expect, we have a benefit from some carry-in inventory in the September quarter. However, we believe this will see decreasing benefit from this over time beyond the September quarter. The second is we're expecting lower cost on certain nonmemory components that are in our bomb -- and then if you look beyond September, we see the market pricing for memory continuing to increase which could drive an increasing impact on our business, and we're continuing to evaluate this.

In terms of the sources of supply, primarily the DRAM market has 3 suppliers. And obviously, if there were more suppliers that would be good and it would help us on the supply side and perhaps the pricing side. It's unclear on the pricing side, but it could help on the supply side. And so we're evaluating all options.

All right. Thank you, Amit. Operator, could we have the next question, please?

Our next question is from Michael Ng, Goldman Sachs.

Good afternoon. First, Tim, congratulations on the extraordinary run on these earnings calls. In terms of my questions, I have 2 as well. First, on the Apple Upgrade program, could you talk a little bit about the expected adoption rates across your $2.5 billion device installed base in success, do you see it shortening the replacement cycle for iPhone or also having an equal impact to Mac and iPad, which may have not have benefited from device subsidies in the U.S. like iPhone has historically.

Yes. Michael, first of all, thank you for your comments. I really appreciate that. If you look at the upgrade program, -- what it's all about is making it easier for customers to get their hands on our latest products were the leasing plan that's right for them. And of course, as you know, the residual values on Apple products are generally much higher than the residual value on several of our competition. And so it's a way to get into a product on a fairly affordable basis, particularly for those customers who want to upgrade on some kind of schedule. And so we're very excited about it. It is offered in our retail stores. And so it's not widely offered in all channels. And so we'll see what the customer uptake is. But the early feedback on it is quite positive.

Yes, Michael, I just mentioned that it's only available in the U.S. right now as well.

Great. That's very helpful. And then my second question, just on iOS 27 and Apple Intelligence -- went into public beta earlier this month. Could you talk about learnings from the public data will the new Siri AI be a demand driver for iPhones this holiday. How does the Apple Intelligence usage to date in the open beta inform how you're thinking about compute costs and the ability to recover some of those costs through iCloud.

Yes. Thank you for that. First of all, we are off the charts excited about Siri AI. We had a great reception from DC we released the developer beta immediately after the keynote -- the developer feedback has been overwhelmingly positive. The feedback from reviewers and so forth have been overwhelmingly positive. We released it to the public for a public beta a few weeks ago and the continued feedback is really, really great. I think it's a very big idea to have AI that's private, that's based on your personal context and that's integrated across the the operating system.

And so we couldn't be happier with how things are going. In terms of the -- what it means for compute cost, it's obviously early going for us. And so I don't want to say that we have a complete plan for that. We do believe there will be people that want to use it a lot. And so we will have some kind of upgrade possibilities on iCloud Plus where people can buy up the stack on iCloud Plus -- and we'll see how the pickup for that is. But we're -- we could not be more excited about where the product is.

Thank you, Michael. Operator, could we have the next question, please?

Our next question is from Ben Reitzes from Melius Research.

Obviously, Tim, known you a long time, I'll really miss you. I wanted to ask about the supply constraints again. And I think people are just trying to make sense of it a little bit this way is that -- the Street had you at 12% growth for the quarter September. And so you could argue that to get to the 10% you guided, that's just the FX. And then in the first quarter, which is December, Street has decelerating quite a bit to like 8% to 9%. So I think what we're struggling with after hours here is how much of these supply constraints really hit you in December, and impact that because Street did a pretty good job of taking that number into the higher single digits deep view. Is there any guidance you can give us there as you see it, Tim, and we'd really appreciate it.

Let me talk about the constraints a little more, and then Kevan can weigh in on the guidance for revenue. As I've mentioned before, the primary issue is advanced nodes that we run our SoCs on. That's the primary supply constraint now. And the root cause of it is not a is not a regular supply issue, it's a demand forecast issue to be candid, where the iPhone and the Mac are both doing remarkably better than we thought they would do. And we had high expectations. So it wasn't -- that our expectations were low. But as you can see, from iPhone's growth being 22% and Max growth at 29%, and the iPhone is 22% year-to-date as well that these are extraordinary numbers, and the supply chain just has less flexibility in it than normal. So we've been pulling supply ahead and at some point, there's a limit to that. And so we've got a quarter that we're going to be scrambling on the supply side essentially. And Kevan, you want to add on the revenue guidance?

Yes. Thanks, Tim. Ben, let me jump in here. And the dynamics I mentioned, combined with the foreign exchange impact I mentioned earlier, sequentially, is really what's built into the 9% to 11% guidance we're giving for the September total company revenue year-on-year growth rate. Beyond September, we're not providing any color at this point, I think you mentioned in December. So we're not providing any kind of color or guidance beyond the September quarter.

Okay. And then if I could just ask -- and you guys know what's in the press all the time, but there's this little company that is also building a fab in Arizona, that's -- you guys have been speculated you guys could work with that could potentially alleviate some at least your silicon constraints. Is there any possibility that you guys broaden out your silicon providers in a reasonable time frame to alleviate these so we feel better about supply?

Yes. Let me stress again. This isn't a partner or a supplier issue. This issue is it incredibly strong -- it's a great issue in some ways. It's an incredibly strong iPhone and Mac product cycle that has really yielded a demand beyond our expectation. In Arizona, we do source over 100 million components this year out of Arizona. And so we have -- it is part of our $600 billion commitment to the U.S. and we could not be more pleased with how that how that fab has ramped and is producing for us.

Thank you, Ben. Operator, could we get the next question, please?

Our next question is from Erik Woodring of Morgan Stanley.

Tim just echo what everyone is saying it's been a pleasure working with you. I hope to talk to you in the future. I want to maybe focus on here, Tim, and kind of unprecedented free to take pricing in the ways that you have. I guess 2 related questions is just, is it your intention to pursue some of these multiyear LTAs with your suppliers just to assure access to supply at pre-agreed prices. And when you approach product pricing in this environment, is it your intention to protect product gross profit dollars? Is it your intention to protect product gross margins? Would just love the kind of thought process behind the pricing? And then I have a quick follow-up, please.

Yes. On the pricing front, we reluctantly raised prices, I would say. And we did it because we're -- and what I would characterize as a 100-year flood on the memory pricing with exponential increases in memory prices. And so that was the rationale for it. In terms of our philosophy on dollars or percentages, we look at units, revenue and margin. and then come to a business judgment as how to handle that. And so it's not a mathematical formula that gets us to a specific result or just looking at one dimension of that, we look at all three dimensions, and think about it over the long term instead of a 90-day clock. Hopefully, that answers.

Yes. Yes. Yes. No, that does help Tim. And then -- just maybe a quick follow-up. I guess, Tim or Kevan, just 12% services growth was just a bit below your guidance. I imagine FX maybe played a role there. I think the fiscal 4Q guidance assumes another deceleration. I think the math would imply below 10% year-over-year as reported. So can you maybe just help us understand those kind of function factors underlying that deceleration? And if that's App Store, which I think some third-party data sources would suggest. Is that a function of AI maybe reprioritizing time away from parts of the app store? I just want to make sure we understand the moving pieces on services, please.

Erik, this is Kevan. I'll take that one. So let's walk from kind of the 16% in our fiscal second quarter to kind of the 12% that we just talked about in the June quarter that you referenced. And we look at that relative to the March quarter foreign exchange was the main driver for the change in the year-on-year growth rate sequentially. And also a couple of other factors to keep in mind. One is we have the theatrical release of F1, which is one of the highest grossing sports films and history. And this year, we didn't have a theatrical release. So that had a favorable impact on both the June quarter and also the September quarter and the year ago.

We also had some factors that impacted the performance of the App Store. We did see some headwinds in mobile gaming. And then keep in mind, we also made some changes to the app store business model in certain countries, and in the U.S., we do continue to operate under a court ruling impact on the link out transactions, but we're pleased the premium core will hear our appeal. Despite this, the App Store did set a June quarter revenue record. So if we take a step back, there are several positive trends in the services business. And during the June quarter, we saw a strong double-digit growth in categories like cloud services, video, payment services and advertising, and we set revenue records in every category, with June quarter records in advertising, in the App Store, AppleCare, music and video for Apple TV viewership reached an all-time high in the quarter.

And then we also set all-time records in cloud services and payment services where Apple Pay saw a record level of users in both developed and emerging markets. And Services also had a June quarter record in emerging markets. And as we outlined in the prepared remarks, our services continue to attract more customers, and we now have surpassed $1.5 billion in paid subscriptions and our transacting and paid accounts hit an all-time high with double-digit growth in both those 2 emerging markets.

So I think when I step back, if I look at kind of how we landed versus our expectations that we had outlined in the March quarter for the June quarter, I would say that our kind of -- we roughly met our expectations, but we did see a bit more softness on mobile gaming in the App Store. As we go into the September quarter, what I would say is we expect foreign exchange will continue to be a headwind. And in fact, this is a theme that's impacting the services business more so than the total company. We expect foreign exchange to drive about a 5 percentage point headwind to the year-on-year growth rate from the March to September quarter. So if we look at the sequential change from the June quarter, the 12% services we reported to what we're guiding for the September quarter, we are going to see another 2.5 point sequential headwind.

Great. Thank you so much, Kevan. I appreciate the detail there.

Awesome. Thanks, Erik. Operator, could we get the next question, please?

Our next question is from Aaron Rakers of Wells Fargo.

And also best wishes, Tim. I guess I want to maybe tethers with the memory pricing dynamic. But as you look at the demand that you're seeing right now, I'm curious of how you assess whether or not you've seen any pull forward of demand, either from the consumer or even the enterprise and education markets and whether or not you're factoring that into your views as we look forward at all?

You're talking about an iPhone, I assume, in general. We've been running at this 22% growth rate for the last while -- this cycle has been a 22% increase year-to-date. And so it's not obvious, I would say, that it's not obvious in the data that what you're asking is true. Obviously, we've now had to increase prices on iPad and Mac -- and the price elasticity there, it's just too early to come to a definitive conclusion of what happens there, because it takes a little while for the channels to adjust since there's channel inventory, and it takes a while for the consumer to respond. And so we'll understand that more in the weeks ahead. .

Very helpful. And then as a quick follow-up, maybe more longer term, thematically. As AI proliferates towards the edge and more consumers utilize AI. I'm curious, Tim, if you see AI opening up additional opportunities, I can appreciate that you're not going to give us specifics, but do you see other kind of addressable markets evolving from AI over time?

Yes. I think there are enormous opportunities for Apple moving forward in AI. And I'm so excited about Siri AI and kind of where it is and where it's going. And I'm excited about the feedback that we're getting there. And of course, the ability to run some percentage of request on device is also very strategic and sort of a competitive weapon, if you will. So I could not be more excited about the opportunities there.

Our next question is from Wamsi Mohan of Bank of America.

Tim, first, congrats on your tenure as CEO. You joined back in 2011 when Apple reported $108 billion in revenue and you just delivered a quarter of $109 billion, so just an amazing journey.

Thank you. Very much appreciate it. .

Yes. Sure, Tim. It's really a pleasure. For my question, first on Siri AI. Do you expect that Siri AI would change the capital intensity of Apple despite the fact that you have the ability to do so much differentiated workloads on device and you have this distributed compute. You do have some requests that go into the back end, both in your own first-party cloud as well as third-party. So is it right to think that the capital intensity of Apple will change in the future because of Siri AI? And I have a follow-up. .

We use a hybrid model. As I know Kevan has reviewed with you earlier. And so we use some third-party cloud, and we do our own data centers. And so there will be a mix. But generally speaking, as you know, we have been growing our OpEx and spending more in AI in general. -- and quite a bit more. And there are other locations on the P&L other than OpEx, like OCOGS, et cetera, that also have AI expenditures. And so we'll see what Siri AI does from the cost side of it, but there's also the ability when people use it a lot for them to move up on an iCloud plan as well. And so what the balance of that is a bit uncertain at the moment.

Okay. And John, since you're on the call, congrats on the new role. I'd love to get maybe just a high level take from you if you think that the competitive landscape here is changing, especially as you hear about potentially companies like Open AI, building in AI-enabled competitive device or SpaceX AI potentially having a phone that could bypass some of the typical carrier attacks. Just would love your high-level thoughts on how you see the competitive landscape evolving and Apple's position there.

Well, thank you for asking. I guess I would just say, reiterate what Tim said, there is so much opportunity for us with everything that's happening in this space. And so we're just really focused on our plans and very excited about it.

We will now go to Samik Chatterjee of JPMorgan.

Tim best wishes from my side as well. Maybe just for my first one, if I go back to WWDC, when you announced -- you also did mention along with the rollout that probably we won't have the initial rollout in China and Europe. So just wanted to get your updated thoughts on that front? And any more color in terms of what hurdles you need to cross to be able to launch it in those regions? And I have a follow-up.

Yes. Thanks for the question. Let me take them individually. If you look at the EU, we're working closely with the commission. Obviously, our complete desire is to launch everything, everywhere at the same time. That's always the philosophy that we have -- we have not been able to do that in the European Union, but we're working closely with them to try to get to something that would allow us to offer series AI there. It is offered or will be offered in -- for the Mac there because the Mac is not covered by the same regulations as the iPhone and the iPad.

So net-net, we're working with them and hope to reach some sort of solution. If you think about -- if you then look at China, last week, we received approval to ship sort of the original features of Apple Intelligence, things like cleanup and so forth. And so we're working now through the rollout of those -- and there will be more work required down the road for the -- for Siri AI, but we're at the front end of that.

And for my follow-up, Kevan, just not to beat sort of this FX thing to death here, but -- if I look at the gross margin, you delivered 48% in the quarter without tariff refund benefit. You're guiding to like 46.5%, any way to walk us through the sequential driver there? And how much of that is FX impacting it versus maybe like increased commodity costs, et cetera, that's driving that sequential operation because it does seem a bit more atypical than your normal sort of your...

Samik, it's a good question. So let me walk through kind of what's impacting our gross margins. When you look at our gross margin change from the $49.3 we had at the total company level for the March quarter -- and as you mentioned, the 48.1% adjusted for the tariff refund in the June quarter, that 120 basis point change. If you look at the drivers of that, more than 100% of that can be explained by the memory cost change that Tim outlined. -- while FX was a factor, really, the main driver is really the memory cost impact. And as Tim outlined earlier, when we talked a bit about the dynamics around the memory cost is we did see some partial offsets from things like the benefit of carrying inventory, reduction in nonmemory component costs and some favorable mix.

We are seeing the same dynamics when you go from the 48.1% that we printed in the June quarter to the 46.5% midpoint you referenced of our range without the tariff refund impact, that 160 basis point change is also more than that is explained by the change in memory costs, and we had some partial offsets again from things like the benefit of carrying inventory, lower cost nonmemory components and as well as favorable mix I think that FX was a pretty minimal impact when you look at that versus the memory. And so generally, the sequential change from the March quarter to the 46.5% you referenced is really driven by memory.

Thank you so much for saying that. I appreciate it.

Thank you, Samik. A replay of today's call will be available on Apple podcast and at apple.com/investor. Thanks again for joining us today.

Once again, this does conclude today's conference. We do appreciate your participation.

Good afternoon, and welcome to the Apple Q2 Fiscal Year 2026 Earnings Conference Call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple's CEO, Tim Cook; John Turnes will be joining after that for a brief set of remarks, and he'll be followed by CFO, Kevan Parekh. After that, we'll open the call to questions from analysts.

Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures and legal and regulatory proceedings. For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-Q for the quarter ended March 28, 2026 to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made.

I'd now like to turn the call over to Tim for introductory remarks.

Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Before we get into the quarter, I wanted to take a moment to talk about the transition we recently announced. I just celebrated my 28th anniversary of being here at Apple, 15 years as CEO. In fact, this will be my 89th earnings call.

I'll always be proud of the impact Apple has had on our users' lives and I can't begin to express how grateful I am for our amazing teams. It's because of them that there is no company like Apple, and I truly believe there never will be. This moment for the transition is the right 1 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 road map is incredible. And most importantly, we have the right leader ready to step into the role.

As I have said, there is no 1 on this planet I trust more to lead Apple into the future than John Turnes. 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 1.

As I've told John, I will be here to support him in any way he needs and in any way I can. I'm incredibly optimistic about Apple's future, and I know we have the right team in place to deliver on the promise of this company.

I also want to take just a moment to share my profound gratitude for our shareholders especially our long-term shareholders for believing in Apple and for your support over the years. It means a great deal to all of us.

With that, I'd like to bring John on the call for a moment to say a few words. John?

Thanks, Tim, and thanks to everyone on the call. In my view, Tim is 1 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, 1 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 road map ahead. And while you're not going to get me to talk about the details of that road map, 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.

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 the recent mission, ARTEMIS 2 astronauts captured some truly other worthy images of earth and space using iPhone 17 ProMax.

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 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 tests 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 SC 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 help insights that can prompt meaningful conversations with care providers, Apple watches 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 combined 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 cleanup and 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 stand-alone feature, but AI is 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 plotting the return to 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 6 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 1 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 in emerging markets all over the world.

At Apple, we believe powerful innovation and uncompromising quality can go hand-in-hand with sustainability. Over the last year, we've reached new milestones in the environment, including the use of recycled content in 30% of the materials in all of our products shipped in 2025, the most we've ever had. That includes the use of 100% recycled cobalt in all Apple design batteries and 100% recycled rare earth elements in all magnets. We've also achieved our goal of removing plastic from packaging with every Apple product now shipping in fiber-based packaging.

All of this is a testament to the outstanding forward thinking and innovative work of our teams. We're also making great progress in advancing American supply chain innovation. As part of our $600 billion commitment to the U.S., we were pleased to share recently that Mac Mini production is coming to America later this year expanding our factory operations in Houston with a brand-new facility.

In March, we were thrilled to welcome 4 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.

Thanks, Tim. And good afternoon, everyone. Our revenue of $111.2 billion was up 17% year-over-year, a March quarter revenue record. We saw strong performance around the world with March quarter revenue records in every geographic segment.

Foreign exchange was about a 2.5 percentage point tailwind to the March quarter growth rate. We also faced supply constraints on iPhone and to a lesser extent on Mac. We believe if we remove the favorable benefit from foreign exchange, and add back the unfavorable impact from supply constraints, we would have had a higher growth rate for total company revenue for the quarter.

Products revenue was $80.2 billion, up 17% year-over-year, driven by double-digit growth in 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%, above the high end of our guidance range and up 110 basis points sequentially.

Product gross margin was 38.7%, down 200 basis points sequentially.

Services gross margin was 76.7%, up 20 basis points sequentially.

Operating expenses landed at $18.9 billion, up 24% year-over-year. This was slightly above the high end of our guidance range due to a onetime 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 million, 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 installed 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 U.S. Urban China, the U.K., Australia and Japan.

We have been extremely pleased with the positive reception of the iPhone 17 family. In fact, customer satisfaction for the iPhone 17 family in the U.S. was recently measured at 99% by 451 Research.

Mac revenue was $8.4 billion, up 6% year-over-year driven by the strength of the recent product launches, including MacBook Neo. We grew in both developed and emerging markets with double-digit growth in many emerging markets, including India and Indonesia.

As Tim mentioned earlier, we had a March quarter record for customers new to the Mac, and this helped drive a new all-time record for the overall Mac 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 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 installed 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 efficiently manage their deployments and scale their business. We continue to see more organizations in 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 a preferred platform to build enterprise-grade AI assistance 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 remain 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, but 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 rightsized 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 million 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% 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%.

With that, Tim and I will take questions.

Thank you, Kevan. [Operator Instructions] Operator, may we have the first question, please?

Certainly. We'll go ahead and take our first question from Erik Woodring with Morgan Stanley.

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? And then a quick follow-up, please.

Yes. Erik, thanks for your comments. We were constrained during the March quarter. This was primarily on iPhone and to a lesser extent on the Mac. 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 2 factors that are driving the constraints. One is that on the Mac Mini and the Max Studio, both of these are amazing platforms for AI and a genetic 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.

Awesome. And then Kevan, I'd love to maybe turn to you and kind of a surprise little announcement there talking about net cash neutral still great still a great path, but we're no longer providing this as a formal target. Could you maybe expand on that update? 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, so would be super helpful.

Yes. Sure, Erik. Thanks for the question. Yes, 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, has been a valuable framework for us and for our capital structure since 2018. We believe we're at a stage where we're evaluating cash and debt independently is really the right approach for us and allows us to make more optimal economic decisions around how we best utilize our debt and cash portfolios to support the business based on business factors and market conditions. We also believe we can manage this flexibility with -- while also being very efficient, remaining disciplined.

So with all that being said, we remain very committed to returning excess cash to shareholders. And 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 $1 trillion to shareholders from the start of the program. Over $850 billion of which has been through share repurchases.

And so -- and the other piece as well that's really important is as part of that, we also have increased our buyback authorization by another $100 million. 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.

Thank you, Erik. Operator, could we get the next question, please?

Our next question is from Ben Reitzes with Melius Research.

I'll ask 2 myself. The first 1 is, there's just been a lot of talk, and it's great too, by the way, to speak with you, Tim and John and Kevan. The first question is around -- there's been some commentary around Agentic smartphone -- by the way, I don't even know what that means, but there's comments that about AI on the edge and that agents could catalyze smartphones, but also shift the smartphone kind of form factor or maybe not. I was just wondering with the rise of agents, how you would like us to think about that? 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 nontrend?

Ben, it's Tim. We don't get into our future road map, and so I don't want to 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.

Okay. Well, 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, I may push you 1 more time, try to do it nicely, though, just given my age. The big concern out there is maybe how margins go after the June quarter, given even the components and trends and what 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.

Yes, Ben, let me talk about memory specifically, which I think is the root of the question. So -- and I'll go back to December for a moment and just walk you through the chronology. And 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 carrying 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.

Thank you, Ben. Operator, could we have the next question, please?

Our next question comes from Michael Ng with Goldman Sachs.

I have 2 as well. First, given the success of the MacBook Neo, I was wondering if you could talk a little bit about how it's helped drive penetration with new customer segments whether that be 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 road map inform that strategy?

Yes. Right now, we are supply constrained on the MacBook Neo. The response has been -- we were very bullish the product before announcing it. And -- but we undercalled the level of enthusiasm that would be with it. And it's very much focused on getting the Mac to even more people than we were reaching before. We're very focused on customers new to the Mac and customers that have been holding on to their Mac a very long period of time. We're doing well with both of those.

In the -- 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 kind 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.

Great. 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 services 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?

Yes, Mike, it's Kevin. Thanks for the question. In advertising, we did see year-over-year growth in our advertising business. As you alluded to, we recently did introduce additional ads across the App Store search results to provide developers with more ways to drive downloads and 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.

Thank you, Mike. Operator, can we get the next question, please?

Our next question is from Wamsi Mohan with Bank of America.

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

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.

Okay, Tim. On -- as a follow-up here, how is Apple thinking about the broader monetization, maybe following Ben's question here in the agent AI world? So 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 work.

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 are 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.

Yes. 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 road map. And so I think I want to reiterate that point as well.

Thank you, Wamsi. Operator, can we get the next question, please?

Our next question is from Amit Daryanani with Evercore.

I have 2 as well. I guess 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 guide sort of implies the momentum will continue in June. I'd love my 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 so what is the durability of this growth?

Yes. If you look at it, it's the iPhone 17 family that's driving it. And that is, as you point out, is despite the supply constraints that we're experiencing, and it's the things that are driving people to the 17 or people love the design. People love the performance. They love the durability. They love the camera. They love center stage. And they love that Apple Intelligence is integrated across the platform. From a -- where we're seeing the growth, it is amazing. We're seeing double-digit growth in the majority of the markets we track. From the U.S. to Latin America to Greater China to Western Europe to India to Japan to Southeast Asia. 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. And so we're thrilled with how things are going.

Perfect. And then, Tim, I think we have you for 1 more earnings call, but I would really appreciate if you could kind of share a bit about the upcoming transition. You 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. I 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?

Well, I think Steve's advice to me lifted a huge burden. And so that advice did well for me in over the 15 years. For John, I think my advice is that -- what I told him is that 1 of the most important decisions will make us 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. 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.

Thanks, Amit. Operator, could we get the next question, please?

Our next question is from David Vogt with UBS.

Maybe 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? And then I have a follow-up as well.

Yes. David, the current constraint for well, 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 will 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 undercalled the demand. And there are lead time to this as you well understand, and it takes a while to correct that. And the primary constraint from a product point of view in the -- or the majority of it for this quarter for the June quarter will be on the Mac. And it's Mac Mini, Mac Studio and the MacBook Neo. It's all of those.

And then maybe just maybe 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 were 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?

Yes, David, it's Kevan. Thanks for the question. Look, as you know, our services portfolio contains a wide range of businesses that have different business models and profitability profiles and also are growing at different rates. So at any given time, right, 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, but 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.

Thank you, David. Operator, could we get the next question, please?

Our next question is from Samik Chatterjee with JPMorgan.

Tim, for my first question. Last quarter, you did talk about Apple Foundational models and sort of the two-pronged strategy there of the collaboration with Google as well as continuing to internally sort of work on your own models hoping you can sort of give us an update in terms of how you're able to balance those 2 priorities as well as do you feel like you need to double down and invest more to be able to balance those 2 priorities side by side? And I have a follow-up.

Yes, it's a good question. We are investing more. You can see that in the OpEx numbers. And as I've mentioned before, the R&D in particular, is -- has scaled rather significantly on a year-over-year basis. The collaboration with Google is going well. We're happy with where things are, and we're happy with the work that we're doing independently as well.

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

Sure, Samik. 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 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, right, our sequential gross margin impact was 110 basis points positively and that was driven by favorable mix, lower tariff-related costs, and that was partly offset by a seasonal loss of leverage and higher memory costs. And I do 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.

Yes. 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 our -- 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 IIFA 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.

And then 1 last point on your FX question. We really didn't see any sequential impact related to foreign exchange as a factor going from Q1 gross margin in Q2.

All right. Thank you. Operator, could we get the last question, please?

We'll go ahead and take our last question from Aaron Rakers with Wells Fargo.

Congrats on the quarter. I wanted to ask about a few of the end markets. I guess, particularly, Tim, if you could comment a little bit on what you're seeing specifically in China I guess from a competitive perspective, are you seeing advantages from supply constraints impacting some of your competitors? Any thoughts on the China market? And I do have a quick follow-up.

Yes. We are thrilled with the performance in Greater China. The first half of the year grew at 33%. In the March quarter, revenue was up 28%. It's a quarterly revenue record for us. The performance is really driven by iPhone, which was also a March quarter record. If you look at the individual products, iPhone was the top-selling model in urban China, the Mac Mini was the top selling desktop in China and the MacBook Air Mar was the top-selling laptop model. And so we're really doing well pretty well across the board there. And I was over there in March. The traffic in our stores grew by double digit. We were celebrating the 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 in the first half of this year.

Yes. And then maybe I'll stick with a similar theme kind of the same question on the India market. It seems like that continues to be a focal point on these last several quarterly conference calls. I mean, how are you seeing the market in India evolve around the base of iPhones and the opportunity of kind of a rising middle class, just the overall opportunity set in that large mobile market?

Yes. I think it's a huge opportunity for us. 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 there's -- that really speaks to the opportunity that we have. There are a lot of people moving into the middle class there. And we've got some great products for them, both currently and coming. 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.

Thank you, Aaron. A replay of today's call will be available for 2 weeks on Apple podcast, as a webcast on apple.com/investor and via telephone. The number for the telephone replay is (866) 583-1035. Please enter confirmation code 2803309 followed by the pound sign. These replays will be available by approximately 5 p.m. Pacific Time today. Members of the press with additional questions can contact Josh Rosenstock at (408) 862-1142. And financial analysts can contact me, Suhasini Chandramouli with additional questions at (408) 974-3123. Thanks again for joining us today.

Once again, this does conclude today's conference. We do appreciate your participation.

Good afternoon, and welcome to the Apple Q1 Fiscal Year 2026 Earnings Conference Call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple's CEO, Tim Cook, and he'll be followed by CFO, Kevan Parekh. After that, we'll open the call to questions from analysts.

Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures and legal and regulatory proceedings.

For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-Q for the quarter ended December 27, 2025, to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements which speak only as of the date they are made.

I'd now like to turn the call over to Tim for introductory remarks.

Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. I am proud to say that we just had a quarter for the record books. We are reporting our best-ever quarter with $143.8 billion in revenue, up 16% from a year ago and exceeding our expectations. The demand for iPhone was simply staggering with revenue growing 23% year-over-year and all-time records across every geographic segment.

Service has set an all-time revenue record as well, up 14% from a year ago, and EPS reached an all-time record of $2.84, growing a robust 19% year-over-year. We set all-time revenue records in the Americas, Europe, Japan and rest of Asia Pacific and grew in the vast majority of markets we track. We continue to gain momentum in emerging markets which includes India, where we saw strong double-digit revenue growth. Greater China also grew 38% year-over-year, driven by iPhone, which had record upgraders and double-digit growth on switchers.

Apple's December quarter results underscore our relentless commitment to innovation to our customers and to our mission to build the best products and services in the world.

Now I'd like to take a closer look at results from across our lineup, beginning with iPhone. As I mentioned earlier, it was a fantastic quarter for iPhone with an all-time revenue record of $85.3 billion, up 23% year-over-year. This is the strongest iPhone lineup we've ever had and by far, the most popular. Throughout the quarter, customer enthusiasm for iPhone was simply extraordinary. Users were incredibly excited about everything enables them to do. iPhone 17 Pro and 17 Pro Max delivered the ultimate iPhone experience. They feature the best ever performance in battery life on an iPhone, the most advanced camera system and a striking design. iPhone Air, our slimmest and lightest smartphone yet, as powerful capabilities into an ultra slim and sleek design.

And iPhone 17 is a truly fantastic upgrade and an incredible value.

Turning to Mac. Revenue was $8.4 billion for the December quarter. We were pleased to see the Mac installed base reach another all-time high with nearly half of customers who purchased the Mac being new to the product. The M5 powered 14-inch MacBook Pro takes a huge leap in AI performance, thanks to the next-generation GPU architecture and a faster neural engine. From the world's most popular laptop for consumers and businesses in MacBook Air to the small and spectacular Mac Mini, every Mac in our lineup has something special to offer users. And with the recently released Apple Creator Studio available across Mac, iPad and iPhone, creators have more tools at their fingertips to make incredible music or turn their devices into a video production studio.

Meanwhile, iPad saw December quarter revenue of $8.6 billion, up 6% from a year ago with an all-time record for upgraders. We are proud to have our strongest lineup ever from iPad powered by A16, which is proving to be incredibly popular to iPad Air with its amazing versatility to the unbelievably powerful M5 iPad Pro with its remarkably thin and light design. It's no wonder that iPad continued to be the most popular tablet in the world. Across Wearables, Home and Accessories, revenue was $11.5 billion, with Apple Watch Ultra 3 and Apple Watch Series 11, users are tapping into a comprehensive set of health and wellness features to help them meet their health goals.

In a recent survey, we see an increasing number of users telling us they're wearing their watch to sleep, which allows them to check their sleep scores each morning and find ways to improve their sleep quality. And Apple Watch alerts are enabling important conversations between users and their doctors regarding potential signs of hypertension. These are just some of the many ways that watch is helping people live healthier lives. The response to AirPods Pro 3 has been amazing. Customers are raving about the rich immersive sound quality, the unmatched level of active noise cancellation and the noticeably improved comfort that makes them effortless to wear.

Features like live translation are also changing the way people can communicate by helping users connect across languages in real time and making everyday conversations feel more natural and accessible. Together, these innovations create an experience that feels both powerful and personal and the enthusiasm we are seeing reflects just how strongly AirPods Pro 3 are resonating with customers.

Across our product categories, we are seeing very high levels of customer satisfaction, and we are proud to report that we have a new record for our installed base with more than 2.5 billion active devices. During the quarter, we were excited to see that the majority of users on enabled iPhones are actively leveraging the power of Apple Intelligence. Since the launch of Apple Intelligence, we've introduced dozens of features, including writing tools and cleanup and made it available in 15 languages. These AI experiences are personal private, integrated across our platforms and relevant to what our users do every day. We are bringing intelligence to more of what people already love about our products so we can make every experience even more capable and effortless.

One of our most popular features is visual intelligence which helps users learn and do more than ever with the content on their iPhone screen, making it faster to search, take action and answer questions across their apps. And as I touched on earlier, we are hearing powerful stories of people using live translation to communicate seamlessly across languages. And these are just some of the many powerful AI features that are enabling our users to do remarkable things with our products, which are far and away the best platforms in the world for AI. That's a no small part because of the extraordinary power and performance of Apple Silicon. Building on our efforts in the AI space, we are also collaborating with Google to develop the next generation of Apple Foundation models. This will help power future Apple intelligence features, including a more personalized series coming this year. We're incredibly excited for what's to come with so many new experiences to unlock.

Turning to services. We achieved an all-time revenue record of $30 billion 14% higher from a year ago. Services also set all-time revenue records in both developed and emerging markets. Apple TV has seen fantastic momentum with December seeing a 36% increase in viewership over the previous year. It's no wonder with shows like Pluribus which are creating landmark cultural moments that audiences are loving. Anticipation is building for upcoming new productions like Cape Fear from Steven Spielberg and Martin Scorsese. And we are thrilled to announce that Ted Lassa will be returning for a fourth season this summer.

Six years since launch, we're excited by the growing enthusiasm viewers have for Apple TV, and we are grateful for the accolades that have followed, most recently at the Critic's Choice and Golden Globe Awards. To date, Apple TV productions have earned more than 650 wins and more than 3,200 nominations, including a recently announced Oscar nomination for best picture for F1, the movie. And speaking of F1, we're also approaching the start of a new Formula One season, and for F1 fans in the U.S., Apple TV will be the place to watch every practice qualifying, Sprint and Grand Prix. MLS fans will also be able to watch every regular and postseason game with their Apple TV subscription this year, and we're looking forward to kick off in the coming weeks.

Looking back, 2025 was a fantastic year for services as we rolled out amazing new features and broke records. Apple Music climbed all-time highs in both listenership and new subscriber growth. Apple Pay eliminated more than $1 billion in fraud for our partners last year, and we've made it available in more markets than ever before. And last year, we welcomed more than 850 million users every week on average to the App Store, the world's safest and most innovative at marketplace. Developers have now earned more than $550 billion on our platform since 2008.

In retail, we continue to bring a magical experience to our customers all around the world, and we were thrilled to have our best ever results in retail during the quarter. We were excited to open our fifth store in India in December and have plans to open another store in Mumbai soon. Wherever we are, we see ourselves as part of a larger hole. That's why we show up with our values in everything we do. That means working with partners in places like Vietnam to bring more clean water to rural areas. It means celebrating graduations of new classes of innovators from our developer academies in places such as Brazil, Indonesia and South Korea. It means 3D printing titanium cases for Apple Watch using recycled materials so that they're better for the planet without compromising quality and so much more.

We're especially proud of the work we're doing to support American innovation. Last year, we committed to invest $600 billion over 4 years in vital industries like advanced manufacturing, silicon engineering and artificial intelligence. As we're building on our long-standing investments in America, we're supporting nearly 0.5 million jobs with thousands of suppliers across all 50 states. In the year since we made our initial commitment, we're making great progress. Today, we're shipping servers to power Apple intelligence from our new manufacturing facility in Houston. Through our advanced manufacturing program, we're working with Corning in Kentucky to make 100% of cover glass for iPhone and Apple Watch. We're working with Micron, which broke ground on a new advanced chip packaging and test facility, and we continue to advance the development of an end-to-end silicon supply chain across the country sourcing 20 billion U.S. chips in 2025.

Through our Apple Manufacturing Academy in Detroit, we're already training American businesses and innovators on the latest smart manufacturing and artificial intelligence techniques. 6 months since opening, the academy is already making an enormously positive impact for businesses working alongside Apple engineers to drive productivity, efficiency and quality in their supply chains. As I said at the beginning of my remarks, this was in so many ways, a remarkable quarter for Apple. And we're excited for all the opportunities we'll have in the year ahead to deliver innovations that have never been seen before and enrich the lives of users every step of the way.

With so much to look forward to in the weeks and months ahead, I have every confidence that our best work is yet to come.

With that, I'll turn it over to Kevan.

Thanks, Tim, and good afternoon, everyone. Our revenue of $143.8 billion was up 16% year-over-year, our best quarter ever. Across the world, we set all-time revenue records in both developed and emerging markets. And we saw double-digit growth year-over-year across the majority of the markets we track, including the U.S., Latin America, Western Europe, Greater China, India and South Asia. Products revenue was $113.7 billion, up 16% year-over-year, driven by double-digit growth in iPhone, setting a new all-time record. And as Tim mentioned, thanks to our strong levels of customer loyalty and satisfaction, our installed base of active devices has now surpassed $2.5 billion, reaching another all-time high across all product categories and geographic segments. .

Services revenue was $30 billion, up 14% year-over-year. This performance continues to be broad-based with double-digit growth in almost every market we track. We also reached all-time revenue records for advertising, cloud services, music and payment services with December quarter records on the App Store and video. Company gross margin was at 48.2% above the high end of our guidance range and up 100 basis points sequentially, driven by favorable mix and leverage. Products gross margin was 40.7%, up 450 basis points sequentially driven by favorable mix and leverage. Services gross margin was 76.5%, up 120 basis points sequentially, driven by mix.

Operating expenses landed at $18.4 billion, up 19% year-over-year. This was within the range we provided and driven by increased investment in R&D. Net income was $42.1 billion and diluted earnings per share was $2.84, up 19% year-over-year. Both net income and diluted EPS were all-time records and these incredibly strong business results drove an all-time record for operating cash flow coming in at $53.9 billion.

Now I'm going to provide some more details for each of our revenue categories. iPhone revenue was $85.3 billion, up 23% year-over-year, driven by the iPhone 17 family. iPhone saw strength around the world reaching all-time revenue records in many of the markets we track, including the U.S., Greater China, Latin America, Western Europe, the Middle East, Australia and South Asia as well as a December quarter record in India. The iPhone active installed base grew to an all-time high and set a new all-time record for upgraders in aggregate and across many countries, including the U.S., China Mainland, Japan and India.

According to a recent survey from World Panel, iPhone was a top-selling model in the U.S., Urban China, the U.K., Australia and Japan. Customers are loving the latest iPhone lineup. The latest customer satisfaction for the iPhone 17 family in the U.S. was measured at 99% by 451 Research. Mac revenue was $8.4 billion, down 7% year-over-year. As we described in the last call, we faced a very difficult compare against an M4 MacBook Pro Mac Mini and iMAC launches in the year ago quarter. Despite this difficult compare, we continue to see growth in several emerging markets, including Brazil, India, Malaysia, Vietnam and more.

And as Tim mentioned earlier, the MAC installed base reached another all-time high with nearly half of the customers who purchased the MAC being new to the product. And in the U.S. Customer satisfaction for MAC was measured at 97%. iPad revenue was $8.6 billion, up 6% year-over-year, driven by the M5 powered iPad Pro and the A16 powered iPad. We continue to add new users to the iPad. In fact, over half the customers who purchased the iPad during the quarter renewed to the product. This helped the iPad installed base to reach an all-time high and we also reached an all-time high for upgraders.

Based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S. Wearables, Home and Accessories revenue was $11.5 billion, down 2% year-over-year. During the quarter, we experienced constraints on the AirPods Pro 3, and we believe the overall category would have grown had it not been for these constraints. The Wearables 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. And in the U.S., customer satisfaction was recently reported at 96%.

Our services revenue reached an all-time high of $30 billion, up 14% year-over-year. As we said earlier, we had all-time revenue records on advertising, music, payment services and cloud services where we saw a double-digit growth in paid subscribers. We continue to be optimistic about the future of our services business with our installed base of over 2.5 billion active devices, we have an incredibly strong foundation for new growth opportunities. We saw increased customer engagement across our service offerings with both transacting and paid accounts reaching all-time highs in the quarter. And we continue to improve quality and expand the breadth of our services offerings.

From new wallet features like digital ID, which provides a way for users to create an ID and wallet using information from their U.S. passport to additional ads coming to search in the App Store, which provides advertisers more ways to drive downloads from search.

Turning now to enterprise. Organizations are continuing to expand their fleet of Apple devices to drive productivity while remaining secure. Snowflake has deployed over 9,000 Mac devices company-wide establishing MAC as a primary laptop across all business units, resulting in increased performance and a reduction in support tickets. AstraZeneca is rolling out over 5,000 M5 powered iPad Pros to its pharmaceutical sales team to take advantage of AI capabilities, including Apple Intelligence, while meeting with clinicians daily.

And in Mexico, Copel, the country's largest domestic retailer recently added MacBook Air in addition to a growing fleet of over 10,000 iPad devices.

Let's turn to our cash position and capital return program. We ended the quarter with $145 billion in cash and marketable securities. We had $2.2 billion of debt maturities and decreased commercial paper by $6 billion, resulting in $91 billion in total debt. Therefore, at the end of the quarter, net cash was $54 billion. During the quarter, we returned nearly $32 billion to shareholders. This included $3.9 billion in dividends and equivalents and $25 billion through open market repurchases of 93 million Apple shares. As we move ahead into the March 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 March quarter total company revenue to grow by 13% to 16% year-over-year, which comprehends our best estimates of constrained iPhone supply during the quarter. We expect services revenue to grow at a year-over-year rate similar to what we reported in the December quarter. We expect gross margin to be between 48% and 49%. We expect operating expenses to be between $18.4 billion and $18.7 billion, which is at a similar level to what we reported in the December quarter and driven by higher R&D on a year-over-year basis. We expect OI&E to be around $100 million, excluding any potential impact from the mark-to-market of minority investments and our tax rate to be around 17.5%.

Finally, today, our Board of Directors has declared a cash dividend of $0.26 per share of common stock payable on February 12, 2026, to shareholders of record as of February 9, 2026.

With that, let's open the call to questions.

Operator, may we have the first question, please?

Certainly. We'll go ahead and take our first question from Amit Daryanani of Evercore.

Yes, I have 2. Maybe to start with -- there's a lot of focus on the impact of memory to hosted companies and I'd love to kind of get your perspective when you folks are guiding gross margins up into the March quarter. Just talk about, a, your comfort in securing the bits that you need for shipment? And b, how do we think about memory inflation flowing through Apple's model over time?

Yes, Amit, it's Tim. Let me back up a bit and talk about the constraints that Kevan referred to in his remarks and memory try to get both of these out at once. First of all, we were thrilled with the customer response on the latest iPhone lineup. It exceeded our expectations to say the least. And iPhone grew 23%. And what the result of that was that we exited the December quarter with very lean channel inventory due to that staggering level of demand. And based on that, we're in a supply chase mode to meet the very high levels of customer demand. We are currently constrained. And at this point, it's difficult to predict when supply and demand will balance.

The constraints that we have are driven by the availability of the advanced nodes that our SoCs are produced on. At this time, we're seeing less flexibility in supply chain than normal, partly because of our increased demand that I just spoke about. From a memory point of view, to answer your question, memory had a minimal impact on the Q1, so the December quarter gross margin. We do expect it to be a bit more of an impact to the Q2 gross margin and that was comprehended in the outlook of 48% to 49% that Kevan gave earlier.

Beyond Q2, we don't obviously provide outlooks beyond the current quarter. But we do continue to see market pricing for memory increasing significantly. As always, we'll look at a range of options to deal with that. So hopefully, that gives you the full view.

I appreciate all the clarity on that, Tim. Maybe the other second question I have for you is maybe just touch on the China strength you folks had. I think this is very close to all-time high revenues we've had in China. What's driving the strength over here? And just sort of the durability of the growth rate we saw in the December quarter would be helpful to understand.

Sure. Greater China was up 38% year-on-year. It was driven by iPhone where we set an all-time revenue record. So it was the best iPhone quarter in history in Greater China. That's driven by the customer enthusiasm for the iPhone 17 lineup. And I would tell you that during the quarter, traffic in our stores in China grew by strong double digits year-over-year. it was a terrific quarter. Our installed base reached an all-time high in both Greater China and Mainland China. And we set an all-time record for the upgraders and we saw strong double-digit growth on switchers.

And according to a survey from World panel, iPhones were the top 3 smartphones in Urban China during the quarter. So it was -- and it's really driven primarily by the product strength and the customer response to the product strength. We do see on non-iPhone products that the majority of customers that are buying a Mac and iPad or watch are still new to that product. So that's a very good sign for us. And if you look at iPad on that same survey iPad was the top tablet model in Urban China.

And according to counterpoint the MacBook Air was the top-selling laptop model, and MacMini was the top selling desktop model in the December quarter. So Overall, a great quarter in China, we could not be more happy with it.

Awesome. Thank you, Amit. Operator, can we get the next question, please?

Our next question is from Erik Woodring of Morgan Stanley.

Tim, congrats on announcing the partnership with Google, and we're all excited to what you bring to market later this year. When I think about your AI initiatives, it's clear there are added costs associated with that. We're obviously seeing that flow through in OpEx. Can you help us understand maybe what the revenue upside potential that exists with many of your competitors have already integrated AI into their devices. And it's just not clear yet what incremental monetization they're seeing because of AI, but you're always disciplined with investing. You obviously have a differentiated product. So how do you monetize AI? And what's the time line to realizing that ROI? Then a quick follow-up.

Well, let me just say that we're bringing intelligence to more of what people love, and we're integrating it across the operating system in personal and private way. And I think that by doing so, it creates great value and that opens up a range of opportunities across our products and services. And we're very happy with the collaboration with Google as well as said.

Okay. And then maybe just a follow-up. Now that you have kind of more time in data to evaluate this cycle, can you maybe help us understand what the primary factors are driving strength in the iPhone? I'm sure there's a number of factors. But if you had to point to 1 or 2, just what would they be? And how sustainable do you think those are?

I think it's different for different cohorts of where people are coming from in the device that they have. But it's a combination of things always that make the product same. It's the display. It's the camera, it's the performance. It's the new selfie camera. It's the design. The design is beloved. And so it's all of these things that come together at once and have -- are producing a very strong product cycle as witnessed by our December quarter results.

Awesome. Thank you, Eric, operator. Can we get the next question, please?

Will now go to Michael Ng of Goldman Sachs.

Wonderful I have 2 as well, if I could. First, it was encouraging to hear about the revenue growth outlook of 13% to 16% for the March quarter. I was just wondering if you could talk about any comps that we should be particularly aware of as we kind of think about each of the product categories? I know last year, you guys had MacBook Air with M4, the iPhone 16E the iPod A16 and the iPod with M3. So just wanted to ask if those things would create tough comps or is it just less of an issue just given the new product outlook?

Yes, Mike, it's Kevan. Thanks for the question. Yes, I wouldn't say there's any particular comp issue that we'd note. As you recall, last quarter, we talked about the difficult comparison we had on MAC. But there's nothing that rises to that kind of color that we'd outlined in the outlook. And so I think it's just a continuation of the strong cycle. We're seeing subjects to the constraints that I had mentioned in the prepared remarks, and that Tim alluded to a little earlier as well.

Great. Wonderful. And then just on services, advertising, strong in the quarter. I wanted to ask about some of the new growth opportunities in advertising. I know you guys are doing the new ad slots in the App Store. Maybe you could just talk a little bit about that? And then any plans to do more in advertising across other products like Maps or TV?

Yes, sure. Like what I would say, just as I step back in general, I think as we outlined, we saw really good broad-based performance in our crosser services business, so ranging from all-time records in advertising, music, payment services and cloud services. So I think we see really good opportunities across a lot of our service categories. And we continue to add new service offerings. We talked about what we added to the wallet like digital ID, and you referenced the additional kind of additional ads coming into search in the App Store, which we are excited about, it provides advertisers in more ways to be discovered.

And so I think we'll continue to look for ways to expand opportunities to add value to users and also create opportunities for Apple. I think as we talked about, we created across really significant milestone at 2.5 billion active devices. So we really feel excited about the opportunity that provides for our services business as well.

Thank you, Mike. Operator, can we get the next question, please?

The next question will be coming from Ben Reitzes of Melius.

Tim. First question is on Google partnership again. I wanted to understand how you came to that decision with regard to the AI and SRI in particular? And if there's an opportunity for you guys to share in revenue too with that partnership like you do in search.

Yes. We basically determined that Google's AI technology would provide the most capable foundation for AFM -- I'm sorry, Apple Foundation Models. And we believe that we can unlock a lot of experiences and innovate in a key way due to the collaboration. We'll continue to run on the device and run in private cloud compute and maintain our industry-leading privacy standards and doing so. In terms of the arrangement with Google, we're not releasing the details of that.

Bummer. Okay. I tried. So yes, it would be me. So the next question is on gross margin. I'm pretty shocked. I got to hand it to you, Tim, that you're able to do 48% to 49%. What's really going on there? How are you doing that with this memory, the NAND prices, is it due to mix that there's a good -- less hardware and more services and services margins are going up. How are you doing it to go to keep it at 48% to 49%?

Yes, Ben, this is Kevan. Let me start maybe by just reflecting on the Q1 gross margin. I think we talked about the fact that we landed at 48.2%. So just above the high end of the range. that we provided on the last call. And I think if you look at that performance, we were up 100 basis points sequentially. We talked about the fact that we had favorable mix. I mean, as you know, when we have a good product cycle, a strong price cycle we're seeing for iPhone, that does lend itself to a bit more favorable opportunity on the mix and leverage side. So we're having a strong iPhone cycle, as Tim outlined. And so that also transit itself. We talked about products sequentially went up by 450 basis points.

So I think, in general, I think we're just seeing favorable mix dynamics as well. Services continues to contribute as well. That business is growing double digits. So that also is a contributor. And I think that as we looked at our guidance, we're providing a similar range to where we reported in December. And there's going to be a few puts and takes. We do expect to see favorable mix in the services. As you know, when we move from Q1 to Q2, that tends to be the case, and that's partly offset by a seasonal loss of leverage. So there will be puts and takes. But again, we feel pretty good about the guide of 48% to 49%, which is similar to the range we reported in December.

All right. Thanks, Ben. Operator, could we get the next question, please?

Next question will be coming from David Vogt of UBS.

Maybe Tim or Kevan, if we could pull out a little bit, can you help us understand how you're thinking about the overall kind of smartphone market demand, particularly given where memory prices are headed, and we've heard some conversations with some other OEMs as well as component providers that are worried about either the availability of components, potential market weakness in terms of demand destruction and some of the actions to offset or higher prices? I know you don't give outlook for the full year, but how are you thinking about all of those different vectors and what that might mean for the overall smartphone market?

And then ultimately, what that might mean for demand for iPhones as we move through the rest of this calendar year?

Yes. On the supply side, I had made comments earlier about the constraint that we are seeing in Q2. We -- and that's reflected in the revenue guidance that Kevan gave earlier. The constraint, as I'd mentioned, is due to the advanced node capacity. And it's really a result of growing so well in Q1 with 23% and having less flexibility partly due to that in the process to increase it as much as we would like to increase it. Beyond Q2, I don't really want to comment on supply. Its -- supply is a function of a lot of things in the industry that move around a lot. So I wouldn't want to comment on that.

And I commented before on the -- on memory pricing. And so hopefully, that answers your question. In terms of smartphone demand we believe that based on the information that we've got is we gained share in the December quarter. Obviously, the market wasn't growing at 23%. So we feel good about doing that. And -- but I don't -- I wouldn't want to predict how the market reacts in the future. It's very difficult to do that.

Got it. At the risk of not getting this answer, I'm going to follow up with. Can you maybe help us understand, you mentioned there's a range of options that you're looking at -- how do -- how should we think about kind of like LTAs in the marketplace? I mean, is that an option as we move through the year? Or is it more spot-based from -- on a perspective, particularly around memory. Just want to get a better sense for how we should think about kind of the dynamics in the marketplace.

It's a range. And so I don't want to get more specific than that. I mean there are different levers that we can push and who knows how successful they'll be, but there's just a range of options.

Thank you, David. Operator, could we get the next question, please?

Well now we take questions from me Wamsi Mohan from Bank of America.

That's fine. Tim, on services, you grew a pretty impressive 14%. And I know you said that the App Store was a record for the December quarter but third-party data is showing a notable deceleration in app store growth, maybe 7% in the December quarter relative to your 14% growth. I was hoping if you could maybe confirm that? And secondarily, if it's correct, what might be some of the drivers of that? And what could be things that you could do to reverse that in future quarters? And I have a follow-up.

Wamsi, it's Kevan here. Look, I think I want to reiterate the fact that during December quarter, we had a quarterly record on the App Store. As you know, we don't provide specific color on how the individual services categories have done. But again, if we step back, I think we saw, again, broad-based growth across all the different categories, also across various geographies. We had all-time records in both developed and emerging markets as well. So -- and double-digit growth in both of those 2. And so I think in general, we don't provide the color at the detailed services level.

Okay. I guess back to the memory price. I appreciate you have a range of options to address that. Historically, Apple is not used a pricing lever unless FX markets got maybe very dislocated to prevent arbitrage or issues like that. But -- given some of these unprecedented moves in memory, would pricing be a lever that you would be willing to pull or push outside of every other thing that outside of everything else that you can do?

Yes, I wouldn't want to speculate on that one.

Thanks, Wamsi. Operator, could we have the next question, please?

Will now go to Samik Chatterjee of JPMorgan.

Maybe for the first one, I'm just looking at your capital investment in the first quarter, which did moderate from the last one. And wondering if the partnership with Google on Gemini and sort of help collaboration to develop the next generation of Apple Foundation and models, does that have any near-term sort of impact on your intent to use Apple private cloud? I know you emphasize sort of the rule Apple private cloud plays in the long term. But -- are there any changes on that front through this collaboration? Any thoughts around that? And I have a quick follow-up.

Yes, sure. I think -- this is Kevan here. I think in general, as Tim outlined, we weren't going to provide any details on our arrangement and collaboration with Google. Just speaking of CapEx, in general, as you know, we have a hybrid model for CapEx. And so I think that what happens is our CapEx can be volatile, independent of kind of the volume performance of our business. And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments in our retail store, data centers. And on tooling and data centers, we leverage this hybrid model that I mentioned before, which we leverage a combination of first and third-party capacity.

So in general, it's hard to read into the CapEx and draw any conclusions. And so I think I would just say there's going to be some ebbs and flows in CapEx. Last year, remember, we did build out our private cloud compute environment. And so we did have CapEx spending related to that in our results in December.

Got it. Got it. And my follow-up probably is for you again. You did mention product gross margin and the sort of drivers there for the product gross margin improvement. When you sort of highlighted mix as a driver, can you just sort of talk through what are the big differences in mix you're seeing for iPhone 17 versus 16? And the tariffs and tariffs coming in more favorable player role at all and what you're expecting for tariffs for the next quarter?

Yes. So there's a few things to unpack there. So on the overall margin and product side, I think I mentioned that we had favorable mix of products and leverage. I think given the strong iPhone cycle we're seeing, that was, I would say, probably a higher favorability than you might have seen in maybe other cycles. And as well, as you know, in Q1, typically, we do see the impact of the cost structure of our new products that we launch. And in this case, we are seeing a more favorable offset from mix of products and leverage versus historical -- sequential changes from Q4 to Q1.

On the tariff piece, we had outlined an amount of $1.4 billion for the December quarter and we landed roughly in that range at that level.

Thank you, Samik. Operator, could we have the next question, please?

Now go to Krish Sankar of TD Cowen.

The first 1 I had was for Tim. I think you touched upon this earlier on the Gemini integration an Apple foundation model, how to think about kind of like the difference between Apple foundational model functionality and third-party models, like does the Apple Foundation model evolved to a different layer in the AI software stack? How to think about it as you partner with third-party frontier models? I had a follow-up.

Yes. Krish, you should think of it as a collaboration and we'll obviously independently continue to do some of our own stuff. But you should think of what is going to power the personalized version of SIRI is the collaboration with Google.

Got it. then, a quick follow-up for maybe Kevan or Tim, just a lot of discussion on memory pricing. Given that the memory constraint or commodities casts impacting both the smartphone and the PC markets, and Apple, arguably having more purchasing power. Do you think this is a chance for you to increase your market share, both in iPhone and MAC at the expense of competition who might have more constraints in getting access to memory?

Yes. I don't only want to talk about kind of what has happened. And we do believe, as I had shared that iPhone gained share in the December quarter. And if you look at MAC for the full year of full calendar year '25, we also believe we gained share. And so we feel very good about our position.

Thank you, Krish. Operator, could we have the next question, please?

We will now go to Atif Malik calling from Citi.

The first 1 for Tim. I think some of the industry pundits are comparing the iPhone 17 upgrade cycle to the 2020, 2021 years as some of the iPhone 12, 13 users upgrade. Curious if you agree with that view? And also, if you can layer on the impact from Apple intelligence to the refresh rate.

I think each iPhone cycle has its own unique characteristics. And so I wouldn't compare it to a specific one. I think iPhone 17, the family of 17 is a unique product that brings several very compelling features in 1 product, and it has done extremely well. And so we feel quite good about it. .

Atif, I'll just add to Tim's comment that we talked about the fact we have a large and diverse installed base of customers. And so this product has really resonated with multiple cohorts, whether you're on older devices or newer iPhones as well. So we've seen really strong reaction to the product lineup.

Great. As my follow-up, there was a blood discussion supply constraints. And I'm surprised that you guys are constrained on advanced packaging as you generally get your share at the big foundry. How long will these supply impact your ability to ship to true demand?

It's difficult to estimate demand when you haven't met the demand. And so we've -- obviously, we have internal estimates on that, but I don't want to share those. But it's very difficult. And just to be clear, it's the advanced nodes that we -- like 3-nanometer to be specific, where our SoCs or the latest SoCs are produced on as to what is gating the Q2 supply. And it's a direct result of the 23% growth, and that far outstripping what we had internally estimated and having more limited flexibility in the supply chain for some period of time. But I don't want to estimate when supply and demand will balance at this point.

Thank you, Atif. Operator, can we have the next question, please?

The next question will be coming from Aaron Rakers coming from Wells Fargo.

I have 2 as well, and I'll try and stay away from the memory question. I'm curious and obviously, a lot of focus on the China demand, but I'm curious, you also called out India. And so -- can you maybe unpack some of the things that you're seeing in the Indian market as far as iPhone traction? Any kind of color on what is a very large installed base in India that seems to be a good growth opportunity for Apple still?

Yes. Thanks for the question. We did set a quarterly revenue record during the December quarter. And to go a little further down, we set quarterly revenue records on iPhone and Mac and iPad and an all-time revenue record on services. So it was a terrific quarter in India. We really like what we see there. It's the second largest smartphone market in the world and the fourth largest PC market. So -- and we still have, despite a very nice growth history. We have modest share there. And so we think there's a huge opportunity for us there. and we could not be more excited about it.

If you look at the -- the other thing that I would point out is the that the majority of customers that are buying iPhone and Mac and iPad and watch are all new to that product. And so it speaks very well to opportunity there.

Yes. Aaron. I'd add, you mentioned the installed base, we're seeing strong double-digit growth in the installed base in India as well, which is really encouraging.

Yes. And then as a quick follow-up, kind of tied to memory, maybe not so much. But part of this current generation iPhone cycle is you clearly deepened some of your own internal silicon capabilities on the device. I'm curious if that -- if we should think about that as a lever and maybe a supportive factor to gross margin that might be underappreciated and -- any thoughts on where we go from here as far as continued opportunities of internalizing your own silicon?

Yes. I'll let Kevan talk about the gross margin. But in terms of the product, which is at the heart of what we think about in the user. Apple Silicon has just been an incredible game changer for us. starting with iPhone and then on iPad and of course, the MAC as of a few years ago. And so we believe it's a game changer and a major competitive advantage.

Yes. And as far as impact on gross margin, we have been, as you know, investing in core technologies like our own silicon, our own modem. And certainly, while those do provide opportunities for cost savings and can be let margins, they also importantly provide the differentiation that's really important for our products as well and give us more control of our road map. So I think there's a lot of strategic value to it, but also we are seeing investments in our core technologies impacting gross margin in a positive way.

Awesome. Thank you, Aaron. Operator, could we have our last question, please?

Most certainly. Our last question will be coming from Richard Kramer calling from Art Research.

I have 2 questions. Tim, when you think about how Apple might manage AI, do you see that evolving towards more edge AI or on device services versus cloud-based. And are you confident you've reserved sufficient data center capacity to support the widespread SIRI adoption, especially given that you're not following the other hyperscalers and sharply increasing CapEx?

The answer is that we see both being important, the on-device and the private cloud compute. And so we don't see it as an either/or we see it as a both and we believe it's a differentiator because of our privacy approach. In terms of do we have enough capacity. It's hard to estimate with precision what the demand will be. But we've done the -- sort of the best job that we can do and either have or are putting capacity in for it.

Okay. And you also -- you mentioned the $2.5 billion active device number but Apple Intelligence features have only been available since the 15 Pro. So can you speak at all to roughly what portion of your iPhone or overall active device installed base is now AI capable. And has this been a factor in maybe a more gradual pace of launching wider AI services?

Yes, Richard, this is Kevan. We don't provide that specific number, but it is a growing number, as you can imagine in our installed base. And so we're encouraged by the amount of devices now that are capable, but we're not going to provide a specific figure on that today.

All right. Thank you, Richard. A replay of today's call will be available for 2 weeks on Apple podcast as a webcast on apple.com/investor and via telephone. The number for the telephone replay is 866 583-1035. Please enter confirmation code (890-2968) followed by the pound sign. These replays will be available by approximately 5 p.m. Pacific Time tonight. Members of the press with additional questions can contact Josh Rosenstock at (408) 862-1142. And financial analysts can contact me, Suhasini Chandramouli with additional questions at (408) 974-3123. Thanks again for joining us today.

Once again, this does conclude today's conference. We do appreciate your participation.

Good afternoon, and welcome to the Apple Q4 Fiscal Year 2025 Earnings Conference Call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple's CEO, Tim Cook, and he'll be followed by CFO, Kevan Parekh. After that, we'll open the call to questions from analysts.

Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business, and results of operations from macroeconomic conditions, tariffs and other measures and legal and regulatory proceedings.

For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-K for the year ended September 27, 2025 to be filed tomorrow and in other reports and filings we make with the SEC.

Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made. Additionally, today's discussion will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures in our fourth quarter earnings release, which is available on our Investor Relations website. I'd now like to turn the call over to Tim for introductory remarks.

Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Today, Apple is proud to report $102.5 billion in revenue, up 8% from a year ago and a September quarter record. Services achieved an all-time revenue record of $28.8 billion, growing 15% from a year ago. EPS came in at $1.85 setting a September quarter record. We grew in the vast majority of markets we track and had September quarter revenue records in dozens of markets, including the U.S., Canada, Latin America, Western Europe, the Middle East, Japan, Korea and South Asia. We also set a September quarter revenue record in emerging markets and an all-time revenue record in India. These results come at the close of an extraordinary year for Apple in which we achieved an all-time revenue record of $416 billion for the fiscal year.

We set all-time revenue records in emerging and developed markets. We set an all-time revenue record for iPhone. And in Services, we achieved all-time records across every geographic segment. These results reflect the tremendous customer enthusiasm for Apple products and services as well as our deep commitment to innovation. We are incredibly excited about the strength we're seeing across our products and services and we expect the December quarter's revenue to be the best ever for the company and the best ever for iPhone.

We are heading into the holiday season with a truly remarkable lineup. That includes the biggest leap ever for iPhone, which has had a tremendous response from our users around the world. Our Apple Watch lineup is more capable than ever to giving users ways to take charge of their health like never before, through new features like hypertension notifications and sleep score. And the next level sound quality and active noise cancellation of AirPods Pro 3 are hitting all the right notes for our users.

In October, we also broke new ground and power-efficient performance with the uncomparably fast M5 chip, packed with neural accelerators in each GPU core to supercharge AI workflows. iPad Pro combines game-changing features in iPad OS 26 with the power of M5 to create our most capable iPad ever. At the same time, the M5 MacBook Pro raises the bar for what users can do with a laptop while the new M5 powered Apple Vision Pro opens up amazing possibilities on its infinite canvas.

We also launched a beautiful new software design that creates a unified experience across all of our platforms for the very first time. The design is crafted with a new material called liquid glass that brings fluidity, vitality and flexibility to our products. Along with the new design, we delivered powerful new features to enable users to do even more with their devices. That includes updates to the phone and messages apps in iOS 26 to help users stay connected, continuity enhancements in MAC to deliver an even more seamless experience across devices and a powerful new windowing system that fundamentally transforms the user experience in iPad OS 26.

As we continue to expand our investment in AI, we're bringing intelligence to more of what people already love about our products and services, making every experience even more personal, capable and effortless. At the heart of it all is Apple Silicon, and we were thrilled to launch new products powered by the A19 Pro chip and M5. These incredibly advanced chips make Apple products the very best place to experience the power of AI. With Apple Intelligence, we've introduced dozens of new features that are powerful, intuitive, private and deeply integrated into the things people do every day. Features like live translation, which help users communicate across languages in real time and visual intelligence, which opens new ways to learn about and explore the world. We also introduced Workout Buddy, a new experience that uses AI to provide personalized motivational insights based on a user's workout data and fitness history.

And these joined so many others from cleanup and photos and new image creation tools to powerful writing tools, we're also seeing developers take advantage of our own device foundation models to create entirely new experiences for users around the world. We're also excited for our more personalized Siri. We're making good progress on it. And as we've shared, we expect to release it next year.

Now let's take a closer look at the September quarter results across our lineup, starting with iPhone. iPhone set a revenue record for the September quarter at $49 billion, up 6% from a year ago, with growth in the vast majority of markets we track despite supply constraints we faced on several iPhone 16 and iPhone 17 models given strong demand. Redesigned from the inside out and powered by the outstanding A19 pro chip, the iPhone 17 Pro is by far the most powerful iPhone we've ever made, setting a whole new standard for the smartphone industry. The iPhone 17 Pro also offers our best camera system ever with an all-new ADEX telephoto camera and look stunning with bold new finishes like COSMIC Orange. The iPhone Air introduces an incredibly breakthrough design and with a bigger and brighter display with promotion, the iPhone 17 is a fantastic upgrade packed with features users will love.

In MAC, we had a strong September quarter with revenue of $8.7 billion, up 13% year-over-year driven by the strength of the MacBook Air. The MacBook Air enables users to get things done easily on the world's most popular laptop. Mac mini users are loving how much performance is packed into our smallest Mac ever made while Mac Studio customers are pushing the envelope of what's possible with our most powerful Mac ever, and the latest 14-inch MacBook Pro unlocks incredible speed and next level performance with the all-new M5 chip, which delivers 3.5x faster AI performance than M4.

Turning to iPad. Revenue was $7 billion for the September quarter. Last month, we released 1 of the most attention grabbing software updates we've had in years with iPad OS 26 and we recently gave iPad users even more to love with the launch of the incredible M5 iPad Pro, which offers an incredible boost in AI performance. With an unmatched combination of power and versatility, the new iPad Pro makes every interaction delightful with its thin, light and portable design. In Wearables, Home and Accessories revenue was $9 billion. As I mentioned earlier, we were excited to unlock new possibilities for users with the launch of our newest Apple Watch lineup, making the world's most popular watch even better. That includes Apple Watch Ultra 3 with the largest display ever in an Apple watch, improved battery life and emergency SOS via satellite.

Apple Watch Series 11 brings our users the most comprehensive set of health features yet. And Apple Watch SC3 delivers advanced capabilities at an incredible value. AI and advanced machine learning are at the core of powerful health features like heart rate monitoring, fall detection, crash detection and more. With our latest Apple Watch lineup, we were proud to introduce hypertension notifications, developed using large-scale machine learning models. Hypertension is one of the leading risk factors for heart attack and stroke affecting more than 1 billion adults worldwide, and we expect to notify more than 1 million users of this life-threatening condition. We're also excited about sleep score, a simple, intuitive way to help users better understand their sleep quality and discover ways to improve it. That's something I'm sure we can all benefit from.

Meanwhile, AirPods Pro 3 have been a huge hit. You have to hear them to really understand just how remarkable they are. users and reviewers alike are praising their incredible sound quality and improved fit. They feature the world's best in-ear active noise cancellation, removing up to 2x as much noise as the previous generation. And with live translation powered by Apple Intelligence, AirPods deliver an incredibly new and exciting experience for users around the world.

Turning to Services. As I mentioned earlier, revenue was $28.8 billion for the September quarter, 15% higher year-over-year and an all-time record. We saw double-digit growth in both developed and emerging markets and set new all-time records across advertising, App Store, cloud services, Music, payment services and video. Apple TV celebrated a big night at this year's Emmy Awards with 22 wins. The studio led the night with 13 wins the most of any comedy series in Emmy's history. Severance topped all dramas with 8 wins, adding to the accolades for this landmark series. To date, Apple TV productions have now earned over 600 wins and 2,800 nominations in total, driven by powerful original storytelling. And we're excited for audiences to discover new productions like Pluribus and to catch returning favorites like slow horses and the morning show.

And soon, Apple TV will be the destination for F1 fans across the U.S. on track Day, thanks to a new partnership with Formula One. F1 is one of the most exciting and fastest-growing sports in the world. And starting next year, Apple TV will be the place for subscribers to follow every twist and turn of the new season. And in addition, F1, the movie, one of the year's biggest blockbusters will be coming to Apple TV on December 12.

During the September quarter, we also marked the 10-year anniversary of Apple News. Apple News provides access to front page news from all around the world, putting hundreds of publications right at users' fingertips.

Turning to retail. We're heading into our busiest time of year with our best ever lineup. In the last few months, we've opened new stores in emerging markets like India and the UAE and new locations in the U.S. and China. I was also in Tokyo last month for the opening of the redesigned and reimagined Apple Ginza store and the energy among the crowd was truly remarkable. When it originally opened, it was our first store outside the United States, and so it was especially meaningful to come back to welcome customers to the beautiful new space.

Everywhere we operate, and in everything we do, we strive to give the best to our users while living by our values, whether that's building new accessibility features into our most recent software releases or advancing our environmental work by using even more recycled materials in our latest lineup or providing free educational programming to train and support American businesses with our new Apple Manufacturing Academy in Detroit. And we're continuing to invest in innovation and user experiences that will transform our future.

A great example is the work we're doing in the U.S. where we're committed to invest $600 billion over the next 4 years with a focus on innovation in strategic areas like advanced manufacturing, silicon engineering and artificial intelligence. These commitments build on our long-standing investments in America, while supporting more than 450,000 jobs with thousands of suppliers across all 50 states. We built a new factory in Houston for advanced AI service, for example, which just started shipping its first products off the line, and we're leading the creation of end-to-end silicon supply chain across the country.

In recent months, I've connected with developers, innovators, artists, entrepreneurs and so many others around the world, people passionate about innovation and all the things they can do with Apple products. Each one is another reminder of why we do what we do. We're driven to empower people to do more of the things that matter most to them and enrich their lives along the way. As we head into the holiday season with our most powerful lineup ever, I couldn't be more excited for what's to come.

With that, I'll turn it over to Kevan.

Thanks, Tim, and good afternoon, everyone. Our revenue of $102.5 billion was up 8% year-over-year and is a new September quarter record. We set some temporal quarter records in the Americas, Europe, Japan and the rest of Asia Pacific and grew in the vast majority of markets we track. Products revenue was $73.7 billion, up 5% year-over-year, driven by growth across iPhone and MAC and reached a September quarter record. Thanks to our exceptional customer satisfaction and strong levels of loyalty, our installed base of active devices has reached another all-time high across all product categories and geographic segments. Services revenue was $28.8 billion, up 15% year-over-year and an all-time record. The performance was broad-based, with double-digit growth in the vast majority of the markets we track and double-digit growth across most of our services categories. Company gross margin was 47.2%, above the high end of our guidance range and up 70 basis points sequentially, driven by favorable mix.

This includes approximately $1.1 billion of tariff-related costs, which is in line with what we had estimated on our last call. Products gross margin was 36.2%, up 170 basis points sequentially driven by favorable mix. Services gross margin was 75.3%, down 30 basis points sequentially. Operating expenses landed at $15.9 billion, up 11% year-over-year, driven by increased investment in R&D. These strong levels of business performance led to September quarter records for both net income and diluted earnings per share.

Net income was $27.5 billion and diluted earnings per share was $1.85, up 13% year-over-year on an adjusted basis, excluding the onetime charge we recognized during the fourth quarter of 2024. Operating cash flow was also a September quarter record at $29.7 billion.

Now I'm going to provide some more details for each of our revenue categories. iPhone revenue was $49 billion, up 6% year-over-year, driven by the iPhone 16 family. iPhone grew in the vast majority of the markets we track with September quarter records in many emerging markets, including Latin America, the Middle East and South Asia and an all-time record in India. The iPhone active installed base grew to an all-time high, and we set a September quarter record for upgraders.

According to the recent survey from World Panel, iPhone was a top-selling model in the U.S., Urban China, the U.K., France, Australia and Japan. We continue to see very high levels of customer satisfaction in the U.S. at 98% as measured by 451 Research. Mac revenue was $8.7 billion, up 13% year-over-year, driven by MacBook Air. We grew in every geographic segment with strong double-digit growth in emerging markets. The Mac installed base reached another all-time high with nearly half of customers who purchased a Mac being new to the product. And the latest customer satisfaction for Mac in the U.S. was reported at 96%.

iPad revenue was $7 billion, flat year-over-year. Keep in mind, we faced a difficult compare against the full quarter impact of the iPad Air and iPad Pro launch from last year, offset by the better-than-expected performance on the iPad. The installed base reached an all-time high with a September quarter record for upgraders and over half of the customers who purchased an iPad during the quarter were new to the product. Based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S. Wearables, Home and Accessories revenue was $9 billion, flat year-over-year. This was driven by growth on Watch and AirPods, offset by accessories, which was impacted by strong performance in the year ago quarter, driven by the iPad launches.

Both the Apple Watch and AirPods installed bases reached new all-time highs. Over half of the customers purchasing Apple Watch during the quarter were new to the product, and we also set a September record for upgraders an Apple Watch. And in the U.S., customer satisfaction was recently measured at 95%. Our services revenue reached an all-time high of $28.8 billion, up 15% year-over-year. We achieved all-time revenue records in the Americas, Europe, Japan and rest of Asia Pacific as well as a September quarter record in Greater China.

The majority of categories saw a sequential acceleration. And as Tim mentioned, we set many all-time revenue records, including payment services, where we reached an all-time revenue record and saw a double-digit growth year-over-year on Apple Pay Active Users. This strong momentum in the September quarter drove our total fiscal year services revenue to surpass $100 billion, up 14% year-over-year and our best ever. The growth of our installed base of active devices continues to offer us great opportunities for the future.

Customer engagement across our services offerings also continue to grow both transacting and paid accounts reached new all-time highs, and we continue to improve the quality and expand the reach of our services offerings. From additional markets for Apple Pay, now available in nearly 90 countries, to AppleCare One, a great new way to cover multiple Apple products in a single plan.

Turning to enterprise. We are seeing an adoption of Apple products accelerate across industries to improve productivity and drive innovation. The BMW Group has been deploying tens of thousands of iPhones, including the factory employees to further strengthen its digital capabilities and advance innovation at the company. Capital One has expanded its Mac Choice program by adding thousands more MacBook Airs across its workforce. In the Czech Republic, its largest bank, [indiscernible], continues to invest in the Apple ecosystem with over 5,000 iPhones in addition to its existing thousands of iPads and Macs. And Purdue University has launched a spatial computing hub built around Vision Pro, designed to help prepare students to lead the next wave of innovation in critical industries like semiconductor and pharmaceutical manufacturing.

Let's turn to our cash position and capital return program. We ended the quarter with $132 billion in cash and marketable securities. We had $1.3 billion of debt maturities and decreased commercial paper by $1.9 billion, resulting in $99 billion in total debt.

Therefore, at the end of the quarter, net cash was $34 billion. During the quarter, we returned $24 billion to shareholders. This included $3.9 billion in dividends and equivalents and $20 billion through open market repurchases of 89 million Apple shares. Taking a step back, we are very pleased with our record fiscal year 2025 results. As Tim mentioned, total company revenue for the year was $416 billion with growth in iPhone, Mac, iPad and Services and all-time records in the vast majority of markets we track. This revenue performance led to very strong full year operating results with all-time records for net income and for diluted EPS, which grew double digits year-over-year on an adjusted basis.

As we move ahead into the December quarter, I'd like to review our outlook, which includes the types of forward-looking information 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 and the global macroeconomic outlook does not worsen from today. We expect our December quarter total company revenue to grow by 10% to 12% year-over-year, which will be our best quarter ever.

We expect iPhone revenue to grow double digits year-over-year, which would be our best iPhone quarter ever. On Mac, keep in mind, we expect to face a very difficult compare against the M4 MacBook Pro, Mac Mini and iMac launches in the year ago quarter. We expect services revenue to grow at a year-over-year rate similar to what we reported in the fiscal year 2025.

We expect gross margin to be between 47% and 48%, which includes an estimated impact of $1.4 billion of tariff-related costs. And as we've said before, we are significantly increasing our investments in AI, while continuing to invest in our product road map. And so for the December quarter, we expect operating expenses to be between $18.1 billion and $18.5 billion. We expect OI&E to be around $150 million, excluding any potential impact from the mark-to-market of minority investments and our tax rate to be around 17%. Finally, today, our Board of Directors has declared a cash dividend of $0.26 per share of common stock payable on November 13, 2025, to shareholders of record as of November 10, 2025. With that, let's open the call to questions.

[Operator Instructions]

Operator, may we have the first question, please?

Certainly, we will go ahead and take our first question from Erik Woodring with Morgan Stanley.

Congrats on the results. Tim, can you maybe share a bit more detail on why you think the iPhone 17 is having the degree of success that it is at this point. And really, the question is, do you believe this is the aged installed base replacement cycle kicking in? Or are there specific features or functionality you believe stand out this cycle versus past cycles that consumers are really looking for? And then just a quick follow-up.

Eric, thanks for your comments. I think it's all about the product. The product lineup is incredibly strong, our strongest ever. The 17 Pro is the most pro phone we've ever done. It's incredible in the design things. The iPhone air is -- feels so thin and so light in your hand, it feels like it's going to fly away. And then the 17 phone is an incredible value and takes several of the features that were reserved for Pro before and brings them down to the consumer lineup. So overall, strongest iPhone lineup ever, and it's resonating around the world.

Great. And maybe a follow-up for you, Kevan. Can you maybe just discuss your approach to managing component cost inflation during this time, you're obviously increasing the memory content in your devices quite substantially at the same time. Memory prices are going through some pretty significant inflation. So just how are you managing through this cycle.

Erik, thanks for the question. Look, as you know, we've got a pretty incredible world-class procurement team as we're constantly finding ways to continue to drive cost opportunities. Right now on the commodity side, I would say we're seeing a slight tailwind on memory in storage prices and nothing really to note there. And as we saw from our gross margin performance, we landed in a pretty good spot above the high end of the guidance range we provided at 47.2%. And as well, we're guiding at 47% to 48%. So I think we're managing costs pretty well. As you'll recall, when we talked about this time in the cycle, we just launched a bunch of new products. Those new products do have a slightly higher cost structure than the products they replace, but the team does a very good job of focusing our efforts on getting those costs down over time. And we feel pretty good about the performance we're seeing right now overall on material cost savings.

Operator, can we get the next question, please?

Our next question is from Ben Reitzes with Melius Research.

Tim, can you talk a little bit about iPhone in China specifically? How is that going to trend in the December quarter? And have you turned the corner there? And how do you think that trajectory is going? And then I have a quick follow-up.

Yes. Ben, I was just there. It's incredibly vibrant and dynamic. The store traffic is up significantly year-over-year. The iPhone 17 has been -- the family has been very well received there. We do believe that we'll return to growth in Q1, and that is largely based on the reception of the iPhone there. And so I couldn't be more pleased with how things are going there in the early going.

All right. That's great. And then services, great upside there, a little surprising, right? We were a little worried about that one only a few quarters ago. I was wondering if there were any [indiscernible] payments in there or if the resolution that we saw with the antitrust ruling with one of your partners was a boost and and if that played a role or if it was all really just organic outperformance with many of the things you mentioned.

Ben, it's Kevan here. Let me try to answer that question. You're referring -- I just wanted to clarify, when you're referring to the antitrust piece, you're talking about the Google trial? Is that what you're referring to?

Yes. Yes, sir.

Okay. Yes, there was no tax-related impact. And what I would say is our strong performance for the quarter is really organically driven. And again, just to reiterate, we had an all-time revenue record here for the quarter at $28.8 billion. And as well, we surpassed $100 billion, so best year ever at 14% year-on-year. So really that was all organic growth. As Tim outlined and I outlined in the prepared remarks, we saw a majority of the categories have sequential acceleration, and we had many all-time revenue records. But nothing abnormal at all, really pretty much all organic growth.

Operator, could we get the next question, please?

Our next question is from Michael Ng.

I just have two as well. First, just to follow up on the last one. the services revenue growth, I think, was the fastest across many categories and certainly the fastest in the last 2 years. I was just wondering if you could just unpack a little bit more of the drivers of the acceleration, was there kind of cross-selling with the new iPhone launch? Was it just installed base growth? I know you've been doing a lot of bundling with Apple One and Apple Care One. So any thoughts on that would be very helpful. And then I just have a quick follow-up.

Michael, it's Kevan. Thanks for the question. Yes, let me build on the answer there. I think that the way we look at it is not one thing to point to that would have driven this higher performance. You're right that it is slightly higher than we've seen in the last few quarters. But as you know, our services portfolio is very broad with a broad range of businesses, all that have different growth profiles and different performance characteristics. So those can vary in any given quarter. I would say our strength, again, was very broad-based, both across categories and also geographically. So I wouldn't point to any particular factor that drove any kind of outperformance at all. We were just very pleased to see that result.

Great. And just on iPhone sell-through, I was wondering if you were seeing any notable shifts in trends between the sell-through coming from upgraders versus switchers? Is the U.S. carrier competitive dynamic helping at all in terms of promotional activity? And any thoughts on channel inventory.

Okay. We did set a September quarter record for upgraders and so it was a great quarter from that point of view. It's really too early in the cycle on 17 to make any comments about upgraders or switchers. In terms of channel inventory, we ended the quarter toward the low end of the targeted range. Obviously, because we had constraints on several models of the 16 and 17. And for complete transparency and clarity, we're constrained today on several models of the iPhone 17. There's not a ramp issue. It's just we have very strong demand. And we're working very hard to fulfill all the orders that we have.

Operator, could we get the next question, please.

Our next question is from Amit Daryanani with Evercore.

I guess Kevan, maybe just start with gross margins. Can you just walk through the expectations for the December quarter. I think it implies up 30 basis points or so sequentially. Can you just talk about the puts and takes on gross margin given you do have very sizable operating leverage in the quarter. So just maybe what are the puts and takes around that would be really helpful.

Yes, sure. Amit, let me walk through the outlook. As we mentioned in our outlook, we are targeting a range of 47% to 48%. You take the midpoint of that range at 47.5%, you said it's roughly 25 basis points, 30 basis points higher. Really, there's a lot of puts and takes. As I talked about earlier, this is a quarter we launched a lot of new products. Those new products tend to have a higher cost structure than the products they replaced. So there's definitely an impact from the cost side of thing, but that was more than offset by a favorable mix, especially on the product side as well as you outlined, we typically see higher leverage in this quarter. So I would say those are the 2 big drivers. And so the sequential increase is really going to be driven by favorable mix particularly from the product side.

Got it. And then if I just go back to the China discussion for a minute, the performance in China, at least in September quarter was a bit muted. Could you just talk about what resulted in the weakness over there? And do you think it was a bit more of a pause given iPhone Air, for example, I don't think was available until a few weeks ago. So just somewhat what drove the weakness in September? And is the uptick of that expectation for December there just from the iPhone Air coming out? Or are there other factors as well?

Yes. The Greater China revenue was down 4% in the -- year-over-year in the September quarter. It was driven by iPhone and if you look at the iPhone, the majority of the sequential year-over-year change was due to supply constraints that I mentioned earlier. And so it was basically supply constraints that drove the results. We're thrilled with what we're seeing right now with traffic being up significantly year-over-year and the reception of the 17 family we expect to return to growth this quarter.

Operator, could we have the next question, please?

Our next question is from Wamsi Mohan with Bank of America.

Tim, if I can follow up on your comments about the constrained supply in the quarter, just given the very strong demand for iPhones. Do you expect that as you can see your visibility across demand and supply, do you think that you will be exiting December at a point where you wouldn't be constrained anymore? Or do you still expect that there could be constraints as you exit the December quarter? And any way to quantify sort of what revenue could have been in this quarter without constraints?

Yes. If you look at the supply constraints, today, we are constrained on several 17 models. We're not predicting when the supply/demand will balance. We're obviously working very hard to achieve that because we want to get as many of these products out to the customers as possible. But today, I'm not going to predict.

Okay. Okay. And then as a follow-up, how do you talk about new records across a lot of categories and services. I didn't hear Search explicitly called out. So maybe it's a little bit of a follow-up to Ben's question, but given that there are some concerns around search volumes decelerating at the expense of AI. How do you think about the broader sustainability of these very strong mid-teens growth rates for services or an extended period of time, not just for next quarter where you're obviously guiding to [ 14 ].

This is Tim. The advertising category, which is a combination of third-party and first-party did set a record during the quarter.

Okay. And sorry, just to be clear, both Apple's own internal advertising and within the licensing individually set records?

Actually I'm not saying that. I'm just saying that the combination of the 2 set of record. We don't -- I'm dodging the question intentionally because we don't split it at that level.

Operator, could we get the next question, please?

Our next question is from Samik Chatterjee with JPMorgan.

Maybe for the first one, Tim, you talked about the strong momentum you're seeing in China, which is also driving your conference for the December quarter. Any thoughts on the role that the smartphone subsidies in that region are playing in this momentum? And how do you think about sort of what portion of consumers are maybe using some of those subsidies, leveraging the subsidies at this point? Any more insights into that? And I have a follow-up.

Yes, the subsidies play a favorable role. The subsidies, as you know, are sort of across multiple categories from PCs to tablets, smart watches and smartphones. And however, it's important to note they only apply to certain price ranges. And so there's a maximum price, and there's several of our products that are -- that sell above that price and therefore, are not eligible for a subsidy, but it does have a favorable effect. And it's clearly and at least from our vantage point, driving some consumer demand.

Okay. Got it. And a follow-up for Kevan here. On the OpEx increase going into the December quarter, a fairly sizable step-up. So if you could just dig into that number a bit more what are sort of the components towards what you're spending? And then that increase year-over-year in OpEx does sort of exceed your revenue growth. So is that sort of what we should expect on a going forward basis as well where you probably need to invest a bit more in the near future?

Yes, Samik, thanks for that question. As we've been outlining and reiterated in our last call, we are increasing our investments in AI. We're also continuing to invest in our product road map. So the vast majority of the increase to our operating expenses are driven by R&D. While we continue to manage the company in a thoughtful and disciplined way, we're also managing the business for the long term and are super excited about all the opportunities that we see ahead. As it relates to the question around OpEx and revenue growth, while OpEx has been growing at a faster rate than revenue, we have seen gross margin expansion. And so when we look at that on a combined basis, it does allow us to have healthy operating leverage, and our operating income growth has been generally outpacing revenue growth for the past several years.

Operator, could we get the next question, please?

Our next question is from David Vogt with UBS.

So maybe, Kevan, can I ask first. Can you help us understand sort of the tariff impact sequentially from the September quarter to the December quarter, particularly around iPhone supply constraints because I think I heard you say tariffs go from $1.1 billion to $1.4 billion, but the sequential uplift in iPhone revenue and presumably production given supply chain constraints is dramatically bigger. So you can help us understand how to think about the timing of those tariff headwinds as we move forward and sort of that correlation? And then I have a follow-up.

David, I'll take this one. You're right, it goes from $1.1 billion to a projection of $1.4 billion. And the $1.4 billion is based on sort of what we know right now and where the tariff rates and policies and so forth are. So it assumes a stable kind of environment for the quarter. It does comprehend the change that was just made, which we're very encouraged to see with the tariffs moving from 20% to 10% in China. And so that is factored in. And that is one of the reasons why the it's not linear to volume, if you will. Does that make sense?

No, that's helpful. That's what I was asking if the change is reflected in that outlook. And then just as a follow-up, when you think about -- I think on the Macs, I know people aren't asking about it, you talked about the tough comp, but you're going into sort of a holiday season, I understand that. But when you think about the attached possibility for other products to the iPhone in the holiday season, how do we think about sort of where the consumers heads that and their wallet is at this point in the cycle and granted it is a tough comp, but is there an opportunity to see some maybe upside from an attach rate perspective given the strength in the iPhone portfolio?

We always like to remind people that buy an iPhone, all the other things that we offer. And so you can bet that we're doing that. From a Mac point of view, the challenges that last year was sort of the mother of all Mac launches. All of these from Mac mini to iMac to all the Macbook Pros, all launched literally at the same time. And this year, that compares to launching the 14-inch MacBook Pro. And so there's a very difficult compare. Of course, in the long run, I'm very bullish on the Mac. And you can see that the Mac again last quarter outgrew the market. And so we feel really well about how Mac is positioned, but this certain quarter is an extremely difficult compare.

Yes. And Tim, I'll add to that, that we also have the DRAM upgrades last year for the Mac lineup also is another factor.

Operator, could we get the next question, please?

Our next question is from Krish Sankar with TD Cowen.

My first one is on the iPhone constraints. Is there a way to quantify how much this is you left on the table because of those constraints? And is the different iPhone manufacturing from 2 different regions contributing to the constraint? And then I have a follow-up for you.

To be clear, the constraint was not related to manufacturing capacity per se. It was that we called the number of iPhone 16s that we were going to make, and we're a bit short of where the demand really was. So we could have sold more. We're not publicly at least estimating the extent of that. And then on iPhone 17 family, the demand is very strong. And so we obviously came out of the Q4 time frame with lots of back orders.

Got it. And then a quick follow-up. Given like the prevalence of chatbots and now some of these AI-infused services, do you think that could change the consumer behavior on mobile app ecosystems or are you seeing any of that? And would that have any impact on your App Store?

I think there are opportunities on the App Store with artificial intelligence. And so I think as we have made our on-device models available for developers, and we've seen developers begin to adopt them and so I think as you -- as that proliferates, there's an opportunity to -- for developers and for Apple to benefit from that from adding features to their apps and so forth.

Operator, could we get the next question, please?

Our next question is from Aaron Rakers with Wells Fargo.

I have two as well. I guess the first question is when we look at the iPhone 17 demand, which you've repeatedly highlighted is very strong. I'm curious if there's been any discernible kind of change in the mix within the iPhone 17 categories between the Pro and the Pro Max versions relative to prior cycles?

It's really too early to call the mix, to be honest. And we don't like to publicly disclose that because of -- for competitive reasons. But frankly, we don't really know what the mix will be yet because we have constraints on both sides of the ledger at the top and at the entry. And so we'll see what happens as we get more supply.

Yes. And then as a quick follow-up. I'm curious, as we kind of work through kind of the AI narrative that continues to build. Is there -- could you provide any kind of updated thoughts around the build-out of Apple's private compute cloud and how we should think about that kind of as we look forward?

Yes. We're obviously using PCC, our private cloud compute today for a number of queries for Siri, and we will continue to build it out. In fact, the manufacturing plant that makes the servers used for Apple Intelligence just started manufacturing in Houston a few weeks ago, and we've got a ramp plan there for use in our data centers and it's robust.

Yes. Aaron, I'll add maybe there are two since you asked a question about private cloud compute that we -- in '25, we did have CapEx costs associated with building out our private cloud compute environment in our first-party data centers. So you would have seen that in some of the CapEx investment in the year.

Operator, can we get the next question, please?

Our next question is from Atif Malik with Citi.

Great execution. The first question is on iPhone Air. Does the consumer reception and iPhone Air gives you a feel on perhaps the foldable corn market? Or are the 2 form factors very different?

I'm not sure that that one is a proxy for the other. The thing that I would say is that where we don't get into the model kind of demand. At the aggregate level, we are thrilled with how iPhone has been received, and that's the reason that we're expecting double-digit growth in the current quarter.

Great. And Tim, as a follow-up, good to know that the personalized Siri is making good progress and on track for next year. Will you continue to use a 3-pronged approach with your own foundation models and partner with other LLM providers and maybe potential M&A? Or is one strategy more emphasized over another?

We're obviously creating Apple Foundation models within Apple. We ship them on device and use them in the private cloud compute as well. And we've got several in development. And so we also, from a continually to surveil the market on M&A and are open to pursuing M&A if we think that it will advance our road map.

Operator, can we get our last question, please?

Our last question is from Richard Kramer with Arete Research.

Tim, we've often seen Apple be a fast follower with iPhone and new technology, whether large displays or 4G or 5G. But with all the height now around AI, are you seeing evidence that AI capabilities or features are a material purchase consideration for consumers or the record sales levels you're reporting simply reflecting other factors like the retention of your iOS space?

I think that there are many factors that influence people's purchasing considerations. And so -- and we don't have a great in-depth survey yet on the current iPhone 17 because it's very new in the cycle, and we give it some time to formulate. But I would say that Apple Intelligence is a factor. And we're very bullish on it becoming a greater factor and so that's the way that we look at it.

Okay. And then one for Kevan. In the wake of nearly every other large tech company massively increasing their CapEx in advance of AI demand and also mentioning that there's scarce capacity, do you anticipate Apple altering its sort of long-standing hybrid approach to your own and third-party data centers? And maybe can you talk a little bit about the role you see for Apple silicon with the new M5 series of chipsets?

Richard, thanks for the question. In general, I think as we've talked about before, we are expecting increases in our CapEx spending related to AI investments. For example, as I mentioned earlier, we did end up having investments this year to build out our private cloud compute environment. And we do believe this hybrid model has served us very well, and we continue to want to leverage it. And so I don't see us moving away from this hybrid model where we leverage both first-party capacity as well as leverage third-party capacity. We'll continue to want to build out private cloud compute, as Tim outlined, as we have more usage there over time. But I think in general, we want to continue to have this hybrid model.

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