Q1 2024 Apple Inc Earnings Call

February 1, 2024

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Operator: I wish Tracy Chapman was my friend. She would know exactly what to say Beginnings always hide themselves in it At some point, I will be okay I got high when I met you I got low when I met you I got high when I met you I got low when I met you Good day, and welcome to the Apple Q1 Fiscal Year 2024 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introduction, I would like to turn the call over to Suhasini Chandramouli, Director of Investor Relations. Please go ahead.

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Speaker Change: Good day and welcome to the Apple Q1 fiscal year 2024 earnings Conference call. Today's call is being recorded at this time for opening remarks, and introduction I would like to turn the call over to Sue has niche Anja Mally director of Investor Relations. Please go ahead.

Operator: Good day, and welcome to the AAPL Q1 Fiscal Year 2024 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Sahasini Chandramouli, Director of Investor Relations. Please go ahead. ["Move On"] www.apl.org I would have walked through fire to kiss your lips. Do you still think about it or what you did? Still see your old apartment, like a bad trip. Wish I could forget all the places we've been. Hard and heavy whiskey goodbye Boy, you know how to make a girl cry We're sleeping in vehicles or lace. I only wanted you cause I couldn't have you now that I know. That wasn't love, that wasn't love, that was just hope. Always another bender, I lose control. I thought I'd get it back when you came back home to me, darling. But I never had it, did I?

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Speaker Change: Today's call is being recorded at this time for opening remarks, and introductions I would like to turn the call over to <unk> director of Investor Relations. Please go ahead.

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Operator: Your heart's a joke, and all the magic we found was just us. What a heavy whiskey goodbye, Boy. You know how to make a girl cry. Sleep a little bit for life. And now that I'm older, I can see why. Thank you for watching. I only wanted you to cry. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Suhasini Chandramouli, Director of Investor Relations. Please go ahead; thank you for joining us.

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Suhasini Chandramouli: Speaking first today is Apple CEO Tim Cook, and he'll be followed by CFO Luca Maestri. After that, we'll open the call to questions from analysts. Before turning the call over to Tim, I would like to remind everyone that the quarter we're reporting today included 13 weeks, whereas the quarter we reported a year ago included 14 weeks. 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, including the potential impact of macroeconomic These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast.

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Suhasini Chandramouli: For more information, please refer to the risk factors discussed in Apple's most recently filed annual report on Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. 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.

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Speaker Change: Good day and welcome the Apple Q1 fiscal year 2024 earnings Conference call. Today's call is being recorded at this time for opening remarks, and introductions I would like to turn the call over to <unk> director of Investor Relations. Please go ahead.

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Speaker Change: Thank you for joining US speaking first today is Apple CEO, Tim Cook and he'll be followed by CFO Luca Maestri.

Timothy Donald Cook: Good afternoon, everyone, and thanks for joining the call. Today, Apple is reporting revenue of $119.6 billion for the December quarter, up 2% from a year ago, despite having one less week in the quarter. EPS was $2.18, up 16% from a year ago and an all-time record. We achieved revenue records across more than two dozen countries and regions, including all-time records in Europe and the rest of Asia-Pacific. We also continue to see strong double-digit growth in many emerging markets, with all-time records in Malaysia, Mexico, the Philippines, Poland, and Turkey, as well as December quarter records in India, Indonesia, Saudi Arabia, and Chile. In services, we set an all-time revenue record with paid subscriptions growing double digits year over year. And I'm pleased to announce today that we have set a new record for our installed base, which has now surpassed 2.2 billion active devices.

Luca Maestri: After that we'll open the call to questions from analysts before turning the call over to Tim I would like to remind everyone that the quarter. We're reporting today included 13 weeks, whereas the quarter, we reported a year ago included 14 weeks.

Luca Maestri: 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, including the potential impact.

Luca Maestri: As macroeconomic conditions on the company's business and results of operations. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast for more information. Please refer to the risk factors discussed in Apple's most recently filed annual report on form 10.

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Timothy Donald Cook: We are announcing these results on the eve of what is sure to be an historic day as we enter the era of spatial computing. Starting tomorrow, Apple Vision Pro, the most advanced personal electronics device ever, will be available in Apple stores for customers in the U.S., with expansion to other countries later this year. Apple Vision Pro is a revolutionary device built on decades of Apple innovation, and it's years ahead of anything else. It has a groundbreaking new input system and thousands of innovations, and it will unlock incredible experiences for users and developers that are simply not possible on any other device.

Luca Maestri: <unk> 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.

Timothy Donald Cook: Thank you <unk> good afternoon, everyone and thanks for joining the call.

Timothy Donald Cook: Today, Apple is reporting revenue of $119 $6 billion for the December quarter up 2% from a year ago, Despite having one less week in the quarter.

Timothy Donald Cook: EPS was $2 18 sent up 16% from a year ago and an all time record.

Timothy Donald Cook: Okay.

Timothy Donald Cook: We achieved revenue records across more than two dozen countries and regions, including all time records in Europe and rest of Asia Pacific.

Timothy Donald Cook: We also continued to see strong double digit growth in many emerging markets with all time records in Malaysia, Mexico, the Philippines, Poland, and Turkey, as well as December quarter Records in India, Indonesia, Saudi Arabia in Chile and.

Timothy Donald Cook: There's already so much excitement behind this product from reviewers, customers, and developers. They are praising everything from the incredible experience of watching a movie on a 100-foot screen to remarkable new machine learning capabilities like hand tracking and room mapping. We can't wait for people to experience the magic for themselves. Moments like these are what we live for at Apple. They're why we do what we do.

Timothy Donald Cook: In services, we set an all time revenue record with paid subscriptions growing double digits year over year and.

Timothy Donald Cook: And I am pleased to announce today that we have set a new record for our installed base, which has now surpassed $2 2 billion active devices.

Timothy Donald Cook: We are announcing these results on the eve of what is sure to be in a store a day as we enter the era of spatial computing, starting tomorrow Apple vision pro the most advanced personal electronics device ever will be available in Apple stores for customers in the U S with expansion to other countries.

Timothy Donald Cook: They're why we're infected by groundbreaking innovation and why we're so focused on pushing technology to its limits as we work to enrich the lives of our users. As we look ahead, we will continue to invest in these and other technologies that will shape the future. That includes artificial intelligence, where we continue to spend a tremendous amount of time and effort, and we're excited to share the details of our ongoing work in that space later this year. Now, let's turn to the results for the December quarter, beginning with iPhone. We're proud to report that revenue came in at $69.7 billion, 6% higher than a year ago. The iPhone 15 lineup has earned glowing reviews and been embraced by customers. The iPhone 15 and iPhone 15 Plus feature a gorgeous new design with color-infused back glass and contoured edges, Dynamic Island, A16 Bionic, and a new 48-megapixel camera system.

Timothy Donald Cook: Later this year.

Timothy Donald Cook: Apple Vision Pro is a revolutionary device built on decades of Apple innovation and its years ahead of anything else ample vision pro has a groundbreaking new input system and thousands of innovations and it will unlock incredible experiences for users and developers that are simply not possible.

Timothy Donald Cook: On any other device.

Timothy Donald Cook: There's already so much excitement behind this product from reviewers customers and developers they are praising everything from the incredible experience of watching a movie on a 100 foot screen to remarkable new machine learning capabilities like hand tracking and rune mapping, we can't wait for people to experience the magic for themselves.

Timothy Donald Cook: Moments like these are what we live for the Apple there with why we do what we do.

Timothy Donald Cook: So why we're so unflinchingly dedicated to groundbreaking innovation and why we're so focused on pushing technology to its limits as we work to enrich the lives of our users.

Timothy Donald Cook: And the iPhone 15 Pro and iPhone 15 Pro Max set the gold standard for smartphones with a beautiful and lighter titanium design, industry-leading performance with A17 Pro, and our most advanced camera system with the equivalent of seven Pro lenses and the ability to record spatial video. Features like Emergency SOS and Roadside Assistance via Satellite bring peace of mind to users when they travel, and I'm grateful for every note I've received about their life-saving impact. Turning to Mac, revenue came in at $7.8 billion, up 1% year-over-year, driven by the strength of our latest M3-powered MacBook Pro models, in spite of having one less week of sale. Just last week, we got to wish MAC a happy 40th birthday.

Timothy Donald Cook: As we look ahead, we will continue to invest in these and other technologies that will shape. The future that includes artificial intelligence, where we continue to spend a tremendous amount of time and effort and we're excited to share the details of our ongoing work in that space later this year.

Now, let's turn to the results for the December quarter, beginning with iPhone.

Timothy Donald Cook: We're proud to report that revenue came in at $69 $7 billion, 6% higher than a year ago.

Timothy Donald Cook: The iPhone 15 lineup has armed glowing reviews and been embraced by customers. The iPhone <unk> and iPhone <unk> plus feature a gorgeous new design with color infused back glass and contoured edges dynamic Ireland, a 16, bionic and a new 48 megapixel cameras.

Timothy Donald Cook: When it was introduced 40 years ago, MAC changed everything, and through the years, it has done so again and again. Recently, we have been on a tremendous pace of innovation. Since the introduction of Apple Silicon in 2020, we've been proud to offer our users unmatched performance and power, along with a remarkable neural engine for artificial intelligence and machine learning. This past fall, we had an amazing launch of the latest generation of Apple Silicon for Mac, M3, M3 Pro, and M3 Mac. These chips break new ground in power and performance, empowering users to do more than they ever could before, whether they're making a musical masterpiece using the latest features in Logic Pro or beating their high score in a graphics-intensive game.

Timothy Donald Cook: System.

Timothy Donald Cook: And the icon 15 pro an iPhone 15 pro Max set the gold standard for smartphones with a beautiful and lighter titanium design industry, leading performance with a 17 pro and our most advanced camera system with the equivalent of seven pro lenses and the ability to record special video.

Timothy Donald Cook: Features like emergency Sos and roadside assistance via satellite bring peace of mind to users when they travel and I'm grateful for every note I've received about their life saving impact.

Timothy Donald Cook: Turning to Mac revenue came in at seven $8 billion up 1% year over year, driven by the strength of our latest in three powered Macbook Pro models in spite of having one less week of sales.

Timothy Donald Cook: Just last week, we got to wish Mac are happy 40th birthday. When it was introduced 40 years ago Mac changed everything and through the years. It has done so again and again.

Timothy Donald Cook: A favorite among students, business owners, artists, and video editors, our MacBook Pro lineup is the world's best Pro Notebook family, and IMAC, the world's most capable and best-selling all-in-one, is now faster than ever thanks to M3. In iPad, revenue for the December quarter was $7 billion, down 25% year-over-year due to a difficult comparison with the launch of the M2 iPad Pro and the 10th generation iPad during the December quarter last year and one last week of sales. iPad remains the most versatile, capable, and elegant tablet on the market today. It continues to be the go-to device for students, creatives, and more, with customers loving iPad's incredible combination of portability and performance. Powerful apps like Final Cut Pro and Logic Pro for iPad allow video and music creators to unleash their creativity in new ways that are only possible on iPad. iPad continues to push the boundaries of what's possible on a tablet.

Timothy Donald Cook: Recently, we have been on a tremendous pace of innovation since the introduction of Apple Silicon and 2020, we've been proud to offer our users unmatched performance and power along with a remarkable neural engine for artificial intelligence and machine learning.

Timothy Donald Cook: This past fall, we had an amazing launch of the latest generation of Apple's silicon for Mac in three in three pro and M. Three Max These chips break new ground in power and performance empowering users to do more than they ever could before whether they're making amused.

A cold masterpiece, using the latest features and logic pro or beating their high score in a graphics intensive game.

Timothy Donald Cook: Our favorite amongst students business owners artist and video editors are Macbook Pro lineup is the world's best Pro notebook family.

Timothy Donald Cook: And imac, the world's most capable and best selling all in one is now faster than ever thanks to M. Three.

Timothy Donald Cook: In iPad revenue for the December quarter was $7 billion down 25% year over year due to a difficult compare with the launch of the M to iPad pro and the 10th generation iPad during the December quarter last year, and one less week of sales.

Timothy Donald Cook: In wearables, home, and accessories, revenue came in at $12 billion, down 11% from a year ago due to the difficult comparison with the launch timing of several products in this category and the impact of the 14th week last year. Across our latest Apple Watch lineup, we're enabling and encouraging our users to live a healthier day while making the Apple Watch even more intuitive to use. The new double-tap gesture on Apple Watch Series 9 and Apple Watch Ultra 2 makes it easier to answer calls, play and pause music, or take a photo with iPhones.

Timothy Donald Cook: IPad remains the most versatile capable and elegant tablet on the market today.

Timothy Donald Cook: It continues to be the go to device for students creative and more with customers loving ipads incredible combination of portability and performance.

Timothy Donald Cook: Powerful apps like final cut pro and logic probe for iPad allow video and music creators to unleash their creativity and new ways that are only possible on iPad.

IPad continues to push the boundaries of what's possible on a tablet.

Timothy Donald Cook: In Wearables home and accessories revenue came in at $12 billion down 11% from a year ago due to a difficult compare with the launch timing of several products in this category and the impact of the 14th week last year.

Timothy Donald Cook: I've been deeply moved by the many touching stories about how features like a regular rhythm notification and fall detection helped Apple Watch users when they needed them most. And for the first time ever, users can choose a carbon-neutral option on any new Apple Watch. Meanwhile, our AirPods lineup continued to be a holiday favorite. In services, we set an all-time revenue record of $23.1 billion, an 11% year-over-year increase. Because we had one less week this quarter, this growth represents an acceleration from the September quarter, and we achieved all-time revenue records across advertising, cloud services, payment services, and video, as well as December quarter records in App Store and Apple Care. Across our services, we're constantly growing our offerings to give users even more to love. With the redesigned Apple TV app, we've made it easier for subscribers to enjoy all their favorite shows, movies, and sports, including Apple TV Plus hits like Masters of the Air, Monarch, and Slow Horses.

Timothy Donald Cook: Across our latest Apple watch lineup, we're enabling and encouraging our users to live a healthier day, while making Apple watch ebay more intuitive to use.

Timothy Donald Cook: The new double tap gesture on Apple Watch series, nine and Apple watch ultra to make it easier to answer calls play and pause music or take a photo with iPhone I've been deeply moved by the many touching stories about how features like a regular rhythm notification and fall detection helped <unk>.

Timothy Donald Cook: Apple watch users when they needed it most.

Timothy Donald Cook: And for the first time ever users can choose a carbon neutral option of any new Apple watch.

Timothy Donald Cook: Meanwhile, our Airpods lineup continued to be a holiday favorite.

Timothy Donald Cook: In services, we set an all time revenue record of $23 $1 billion at 11% year over year increase.

Timothy Donald Cook: Because we had one less week this quarter. This growth represents an acceleration from the September quarter.

And we achieved all time revenue records across advertising cloud services payment services and video as well as December quarter Records in App store and applecare.

Timothy Donald Cook: We're proud to be a part of Martin Scorsese's Killers of the Flower Moon, a film that has moved audiences and earned more than 200 accolades, including Best Film of the Year from the New York Film Critics Circle, nine BAFTA nominations, a Golden Globe win, and 10 Oscar nominations, including Best Picture. Across all Apple TV Plus productions, we've now earned 2050 award nominations and 450 wins We're also excited to have a new season of Major League Soccer kick off this month. We're looking forward to seeing Lionel Messi return to the field and to following all of our favorite teams in what is sure to be an incredible season, and we're counting down to the Apple Music Super Bowl halftime show featuring Usher.

Timothy Donald Cook: Across our services, we're constantly growing our offerings to give users even more to logs.

Timothy Donald Cook: With the redesigned Apple TV App, we've made it easier for subscribers to enjoy all of their favorite shows movies and sports, including Apple TV plus hits like Masters of the air monarch and slow horses.

Timothy Donald Cook: We're proud to be a part of Martin Scorsese's killers of the flower Moon. A film that has moved audiences and earned more than 200 accolades, including best film of the year from the New York film critic Circle nine BAFTA nominations, a golden Globe win and 10 Oscar nominations, including best pitch.

Timothy Donald Cook: Sure.

Timothy Donald Cook: Across all Apple TV plus productions. We've now earned 2050 award nominations and 450 win since we've introduced the service.

Timothy Donald Cook: Turning to retail, in recent months, we opened three stores, including our 100th store in Asia Pacific. Throughout the holidays, our team members pulled out all the stops to help customers find the perfect gift.

Timothy Donald Cook: We're also excited to have a new season of major league soccer kicking off the smart.

Timothy Donald Cook: We're looking forward to seeing Lia now messy returned to the field and to following all of our favorite teams and what is sure to be an incredible season.

Timothy Donald Cook: And I know our U.S. team members are especially excited to begin demoing Apple Vision Pro for our customers tomorrow. At Apple, we live and breathe innovation. We are driven to pioneer new technology that can enrich our customers' lives, and we're just as intentional about showing up with our values and being a force for good in the world. February is Black History Month, and to honor it, we've launched our new Black Unity collection, which includes the Black Unity Sport Loop Band.

Timothy Donald Cook: And we're counting down to the Apple music Super Bowl halftime show featuring Usher.

Timothy Donald Cook: Turning to retail in recent months, we opened three stores, including our 100th store in Asia Pacific.

Timothy Donald Cook: Throughout the holidays, our team members pulled out all the stops to help customers find the perfect gift.

Timothy Donald Cook: And I know our U S team members are especially excited to begin Demoing Apple vision probe for our customers tomorrow.

Timothy Donald Cook: At Apple, we live and breathe innovation, we are driven to pioneer new technology that can enrich our customers' lives and we're just as intentional about showing up with our values and being a force for good in the world.

Timothy Donald Cook: This year's designs reflect a lasting commitment to working toward a more equitable world. We also continue to do essential work through our Racial Equity and Justice Initiative, and we're proud to continue providing grants to organizations that are making a real impact in the world. In recent months, we've also taken significant strides in our environmental work. We are partnering with suppliers to bring more clean energy online for Apple production. We're using more recycled materials than ever before and more energy-efficient transportation than ever before. And each day, we are taking more and more steps toward becoming 100% carbon neutral across all of our products by 2030.

Timothy Donald Cook: February is black history month and to honor. It we've launched our new Black Unity collection, which includes the black community sport loop ban.

Timothy Donald Cook: This year's designs reflect a lasting commitment to working toward a more equitable world. We also continued to do a central worked through our racial equity and justice initiatives and we're proud to continue providing grants to organizations that are making a real impact in the world.

Timothy Donald Cook: In recent months, we've also taken significant strides in our environmental work, we're partnering with suppliers to bring more clean energy online for Apple production.

Timothy Donald Cook: We're using more recycled materials than ever before and more energy efficient transportation than ever before and each day, we are taking more and more steps towards becoming 100% carbon neutral across all of our products by 2030.

Timothy Donald Cook: Apple is a company that has never shied away from big challenges. That's because we are grounded by a deep sense of purpose and guided by a core belief in the transformative power of innovation. And so we are optimistic about the future, confident in the long term, and as excited as we've ever been to deliver for our users like only Apple can. With that, I'll turn it over to Luca.

Timothy Donald Cook: Apple is a company that has never shied away from big challenges.

Timothy Donald Cook: That's because we are grounded by a deep sense of purpose and guided by our core belief in the transformative power of innovation.

Timothy Donald Cook: And so we are optimistic about the future confident in the long term and as excited as we've ever been to deliver for our users like only Apple can.

Luca Maestri: Thank you, Tim, and good afternoon, everyone. Revenue for the December quarter was $119.6 billion, up 2% from last year. During the December quarter a year ago, two unique factors affected our results.

Timothy Donald Cook: With that I'll turn it over to Luca.

Luca Maestri: Thank you Tim and good afternoon, everyone.

Luca Maestri: Revenue for the December quarter was $119 6 billion up 2% from last year.

Luca Maestri: First, we had an additional week in the quarter, and second... We had COVID-related factory shutdowns that limited iPhone supply. We estimate that the net impact of these two factors resulted in a two percentage point headwind to our revenue performance this quarter. We set all-time revenue records in Europe and the rest of Asia-Pacific and continue to see strong performance across our emerging markets with double-digit growth in the majority of the emerging markets we track. Products revenue was $96.5 billion, flat compared to last year, driven by strength in iPhone, offset by challenging comparisons for iPad and wearables, home and accessories, and one less week of sales this year across the entire portfolio. Thanks to our unparalleled customer loyalty and very strong levels of customer satisfaction, our total installed base of active devices set a new record across all products and all geographic segments and is now over 2.2 billion active devices. Services revenue set an all-time record of $23.1 billion, up 11% year over year.

Luca Maestri: During the December quarter, a year ago, two unique factors affected our results first we had an additional week in the quarter and second.

Luca Maestri: We had COVID-19 related factory shutdowns that limited iPhone supply.

Luca Maestri: We estimate that the net impact of these two factors resulted in a two percentage point headwind to our revenue performance this quarter.

Luca Maestri: We set all time revenue records in Europe, and rest of Asia Pacific and continue to see strong performance across our emerging markets with double digit growth in the majority of the emerging markets we track.

Luca Maestri: Products revenue was $96 5 billion flat compared to last year driven.

Luca Maestri: Driven by strength in iPhone.

Luca Maestri: Set by challenging compares for iPad, and Wearables home and accessories, and one less week of sales this year across the entire portfolio.

Thanks to our unparalleled customer loyalty and very strong levels of customer satisfaction, our total installed base of active devices.

Luca Maestri: <unk> set a new record across all products in all geographic segments and is now over $2 2 billion active devices.

Luca Maestri: Services revenue set an all time record of $23 1 billion.

Luca Maestri: 7% year over year, when we take into account the extra week last year. This represents a sequential acceleration of growth from the September quarter. We're very pleased with our services performance in both developed and emerging markets with all time revenue records in the Americas, Europe and rest of Asia Pacific.

Luca Maestri: When we take into account the extra week last year, this represents a sequential acceleration of growth from the September quarter. We're very pleased with our services performance in both developed and emerging markets, with all-time revenue records in the Americas, Europe, and rest of Asia Pacific. Company gross margin was 45.9%, up 70 basis points sequentially, driven by leverage and favorable mix, partially offset by foreign exchange. Products gross margin was 39.4%, up 280 basis points sequentially, also driven by leverage and mix, partially offset by foreign exchange. Services gross margin was 72.8%, up 190 basis points from last quarter due to a more favorable name. Operating expenses of $14.5 billion were at the midpoint of the guidance range we provided and up 1% year-over-year.

Luca Maestri: Company gross margin was 45, 9% up 70 basis points sequentially.

Luca Maestri: Given by leverage and favorable mix, partially offset by foreign exchange.

Luca Maestri: Products gross margin was 39, 4%.

Luca Maestri: 280 basis points sequentially also driven by leverage and mix, partially offset by foreign exchange.

Luca Maestri: Services gross margin was 72, 8%.

Luca Maestri: 190 basis points from last quarter due.

Luca Maestri: Due to a more favorable mix.

Operating expenses of $14 5 billion, where at the midpoint of the guidance range, we provided and up 1% year over year.

Luca Maestri: Net income was $33.9 billion, up $3.9 billion from last year. Diluted EPS was $2.18, up 16% versus last year, an all-time record, and operating cash flow was very strong at $39.9 billion. Let me now provide more detail for each of our revenue categories. iPhone revenue was $69.7 billion, up 6% year-over-year. We set all-time records in several countries and regions, including Latin America, Western Europe, the Middle East, and Korea, as well as December quarter records in India and Indonesia.

Luca Maestri: Net income was $33 9 billion up $3 9 billion from last year.

Luca Maestri: Diluted EPS was $2.18 up 16% versus last year, and an all time record.

Luca Maestri: And operating cash flow was very strong at $39 9 billion.

Luca Maestri: Let me now provide more detail for each of our revenue categories.

Luca Maestri: IPhone revenue was $69 7 billion up 6% year over year, we set all time records in several countries and regions, including Latin America, Western Europe, the Middle East and Korea, as well as December quarter Records in India and Indonesia.

Luca Maestri: Our iPhone active install base grew to a new all-time high, and we had an all-time record number of iPhone upgraders during the quarter. Customers are loving the new iPhone 15 family, with the latest reports from 451 Research indicating customer satisfaction of 99% in the U.S. In fact, many iPhone models were among the top-selling smartphones around the world during the quarter. According to a survey from Kantar, iPhones were four out of the top five models in the U.S. and Japan, four out of the top six models in urban China and the U.K., and all top five models in Australia.

Luca Maestri: Our iPhone active installed base grew to a new all time high and we had an all time record number of iPhone upgrades during the quarter customers are loving the new iPhone 15th family with the latest reports from 451 research, indicating customer satisfaction of 99% in the U S.

Luca Maestri: Yes.

Luca Maestri: In fact, many iPhone models were among the top selling smartphones around the world during the quarter.

Luca Maestri: According to a survey from Kantar.

Luca Maestri: Iphones, where four out of the top five models in the U S and Japan.

Luca Maestri: Four out of the top six models in urban shine in the U K and all top five models in Australia.

Luca Maestri: Mac generated revenue of $7.8 billion and returned to growth despite one less week of sales this year. This represents a significant acceleration from the September quarter when we faced a challenging comparison due to the supply disruptions and subsequent demand recapture we experienced a year ago. Customer response to our latest iMac and MacBook Pro models powered by the M3 chips has been great, and our Mac install base reached an all-time high, with almost half of Mac buyers during the quarter being new to the product. Also, 451 Research recently reported customer satisfaction of 97% for Mac in the US, iPad was $7 billion in revenue, down 25% year-over-year. iPads faced a difficult comparison because during the December quarter last year, we launched the new iPad Pro and iPad 10 generation, and we had an extra week of sales.

Luca Maestri: Mac generated revenue of $7 8 billion and returned to growth. Despite one less week of sales this year.

Luca Maestri: This represents a significant acceleration from the September quarter, when we faced a challenging compare due to the supply disruptions and subsequent demand recapture we experienced a year ago gasoline.

Luca Maestri: Customer response to our latest imac and Macbook Pro models powered by the entry chips has been great and our Mac installed base reached an all time high with almost half of Mac buyers during the quarter being new to the product also for five one research recently reported customer satisfaction of 90.

Luca Maestri: 7% for Mac in the U S.

Luca Maestri: IPad was 7 billion in revenue down 25% year over year.

Luca Maestri: IPad faced a difficult compare because during the December quarter last year, we launched the new iPad Pro and iPad 10 generation and we had an extra week of sales. However, the iPad installed base continues to grow and he's an all time high with over half of the customers who purchase ipads during the call.

Luca Maestri: However, the iPad installed base continues to grow and is at an all-time high, with over half of the customers who purchased iPads during the quarter being new to the product. And customer satisfaction for iPads was recently measured at 98% in the US. Wearables Home and Accessories revenue was $12 billion, down 11% year-over-year, due to a challenging launch compare and the extra week a year ago.

Luca Maestri: To be named to the product and customer satisfaction for iPad was recently measured a 98% in the U S.

Luca Maestri: Wearables home and accessories revenue was 12 billion down 11% year over year due to a challenging launch compare and the extra week a year ago.

Luca Maestri: This time last year, we had the full quarter benefit from the launches of the AirPods Pro second generation, the Watch SE, and the first Watch Out. We continue to attract new customers to Apple Watch. Nearly two-thirds of customers purchasing an Apple Watch during the quarter were new to the product, and the latest reports from 451 Research indicate customer satisfaction of 96% in the U.S. And in services, we were very pleased with our double-digit growth, which was driven by the strength of our ecosystem.

This time last year, we had the full quarter benefit from the launches of the Airpods Pro second generation the watch SC and the first watch Altura, we continue to attract new customers to Apple watch nearly two thirds of customers purchasing an apple watch during the quarter when you to the product and the latest reports from <unk>.

Luca Maestri: For Fi one research indicate customer satisfaction of 96% in the U S.

Luca Maestri: And in services, we were very pleased with our double digit growth, which was driven by the strength of our ecosystem. Our installed base is now over $2 2 billion active devices and continues to grow nicely.

Luca Maestri: Our installed base is now over 2.2 billion active devices and continues to grow nicely, establishing a solid foundation for the future expansion of our services business. And we continue to see increased customer engagement with our service; both transacting accounts and paid accounts reached a new all-time high, with paid accounts growing double digits year over year. Also, our paid subscriptions showed strong double-digit growth. We have well over 1 billion paid subscriptions across the services on our platform, more than double the number that we had only four years ago.

Luca Maestri: Establishing a solid foundation for the future expansion of our services business.

Luca Maestri: And we continue to see increased customer engagement with our services.

Luca Maestri: Both transacting accounts and paid accounts reached a new all time high we paid accounts growing double digits year over year.

Also our paid subscriptions showed strong double digit growth.

Luca Maestri: We have well over 1 billion paid subscriptions across the services on our platform more than double the number that we had only four years ago.

Luca Maestri: Finally, we continue to build on the breadth and the quality of our current service, from Oscar-nominated theatrical releases on Apple TV+ to more publications on News+, like The Athletic, and exciting new games on Arcade. Turning to enterprise, we continue to see many business customers leverage Apple products to improve productivity and drive innovation. Target recently added the latest M3 MacBook Pro to their existing deployment of thousands of Macs, enabling employees across various departments to do their best work in emerging markets. Zoho, a leading technology company headquartered in India, offers its 15,000-plus global employees a choice of devices, with 80% of their workforce using iPhone for work and nearly two-thirds of them choosing Mac as their primary computer.

Luca Maestri: Finally, we continue to build on the breadth and the quality of our current services.

Luca Maestri: Oscar nominated theatrical releases with Apple TV, plus two more publications on news glass like get planted and exciting new games on our keg.

Luca Maestri: Turning to enterprise, we continue to see many business customers leverage apple products to improve productivity and drive innovation.

Luca Maestri: Target recently added the latest entry Macbook pro two to their existing deployment of thousands of masks, enabling employees across various departments to do their best work in emerging markets Zelle Hall, a leading technology company headquartered in India offers its 15th.

Luca Maestri: Thousand plus global employees, a choice of devices with 80% of their workforce using iPhone for work and nearly two thirds of them choosing Mac as their primary computer.

Luca Maestri: With the upcoming launch of Apple Vision Pro, we're seeing strong excitement in enterprise. Leading organizations across many industries, such as Walmart, Nike, Vanguard, Striker, Bloomberg, and SAP, have started leveraging and investing in Apple Vision Pro as the new platform to bring innovative spatial computing experiences to their customers and employees. From everyday productivity to collaborative product design to immersive training, we cannot wait to see the amazing things our enterprise customers will create in the months and years to come. Now, let me turn to our cash position and capital return program. We ended the quarter with $173 billion in cash and marketable security. We decreased commercial paper by $4 billion, leaving us with total debt of $108 billion.

Luca Maestri: With the upcoming launch of Apple vision, Pearl, we're seeing strong excite them in enterprise, leading organizations across many industries, such as Walmart Nike Vanguard Stryker Bloomberg NSA P. As started leveraging and investing in applebee's on parole as the new.

Luca Maestri: Platform to bring innovative spatial computing experiences for their customers and employees.

Luca Maestri: From everyday productivity to collaborative product design to immersive training, we cannot wait to see the amazing things our enterprise customers, we create in the months and years to come.

Luca Maestri: Let me now turn to our cash position and catheter Everytime program.

Luca Maestri: We ended the quarter with 173 billion in cash and marketable securities. We decreased commercial paper by 4 billion, leaving US with total debt of 108 billion. As a result, net cash was 65 billion at the end of the quarter and our goal of becoming net cash neutral over time remains unchanged.

Luca Maestri: As a result, net cash was $65 billion at the end of the quarter, and our goal of becoming net cash neutral over time remains unshaken. During the quarter, we returned nearly $27 billion to shareholders, including $3.8 billion in dividends and equivalents and $20.5 billion through open market repurchases of $112 million in ordinary shares. We also retired an additional 6 million shares in the final settlement of our 19th ASR. As usual, we will provide an update on our capital return program when we report results at the end of this quarter. 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 at the beginning of the call. The color we are providing today assumes that the macroeconomic outlook doesn't worsen from what we are projecting today for the current quarter, and we expect foreign exchange to be a revenue headwind of about two percentage points on a year-over-year basis. As a reminder, in the December quarter a year ago, we faced significant supply constraints on the iPhone 14 Pro and 14 Pro Max due to the COVID-19 factory shutdown.

Luca Maestri: During the quarter, we returned nearly $27 billion to shareholders.

Luca Maestri: Including $3 8 billion in dividends and equivalents and 20.5 billion through open market repurchases of 112 million Apple shares.

Luca Maestri: We also retired an additional 6 million shares in the final settlement of our 19th a S. R.

Luca Maestri: As usual, we will provide an update to our capital return program. When we report the results at the end of this quarter.

Luca Maestri: As we move ahead into the March quarter I'd like to review our outlook, which includes the types of forward looking information that's larceny referred to at the beginning of the call.

Luca Maestri: Paula we are providing today assumes that the macroeconomic outlook doesn't worsen from what we are projecting today for the current quarter.

Luca Maestri: And we expect foreign exchange to be a revenue headwind of about two percentage points on a year over year basis.

Luca Maestri: As a reminder ended the December quarter, a year ago, we faced significant supply constraints on the iPhone 14 crore and 14 chrome acts.

Luca Maestri: Due to COVID-19 factory shutdowns.

Luca Maestri: And in the March quarter, a year ago, we were able to replenish channel inventory and fulfill significant pent-up demand from the constraints. We estimate that this impact added close to $5 billion to the March quarter's total revenue last year. When we remove this impact from last year's revenue, we expect both our March quarter total company revenue and iPhone revenue to be similar to a year ago. For our services business, we expect a similar double-digit growth rate to what we reported in the December quarter. We expect gross margin to be between 46 and 47 percent. We expect OPEX to be between $14.3 and $14.5 billion. We expect OI&E to be around $50 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 16%. Finally, today, our board of directors has declared a cash dividend of 24 cents per share of common stock, payable on February 15, 2024 to shareholders of record as of February 12, 2024.

Luca Maestri: And in the March quarter, a year ago, we were able to replenish channel inventory and fulfill a significant pent up demand from the constraints. We estimate that this impact at the close to $5 billion for the March quarter's total revenue last year.

Luca Maestri: When we remove this impact from last year's revenue, we expect both our March quarter total company revenue and iPhone revenue to be similar to a year ago.

Luca Maestri: For our services business, we expect a similar double digit growth rate to what we reported in the December quarter.

Luca Maestri: We expect gross margin to be between 46 and 47%.

Luca Maestri: We expect opex to be between 14.3 and $14 $5 billion.

Luca Maestri: We expect <unk> to be around $50 million.

Luca Maestri: Excluding any potential impact from the mark to market of minority investments and our tax rate to be around 16%.

Luca Maestri: Finally today, our board of directors has declared a cash dividend of 24 cents per share of common stock.

Luca Maestri: Payable on February 15, 2024 to shareholders of record as of February 12, 2024.

Operator: With that, let's open the call to questions. Thank you, Luca. We ask that you limit yourself to two questions. Operator, may we have the first question, please?

Luca Maestri: With that.

Speaker Change: Let's open the call to questions.

Speaker Change: Thank you Luca we ask that you limit yourself to two questions. Operator may we have the first question. Please.

Operator: Certainly. We'll go ahead and take our first question from Eric Woodring, with Morgan Stanley. Please go ahead.

Speaker Change: Certainly we'll go ahead and take our first question from Erik Woodring with Morgan Stanley. Please go ahead.

Eric Woodring: Hey guys, good evening. Thank you for taking my questions. I have two.

Michael J. Olson: Hey, guys. Good evening. Thank you for taking my questions I have two and and congrats on the nice quarter here Luca maybe if we start with you can you on package some of the services drivers a bit for us obviously really nice outperformance in the December quarter versus your expectations a record gross margin implies your higher <unk>.

Luca Maestri: And congratulations on the nice quarter here. Luca, maybe if we start with you, can you unpackage some of the services drivers a bit for us? Obviously, really nice outperformance in the December quarter versus your expectations, and a record gross margin, implies your higher margin businesses were likely the sources of outperformance. But can you maybe just clarify a bit how we should think about services growth for the March quarter? And then speak to some of those underlying drivers in the December quarter and then in the March quarter about what the different puts and takes would be. And then I have a follow-up, please. Thanks.

Michael J. Olson: Businesses were likely the sources of outperformance.

Michael J. Olson: But can you maybe just clarify a bit how we should think about services growth for the for the March quarter.

Michael J. Olson: And then speak to some of those underlying drivers you know in the December quarter.

Michael J. Olson: Then in the March quarter, what the different puts and takes would be and then I have a follow up please thank you.

Luca Maestri: Thanks, Eric, for the question. Let's start with the December quarter. As we said, up 11%, $23.1 billion, it's an all-time record for us, with all-time records in the Americas, in Europe, and the rest of Asia-Pac, so it was pretty broad-based geographically, and very strong across all the services categories because we had all-time revenue records for cloud, for payments, for video, and for advertising, and December quarter records for the App Store and for Apple Care. Obviously, last year, we had an extra week, so the 11% is stronger than, the underlying performance is stronger than the 11% that we have reported. I think the entire ecosystem is doing well because we continue to see growth and new all-time highs in both transacting accounts and paid accounts, which is obviously very important, and paid subscriptions continue to grow strong double digits, just as a reference we have more than a billion paid subscriptions across all the services on our platform this is more than double the number of paid subscriptions that we had only four years ago so obviously very significant very significant growth there what I said during the prepared remarks around the the March quarter I mentioned that we will continue to grow double digits at a percentage that is similar to what we reported for the December quarter we don't provide guidance around the different services categories so we will provide more color when when we report in three months, Okay. Thank you, Luca.

Speaker Change: Thanks, Eric for the question.

Speaker Change: So let's start with.

Speaker Change: The December quarter.

Speaker Change: As we said up 11% $23 1 billion.

Speaker Change: <unk> is an all time record for us with all time records in the Americas in Europe, and the rest of Asia Pac. So it was pretty broad based geographically and very strong across all of the services categories. Because we had all time revenue records for cloud.

Speaker Change: Payments for video and for advertising in December quarter Records for the App store and put applecare, obviously last year, we had an extra week, so 11% is stronger than.

Speaker Change: The underlying.

Speaker Change: Pharmacy is stronger than the 11% that we have reported.

Speaker Change: <unk>.

Speaker Change: The entire ecosystem is doing well because we continue to see.

Speaker Change: Growth in new all time highs in both transacting accounts and paid accounts, which is obviously very important and paid subscriptions continue to grow strong double digits.

Speaker Change: Just as a reference we.

Speaker Change: We have more than a billion paid subscriptions across all the services on our platform. This is more than double the number of paid subscriptions that we had only four years ago. So obviously.

Speaker Change: Very significant a very significant growth there.

Speaker Change: What I said.

Speaker Change: During the prepared remarks around the March quarter, I mentioned that we will continue to grow double digits at a percentage that is similar to what we reported.

Speaker Change: For the December quarter.

We don't provide guidance around the different services category. So we will provide more color when we report in three months.

Speaker Change: Okay. Thank you Luca and then Tim you know really nice to see your your installed base reached a record high again against all products and G. Owes you know I'm wondering if you could share a bit more detail about the new users you like where you were able to onboard over the last 12 months, meaning how might this new cohort.

Timothy Donald Cook: And then, Tim, you know, really nice to see your installed base reach a record high again against all products and geos. You know, I'm wondering if you could share a bit more detail about the new users you were able to onboard over the last 12 months, meaning how might this new cohort look different from past cohorts, either in terms of, you know, geographic representation or skew to certain products, or even how their monetization trends might differ from past cohorts. And that's it for me.

Speaker Change: Or look different from past cohorts, either in terms of geographic representation or SKU to certain products or even how their monetization trends might differ from past cohorts and that's it for me. Thanks, So much.

Timothy Donald Cook: Thanks so much. Yes, hi, Eric. I would say emerging markets have been a very key area of strength for us. You know, if you look at it, India grew in revenue terms, grew strong double digits in the December quarter, and hit a quarterly revenue record. The other emerging markets like Indonesia also hit a quarterly record.

Timothy Donald Cook: Yes, Hi, Eric.

Speaker Change: I would say emerging markets are have been a very key area of strength for us.

Speaker Change: If you look at it.

Speaker Change: India grew in revenue terms grew strong double digits in the December quarter and hit a quarter revenue record.

Speaker Change: The other.

Speaker Change: Other emerging markets like Indonesia also here.

Speaker Change: Quarterly record and we had.

Timothy Donald Cook: And we had several regions with records, from Latin America to the Middle East, and That theme has been pretty consistent across the other quarters of the year as well. And so emerging markets are very, very important. And I feel like we're doing a great job there. Thanks, Eric.

Speaker Change: Several regions.

Speaker Change: With records from Latin America to the Middle East.

Speaker Change: And.

Speaker Change: That theme has been pretty consistent across.

Speaker Change: The other quarters.

Speaker Change: Of the year as well and so emerging markets very very important.

Speaker Change: I feel like we're doing a great job there.

Speaker Change: Thanks, Eric operator can we have the next question. Please.

Speaker Change: Our next question is from Mike <unk> with Goldman Sachs. Please go ahead.

Operator: Operator, can we have the next question, please? Our next question is from Mike Ng with Goldman Sachs. Please go ahead. Hey, good afternoon.

Mike: Hey, good afternoon, I just have two questions as well first on services just on the outlook.

Michael J. Olson: I just have two questions as well. First on services, just on the outlook for the March quarter for a similar double-digit growth rate as the December quarter, I'm just wondering why not, why it won't be potentially faster, you know, given that, you know, the December quarter obviously had a headwind from the extra week of comp and, you know, I'd also think that some of the pricing uplifts on select Apple One services that were implemented last winter should help in the March Any additional thoughts there would be great in terms of, you know, what some of your assumptions are, and then I have a quick follow-up. Yeah, we'll see how the quarter develops.

Mike: <unk> for the March quarter four.

Mike: A similar double digit growth rate as the December quarter I'm just wondering.

Speaker Change: Why not.

Speaker Change: Why wouldn't it be potentially faster you know given that.

Speaker Change: The December quarter, obviously had a headwind from the extra week comp end.

Speaker Change: I'd also think that some of the pricing uplifts on select Apple one services.

Speaker Change: That were implemented loss.

Speaker Change: Winter should help in the March quarter.

Speaker Change: Any additional thoughts there would be great in terms of you know what.

Speaker Change: Some of your assumptions are and then I have a quick follow up yeah, let's see how the quarter develops.

Luca Maestri: I would point to two things. One is the fact that we mentioned that we expect a couple of points of negative foreign exchange in the March quarter, and foreign exchange was essentially flat for us in the December quarter. So you've got a bit of a headwind there.

Speaker Change: Would point to two things one is the fact that we mentioned.

Speaker Change: That we expect a couple of points of negative foreign exchange in the March quarter, and foreign exchange was essentially flat for us in the December quarter. So you've got a bit of a headwind there and then when you look at our other progression allow us services business over the last few quarters.

Luca Maestri: And then when you look at the progression of our services business over the last few quarters, the comparisons for March are slightly more difficult than the comparisons for December. Great, thank you, Luca. And then my second question: it was very interesting to hear about some of the enterprise customer investments in Vision Pro. Could you maybe just talk about some of the efforts to support the Vision Pro developer ecosystem? And it was also good to hear about the potential upcoming announcements on AI, so any thoughts there would also be helpful. Thank you. Yeah, hi.

Speaker Change: The compares are for March are slightly more difficult than the compares for December.

Speaker Change: Great. Thank you Luca and then my second question. It was very interesting to hear about some of the <unk>.

Speaker Change: Enterprise customer investments Center vision pro could you.

Speaker Change: Maybe just talk about some of the efforts to support the vision Pro <unk>.

Speaker Change: Developer ecosystem.

Speaker Change: And it was also good to hear about.

Speaker Change: The potential accounting announcements on AI, so any thoughts there towards also would be helpful. Thank you.

Yes, hi.

Timothy Donald Cook: We are incredibly excited about the enterprise opportunities with VisionPro. I've seen several demos from different companies, and Luca mentioned several in his opening remarks. But Walmart has a very cool merchandising app.

Speaker Change: We are incredibly excited about the enterprise opportunities with vision Pronto I've seen several demos from different companies look Ive mentioned several in the in his opening remarks, but Walmart has a very cool merchandising out.

Timothy Donald Cook: There are firms that are doing collaboration, design collaboration apps. There are field service applications really all over the map. There are applications for control centers, command centers, and such things.

Speaker Change: There are firms that are doing collaboration design collaboration apps there are field service applications.

Speaker Change: Really all over the map.

Speaker Change: There are applications that.

Speaker Change: For control Center Command center kind of things.

Timothy Donald Cook: SAP has really gotten behind it, and of course, SAP is in so many companies that I think there will be a great opportunity for us in enterprise. And we couldn't be more excited about where things are right now. We're obviously looking forward to tomorrow.

Speaker Change: S&P has really gotten behind it and of course, that's a P. As in so many of our companies.

Speaker Change: I think there will be.

Speaker Change: A great opportunity for us in enterprise and we couldn't be more excited about where things are right now.

Speaker Change: We're obviously looking forward to tomorrow.

Timothy Donald Cook: This has been... multiple years of effort from so many people across Apple, and really, it took a whole company effort to bring it this far. In terms of generative AI, which I would guess is your focus, we have a lot of work going on internally, as I've alluded to before. The MO, if you will, has always been to do work and then talk about work and not get out in front of ourselves.

Ben: This is Ben.

Ben: Multiple years of efforts from so many people across Apple and really if you took a whole a company effort to bring it to them.

Ben: Thus far in terms of our generative AI, which I guess is your focus we have a lot of work going on internally as I've alluded to before our.

Ben: And Bob If you will has always been to do work and then talk about work and not to get out in front of ourselves and so we're going to hold that.

Timothy Donald Cook: And so we're going to hold that to this as well. But we've got some things that we're incredibly excited about that we'll be talking about later this year. Wonderful. Thank you, Tim.

Ben: To this as well, but where we've got some things that we're incredibly excited about.

Ben: We'll be talking about later this year.

Bob: Wonderful Thank you Tim.

Michael J. Olson: Thank you, Mike. Operator, can we have the next question, please? Our next question is from Wamsi Mohan with Bank of America. Please go ahead. Yes, thank you so much.

Bob: Thank you Mike operator can we have the next question. Please.

Bob: Our next question is from <unk> Mohan with Bank of America. Please go ahead.

Mohan: Yeah. Thank you so much I had two questions as well.

Wamsi Mohan: I have two questions as well. First, on iPhone, there have been concerns around replacement cycles lengthening, Chinese competition intensifying, and you still beat iPhone revenues despite the weaker performance in China. Curious how you're thinking about the 15th cycle overall given what you saw in the December quarter. Hi, it's Tim.

Mohan: First of all on iPhone, there never been concerned around replacement cycles lengthening, China competition intensifying and you still beat iPhone revenues. Despite the weaker performance in China curious, how youre thinking about the 15 cycle overall, given given what you saw in the December quarter, and I have a follow up.

Timothy Donald Cook: Hi, it's Tim.

Timothy Donald Cook: We were up 6%, as we mentioned in the opening remarks. We're happy with that performance. But underneath that, we had really strong performance in several parts of the world, with all-time records in Europe and the rest of Asia Pacific. As I mentioned earlier, we did particularly well in several emerging markets from Latin America to the Middle East. And we set December quarter records in India and Indonesia.

We were up 6% as we mentioned in the opening remarks.

Timothy Donald Cook: We're happy with that performance.

Timothy Donald Cook: Underneath there we.

Timothy Donald Cook: Had really strong performance in several parts of the world with all time records in Europe, and rest of Asia Pacific.

Timothy Donald Cook: As I mentioned earlier, we did.

Timothy Donald Cook: Typically well in several emerging markets from Latin America to the Middle East and we set December quarter Records in India, and Indonesia, and so really some spectacular.

Timothy Donald Cook: And so, really, some spectacular broad-based reactions to iPhone. And we also importantly set an all-time record worldwide for iPhone upgraders. And the install base hit a new all-time high, consistent with our overall device, And so there's a lot of good things. Luca mentioned in his opening comments that iPhones were four out of the top five smartphone models in the U.S. and Japan, and four out of the top six in urban China and the U.K., and all top five in Australia, and the customer satisfaction level for iPhone 15 hit 99 percent.

Timothy Donald Cook: Broad based.

Timothy Donald Cook: Reactions to iPhone, we also importantly.

Timothy Donald Cook: Set an all time record worldwide for iPhone upgrade errors.

Timothy Donald Cook: And the installed base had a new all time high consistent with the.

Timothy Donald Cook: Our overall device devices.

Timothy Donald Cook: And so theres a lot of lot of good things Luca mentioned in his opening comments.

Timothy Donald Cook: Iphones, where four out of the top five smartphone models in the U S and Japan in four out of the top six in urban China, and the U K and all top five in Australia, and the customer satisfaction level for iPhone 15 hit 99%.

Timothy Donald Cook: If you look at iPhone 15 since the announcement of it and shipment in September, so this is including some of Q4, and you compare that to iPhone 14 over the same period of time, iPhone 15 is outselling iPhone 14, and so we feel very good about that, and the upgraders hitting a record is particularly exciting for us. Great, thank you, Tim. And as a follow-up, obviously, you're just launching the Vision Pro, and it's an entirely new category. It's a price point that's a much higher starting price point relative to most of your other probably over the last decade product introductions, but just wondering how you would measure the success of Vision Pro over time and which Apple products, adoption curve, would you look at as potentially the most similar, and is there a way in which we could think Vision Pro could eclipse, maybe, something like the iPad in revenue over time?

If you look at iPhone 15, since the <unk>.

Timothy Donald Cook: <unk> of it and shipment in September. So this is including some of Q4 and you compare that to iPhone 14 over the same period of time iPhone 15 is outselling iPhone 14.

Timothy Donald Cook: And so we feel.

Timothy Donald Cook: Very good about that and the upgrader is hitting a record is.

Timothy Donald Cook: It is.

Timothy Donald Cook: Particularly exciting for us.

Speaker Change: Great. Thank you, Tim and as a follow up obviously, you're just launching division Pearl and that's an entirely new category.

Speaker Change: It's a price point that's a.

Speaker Change: How much higher starting price point relative to most of your other probably over the last decade product introductions, but just wondering how would you measure the success of vision Pearl over time and at which Apple products.

Speaker Change: Adoption curve would you look at is potentially the most similar.

Speaker Change: And as Dara.

Speaker Change: A way in which we go tank Wigan probe could eclipse, maybe something like the iPad and revenue overtime.

Timothy Donald Cook: Thank you. You know, each product has its own journey, and so I wouldn't want to compare it to any one in particular. I would just say we couldn't be more excited internally. We've gotten an incredible amount of excitement from developers and from customers that can't wait till tomorrow to pick up their units. And we're incredibly proud to be able to demo the unit in so many of our stores in the U.S. starting tomorrow for people that want to check it out. And so we'll see and report the results of it in the wearables category that you're familiar with. I think that if you look at it from a price point of view, there's an incredible amount of technology that's packed into the product. 5,000 patents are in the product, and it's, of course, built on many innovations that Apple has spent multiple years on, from silicon to displays, and significant AI and machine learning. All of the hand tracking, the room mapping, all of this stuff is driven by AI.

Speaker Change: You know each.

Speaker Change: Product has its own journey, and so I wouldn't want to compare it to any one in particular I would just say we couldn't be more excited.

Speaker Change: Internally, we've got made an incredible amount of excitement from developers and from customers that can't wait till tomorrow to pick up their units.

Speaker Change: And we're incredibly.

Speaker Change: Proud to be able to demo the unit and so many of our stores in the U S. Starting tomorrow.

Speaker Change: For people that are that want to check it out.

Speaker Change: So, we'll we'll see in <unk>.

Speaker Change: Report the results of it in the Wearables category.

Speaker Change: That you are familiar with.

Speaker Change: I think the if you look at it from a price point of view, there's an incredible amount of technology, that's packed into the product there is.

Speaker Change: 5000 patents and the product and its of course built on many.

Speaker Change: Innovations that Apple has.

Speaker Change: Multiple years on.

Speaker Change: From from Silicon to displays.

Speaker Change: And it's significant.

Speaker Change: And machine learning.

Speaker Change: All of the the hand tracking the room mapping all of this stuff is driven by AI.

Timothy Donald Cook: And so we're incredibly excited about it. I can't wait to be in the store tomorrow and see the reaction myself. Thank you so much. Thanks, Wamsi. Operator, we'll take the next question, please. Our next question is from Amit Daryanani with Evercore. Please go ahead. Good afternoon. I have two as well.

And so we're incredibly excited about it and I can't wait to be in the store for tomorrow in and see the reaction micelle.

Speaker Change: Thank you Sebastian.

Sebastian: Thanks, <unk> operator, we'll take the next question please.

Sebastian: Okay.

Sebastian: Our next question is from Amit <unk>.

Amit: <unk> with Evercore. Please go ahead.

Amit: Okay.

Good afternoon, op too as well I guess first I was hoping you could talk a little bit about what are you seeing in China right now I think from a geographic basis. One of the few places it was down double digits, while everything else is growing up so it will be it's been a bit of time discussing what are you seeing that from a competitor perspective, and a multi policy from a demand perspective in China.

Amit Daryanani: You know, I guess first off, I was hoping you could talk a little bit about what you are seeing in China right now. I think from a geographic basis, one of the few places that was down double digits while everything else was growing. So I'm hoping you'd spend a bit of time discussing what you're seeing there from a competitive perspective and, more importantly, from a demand perspective in China. Yeah, if you look at iPhone in China, the mainland, which I think has been the focus of a lot of interest. And you look at it in constant currency, so more of an operational view. We were down mid-single digits on the iPhone. And so it was the other things that drove the larger contraction year over year.

Amit: Yes, if you look at iPhone in China, mainland, which I think has been the focus of a lot of interest.

Amit: And you look at it in constant currency, so more of an operational view.

Amit: We were down mid single digits on iPhone and so it was the the other the other things that drove the.

Amit: The larger contraction year over year on a on the good news side, we had solid growth on upgrader is year over year.

Timothy Donald Cook: On the good news side, we had solid growth in upgraders year over year in mainland China, and we had four of the top six smartphone models in urban China. Also, IDC just put out a note that you may have seen that we were the top brand for the full year and for the December quarter. And so there's, you know, some good news along with uh, obviously we prefer not to contrive. Fair enough.

Amit: In mainland China, and we had four of the top six.

Amit: Smartphone models in urban China.

Amit: Also IDC just put out a note that you may have seen that.

Amit: Where we were the top.

Brand in for the full year and for the December quarter, and so theirs.

Amit: Some good news along with.

Speaker Change: You're saying, we'd prefer not to contract.

Speaker Change: Fair enough and then as a follow up.

Timothy Donald Cook: And then, as a follow-up, you folks have implemented a fair bit of changes to the apps in Europe post the DMA implementation there. Can you just touch on what are some of the key updates? And then Luca, does NetApp at all, do you see it having any significant impact financially on your services or the broader Apple P&L statement? Thank you. Yeah, you know, the, let me try to answer a little bit of both. And then, look, we can add some comments to it. We announced a number of changes last week in Europe that would be in effect beginning in March, so the last month of the first calendar quarter of the second fiscal quarter.

Speaker Change: <unk> implemented a fair bit of changes around the App store in Europe post the DMA the implementation there.

Speaker Change: Can you just touch on what are some of the key updates and then look at does a net up at all do you see it having any significant impact financially to your services or the broader.

Speaker Change: Apple P&L statement. Thank you.

Speaker Change: Yes.

Speaker Change: Let me try to answer a little bit above and then Luca can add some comments to it.

Speaker Change: We announced a number of changes last week.

Luca Maestri: In Europe that would be in effect beginning in March.

Luca Maestri: And so the last month.

Luca Maestri: The first calendar quarter of the second fiscal quarter.

Timothy Donald Cook: Those are some of the things that we announced include alternate billing opportunities, and alternate app stores or marketplaces, if you will. We're also opening NFC for new capabilities for banking and wallet apps. And so these are some of the things that we announced. If you think about what we've done over the years, we've really majored on privacy, security, and usability. And we've tried our best to get as close to the past in terms of the things that people love about our ecosystem as we can, but we're going to fall short of providing the maximum amount that we could supply because we need to comply with the regulations. And so, in terms of predicting the choices that developers and users will make, it's very difficult to do that with precision.

Luca Maestri: Those are some of the things that we announced include alternate billing.

Luca Maestri: Opportunities alternate app stores, our marketplaces, if you will.

Luca Maestri: We're also opening NFC or new capabilities for banking and wallet apps.

Luca Maestri: And so these are some of the things that we announced.

Luca Maestri: If you if you think about what we've done over the years as we've really majored on privacy security and usability.

Luca Maestri: And we've tried our best to get as close to.

Luca Maestri: So the to the past in terms of the things that are that people love about our ecosystem.

Luca Maestri: As we can but we're going to fall short of.

Luca Maestri: Providing the maximum amount that we could.

Luca Maestri: Supply because we need to comply with the regulation.

Luca Maestri: And so.

Luca Maestri: In terms of.

Luca Maestri: Predicting the choices that developers and users will make it very difficult to do that with precision.

Timothy Donald Cook: And so I will see what happens in March. Yes, and I mean, as Tim said, these are changes that we're going to be implementing in March. A lot will depend on the choices that will be made. Just to keep it in context, the changes apply to the EU market, which represents roughly 7% of our global upsell revenue. Perfect. That's a really good perspective to have.

Luca Maestri: And so we'll.

Luca Maestri: We'll see what happens in in March.

Amit: Yes, Amit.

Amit: As Tim said that these are.

Amit: The changes that we're going to be implementing in March.

Amit: A lot will depend on the choices that will be made.

Amit: Just to keep it in context, the changes apply to the EU market, which represents roughly 7% of our global App store revenue.

Speaker Change: Perfect. That's it really good perspective to help thank you very much.

Luca Maestri: Thank you very much. Thank you, Amit. Operator, can we have the next question, please? Our next question is from Aaron Rakers with Wells Fargo. Please go ahead.

Speaker Change: Thank you Amit operator can we have the next question. Please.

Speaker Change: Our next question is from Aaron Rakers with Wells Fargo. Please go ahead.

Speaker Change: Okay.

Aaron Christopher Rakers: Yeah, thanks. Thanks for taking the question. I have two, as well, as you'd imagine.

Aaron Christopher Rakers: Yeah. Thanks, Thanks for taking the question I have two as well as you'd imagine.

Aaron Christopher Rakers: I guess the first question I want to just ask and maybe unpack a little bit more about the remarkable trends that we're seeing in your product gross margin specifically. So I'm curious as we look forward, I guess in this last quarter, were there any kind of benefits you're seeing from like just the purchase component, you know, obligations that you put in place, let's say a year ago, and that's flowing through? And, you know, how are you thinking about the component pricing environment, you know, as we think about that gross margin into the March quarter and looking forward? Yes, on the product side, and then maybe I'll make a comment in total for the company. On the product side, our gross margins increased sequentially by 280 basis points, so obviously a very significant increase. I would say the two primary components of the increase are a favorable mix.

Aaron Christopher Rakers: I guess the first question I wanted to just ask maybe unpack a little bit more just remarkable trends that we're seeing in your product gross margin specifically.

Aaron Christopher Rakers: I'm curious as we look forward I guess on this last quarter, where there any kind of benefits you're seeing from like just the purchase component.

Aaron Christopher Rakers: Obligations that you've put in place, let's say a year ago and that flowing through and how are you thinking about the component pricing environment as we think about that gross margin.

Aaron Christopher Rakers: Into into the March quarter and looking forward.

Aaron Christopher Rakers: Yes.

Aaron Christopher Rakers: On.

Aaron Christopher Rakers: The product side, and then maybe I'll make a comment in total for the company on the product side.

Our gross margins increased sequentially 280 basis points. So obviously, a very significant increase I would say the two primary components of the increase are.

Aaron Christopher Rakers: A favorable mix of course, iPhone did very well, we did very well with our high end models.

Luca Maestri: Of course, iPhone did very well. We did very well with our high-end models. And leverage, of course, it's the biggest quarter of the year for us. And so we get the leverage effect.

Aaron Christopher Rakers: And leverage of course, it say, it's the biggest quarter of the year for us and so we get the leverage effect, we had a partial offset the negative impact from foreign exchange, but net net obviously very significant improvement and we had very similar.

Luca Maestri: We had a partially offset negative impact from foreign exchange, but net-net, obviously, a very significant improvement, and we had very similar dynamics on the services side, where we increased sequentially by 190 basis points, also in this case due to a more favorable mix, and so the combined effect of the two businesses gave us, you know, 45.9 at the total company level, which is up 70% sequentially. You've heard from my prepared remarks that we are guiding the total company gross margin to 46 to 47%, which is an additional expansion of margins compared to the already very strong results of the December quarter. Okay, and then the second question I was just gonna ask, Tim, you alluded to kind of your excitement around generative AI and some announcements that we should think about maybe later this year.

Aaron Christopher Rakers: Dynamics on the services side, where we increased sequentially 190 basis points.

Aaron Christopher Rakers: Also in this case due to a more favorable mix and so the combined effect of the two businesses gave us the $45 nine at the total company level, which is up 70% sequentially.

Aaron Christopher Rakers: You've heard from my prepared remarks that we are guiding.

Aaron Christopher Rakers: Total company gross margin to 46% to 47% which is.

Aaron Christopher Rakers: An additional expansion of margins.

Aaron Christopher Rakers: Compared to the already very strong resolve itself by the December quarter.

Speaker Change: Okay, and then the second question and answers.

Speaker Change: Tim you alluded to kind of have your excitement around generative AI and some announcements that we should think about maybe later this year.

Luca Maestri: One of the things that stands out to me is that your capital expenditures have actually come down this last year. I'm curious, as you look to lean in more to generative AI, is there something we should consider about the CapEx intensity at Apple to make investments to really, you know, set the table for a generative AI platform as we move forward? You know, given some of the things that we've seen from some other large tech companies. I'll take the question, Aaron. We've always said we would never underinvest in the business.

Speaker Change: One of the things that stands out for me is that your capital expenditures as it has actually come down. This last year I am curious as you look to lean in more to generative AI is there something we should consider about the capex intensity.

Timothy Donald Cook: At Apple to make investments to really set the table for regenerative AI kind of platform as we move forward just given some of the things that we've seen from some other large tech companies I'll take I'll take the question Aaron.

Aaron Christopher Rakers: We've always said, we will never Underinvest in the business. So we we are making all the investments that are necessary.

Luca Maestri: So we are making all the necessary investments that are necessary throughout our product development, software development, and services development. And so, you know, we will continue to invest in every area of the business and at the appropriate level. And we're very excited about what's in store for us for the rest of the year.

Aaron Christopher Rakers: Throughout our product development software development services development.

Speaker Change: And so.

Speaker Change: We will continue to invest in every area of the business end and.

Speaker Change: At the appropriate level.

Speaker Change: And we're very excited about.

Speaker Change: What what's in store for us for the rest of the year.

Aaron Christopher Rakers: Thank you. Thanks, Aaron. Operator, can we have the next question, please? Our next question is from Krish Sankar with TD Cohen. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Thanks, Erin operator can we have the next question. Please.

Speaker Change: Our next question is from Krish Sanka with Cowen. Please go ahead.

Krish Sankar: Hi, thanks for taking my question. The first one for Luca, a clarification on the question: the $5 billion impact in the March quarter, is that for product revenue? Or is that total company revenue? And along the same path, you highlighted the strong gross margins. And I understand last year, some of the commodity costs were deflationary, but it looks like it's going to be inflationary right now.

Krish Sankar: Yeah, Hi, Thanks for taking my question that you had been postponed from Luca clarification on a question the $5 million impact in March quarter is mix of product revenue or is that total company revenue and along the same path you highlighted the strong gross margins and I understand last year some of the commodity cost deflationary, but it looks like it's going to be inflationary right now.

Luca Maestri: And also, you've done some of the MAC conversions, the silicon conversions. So I'm just trying to figure out how much juice there is more to squeeze on the gross margin side. And then I'll follow up for Tim. Yeah, so the first part of the question was around, Oh, the $5 billion. The $5 billion, as I mentioned, a year ago, we had this disruption of supply on iPhone 14 Pro and Pro Max because of the factory shutdown due to the COVID-19 situation. And so essentially, there was pent-up demand as we exited the December quarter; they got fulfilled, and we also did the channel fill associated with it during the March quarter.

Krish Sankar: And also you have done some of the Mac convulsion silicon motion.

Speaker Change: Just trying to figure out how much juice is there more discrete on the gross margin side, and then I'll follow up with Tim Yes. The.

Timothy Donald Cook: So the first part of the question was around.

Luca Maestri: Oh, the 5 billion 5 billion as I mentioned and a year ago, we add this.

Luca Maestri: Disruption of supply on iPhone.

Luca Maestri: 14, pro and pro Max because Oh, the factories shut down due to the COVID-19 situation and so essentially there was pent up demand as we exited the December quarter, they've got full failed and we also did the channel sale associated with it during the March quarter, So the close to $5 billion.

Luca Maestri: So the close to $5 billion that I mentioned is entirely related to iPhone. On the gross margin side, obviously, we are at very high levels of gross margin, and I'll repeat what I said before. We've had good expansion over the last few quarters, and now we are guiding to 46% to 47%. And that takes into account everything that is going on, which is the commodity environment, which is the foreign exchange situation, and obviously the product and services mix. And the outcome of this is the guidance, which is obviously very strong and we're very happy with it. Thanks a lot, Luca. And then a follow up for Tim.

Luca Maestri: As I mentioned is entirely related to iPhone.

Luca Maestri: On the gross margin side.

Luca Maestri: Obviously, we are at very high levels of gross margin.

Luca Maestri: And I'll repeat what I said before.

Luca Maestri: We've had good.

Luca Maestri: Good expansion over the last few quarters and now we are guiding to 46% to 47% and that takes into account everything that is going on which is.

Luca Maestri: The commodity environment, and which is the foreign exchange situation and obviously the product and services mix and the outcome of this is the guidance, which obviously is very strong and.

Speaker Change: And we are very happy with it.

Speaker Change: Thank you Luca and then a follow up what Kim Jimmy I guess what are you.

Timothy Donald Cook: Tim, it is very interesting to hear your comments on enterprise. And historically, Apple has been a consumer-centric company. And now, with, you know, Vision Pro, Max, etc., penetrating more into the enterprise, I'm kind of curious how to think about Apple in the future. Would it still be consumer-centric?

Speaker Change: Interesting to hear your comments on enterprise and historically Apple has been a consumer centric company and now with you know vision CRO Mag that sits up penetrating more into the enterprise I'm kind of curious how to think about apple of the future would it still be consumer centric or do you think it's going to be more enterprise focused also as we get into the future.

Timothy Donald Cook: Or do you think it's going to be more enterprise-focused also as we get into the future? Thank you very much. We really concluded that we can do both, that if you look at what has happened over the last several years, employees are in a position in many companies to choose their own technology that is the best for them. And so it sort of took some of the central command from the traditional company and decentralized decision making. That is a huge advantage for Apple because there are a lot of people out there that want to use a Mac. They're using a Mac at home. They'd like to use one in the office as well.

Speaker Change: Thank you very much.

Speaker Change: Really concluded that.

Speaker Change: We can do both.

Speaker Change: That if you look at what has happened over the last several years is that in.

Speaker Change: Employees are are in a position and many companies to choose their own technology that is the best for them.

Speaker Change: And so it sort of took some of the central command.

Speaker Change: From the from the traditional company and decentralized decision making.

Speaker Change: That is a huge advantage for Apple.

Speaker Change: There's a lot of people out there that want to use a Mac they are using a map at home.

Speaker Change: I would like to use one in the office as well.

Timothy Donald Cook: iPad has also benefited from that. Vision Pro, when you look at the ton of use cases, I mean, we're starting with a million apps and 600 plus that have been designed particularly for Vision Pro. When I look at what is coming out of enterprise, it's some of the most innovative things I've seen come out of enterprise in a long time, and so I think there's a like-like there is for the Mac and iPad. And, of course, the iPhone has been in enterprise since the early days of Apple. I think there's a nice opportunity there for Vision Pro as well. Thanks a lot, Tim. Very interesting to hear. Thank you, Krish.

Speaker Change: IPad has also benefited from that.

Speaker Change: Vision pro.

Speaker Change: When you look at the ton of use cases, I mean, we're starting with a million apps and 600 plus that are.

Speaker Change: It had been designed is particularly for vision pro when I look at what is coming out of enterprise. It's some of the most innovative things I've seen come out of enterprise.

Speaker Change: A long time.

Speaker Change: And so I think there's like life there is.

Speaker Change: For the Mac and iPad and of course iPhone has been in enterprise says.

Speaker Change: Since the early days of iPhone, I think there's a nice opportunity there provision pro as well.

Speaker Change: Great. Thanks, a lot everybody interested here, yes. Thank you.

Speaker Change: Thank you Krish operator can we have the next question. Please.

David Vogt: Operator, can we have the next question, please? Our next question is from David Vogt with UBS. Please go ahead. Great, thanks, guys. And I have two questions as well. So, you know, Tim and Luke, I appreciate the strength of emerging markets like India and, kind of, listed on the call. But can you maybe spend some time on the Americas?

Michael J. Olson: Our next question is from David vote with UBS. Please go ahead.

Michael J. Olson: Great. Thanks, guys and I have two questions as well, so Tim and Luca I appreciate the strength in the emerging markets like India and the other names that you kind of listed on the call, but can you just maybe spend some time on the Americas. So obviously that was relatively flat you touched on China.

David Vogt: Obviously, that was relatively flat; you touched on China. But what are you seeing in that market from the carriers here in the States? And is the sale cycle elongating, or the replacement cycle elongating? And in your view, what has to change to kind of maybe reaccelerate that business in the Americas, particularly in the iPhone business? And then, sort of, I just want to make sure I understand sort of the guide.

What are you seeing in that market from the carriers here in the states and is the sales cycle elongated by the replacement cycle elongated and in your view what has to change to kind of maybe reaccelerate that business uniques out in the Americas, particularly in the iPhone business and then on sort of I just want to be sure I understand sort of the guide to when I think about the pie.

David Vogt: So, when I think about the $5 billion pull forward last year in the March quarter, from a Channelfield perspective, even if I back that out last quarter or I back it up this quarter, you know, the March quarter, this would be sort of the softest quarter since the COVID pandemic. Obviously, I know the Americas, as I just touched on, is a little bit softer in China, which you cleared up earlier. But how do you think about the differences in sort of macro conditions by region?

Michael J. Olson: Dollar pull forward last year in the March quarter from a channel fill perspective.

Michael J. Olson: Even if I back that out last quarter I back it up this quarter. The March quarter. This would be sort of the softest quarter since the Covid pandemic, obviously I know the Americas as I just touched on is a little bit softer in China, which you cleared up earlier.

Michael J. Olson: How do you think about the differences in sort of a macro conditions by region and again.

Speaker Change: Do you have a sense or are we nearing a trough from a macro demand perspective, or how long do you think is particular weakness persist. Thanks, Let me take the first part of your question about Americas.

Timothy Donald Cook: And again, you know, do you have a sense for whether we are nearing a trough from a macro demand perspective? Or how long do you think this particular, you know, weakness will persist? Thanks. Let me take the first part of your question about Americas. If you look at the US, which obviously drives the vast, vast majority of revenue in America, we grew in the December quarter from an iPhone business point of view, and the installed base hit an all-time high. If you look at the replacement cycle, it's very difficult to measure the replacement cycle at any given point.

Speaker Change: If you look at the U S which is.

Speaker Change: Yeah, obviously drives the vast vast majority of the revenue in Americas.

Speaker Change: We grew.

Speaker Change: In the December quarter from an iPhone business point of view.

Speaker Change: And the installed base at an all time high if you look at the replacement cycle is very difficult to measure the replacement cycle at any given point and so what we focus on internally a lot is the active installed base.

Speaker Change: The obviously the sales over usually a cycle.

Timothy Donald Cook: And so what we focus on internally a lot is the active install base and obviously the sales over, usually, a cycle, and we feel better about those things. If you look at who's selling what in the U.S., the iPhone is four out of the top five selling smartphones in the U.S. And, of course, customer satisfaction in the U.S., as we alluded to earlier, is 99%. So we feel very, very good about what our position is in the U.S. And I would add to that, keep in mind, obviously, the extra week that we had a year ago, that obviously makes the comparison more a bit distorted. On the March quarter guide, I would point to you that obviously the COVID years had a lot of, Let's say turmoil in them, you know, a lot of volatility that typically you wouldn't If you look at our sequential progression from December to March this year versus pre- COVID versus a more normal environment, it's actually stronger than those years.

Speaker Change: And we feel better about about those things if you look at the what who's selling what in the U S. The iPhone is four out of the top five selling smartphones in the U S and of course, the customer satisfaction in the U S is as we alluded to earlier.

Speaker Change: 99%, So we felt very very good about.

Speaker Change: What our position is and in the U S.

Speaker Change: And I would add to that keep in mind, obviously, the extra week that we had a year ago that obviously it makes the compare more.

Speaker Change: A bit distorted.

Speaker Change: On the on the March quarter Guide.

Speaker Change: I would point to you that obviously, the COVID-19 years had a lot of that.

Speaker Change: Say turmoil in it you know a.

Speaker Change: A lot of volatility that typically you wouldn't see if you look at our sequential progression from December to March this year versus pre COVID-19 versus like a more normal environment, it's actually stronger than those years.

Speaker Change: Got it thanks guys.

Speaker Change: Thank you David operator can we have the last question. Please.

Speaker Change: Thank you.

One is from Ben Reitzes with Northcoast Research. Please go ahead.

David Vogt: Got it. Thanks, guys. Thank you, David. Operator, can we have the last question, please?

Michael J. Olson: Yeah, Hi, Thanks, I appreciate it.

Ben Wrightsey: Thank you. Our last question is from Ben Wrightsey with Mellius Research. Please go ahead. Yeah, hi, thanks. Appreciate it. Two questions if I can sneak them in. Just wanted to clarify on China. Well, I think last quarter you still thought it was a growth market. Obviously, you know that there's some concerns with the recent.

Michael J. Olson: Two questions if I can sneak them in.

Michael J. Olson: Just wanted to clarify on China.

Ben Reitzes: Tim.

Michael J. Olson: I think last quarter, you still thought it was a growth market.

Michael J. Olson: Obviously, you know that there's some concerns with the.

Michael J. Olson: Recently and given what we saw in the quarter is there is there something that we can kind of point to where you feel that that market can resume growth in the future.

Timothy Donald Cook: And given what we saw in the quarter, is there something that we can, you know, kind of point to where you feel that that market can resume growth in the future? And I'm wondering if you're still upbeat about that prospect, and then I just have a quick follow-up. Ben, we've been in China for 30 years, and I remain very optimistic about China over the long term, and I feel good about hitting a new installed base number, a high water mark, and very good about the growth in upgraders year over year during the quarter.

Michael J. Olson: And Im wondering if youre still upbeat about that prospect.

Michael J. Olson: And then I just have a quick follow up bid we've been in China for 30 years.

Michael J. Olson: And.

Michael J. Olson: I am I remain very optimistic about China over the long term.

Michael J. Olson: And.

Michael J. Olson: And I feel good about hitting a new installed base number.

High watermark and very good about the growth in upgrade orders.

Michael J. Olson: Year over year.

Michael J. Olson: During the quarter.

Speaker Change: Great. Thanks, Tim and just in terms of AI I know youre not going to talk about your plans but.

Timothy Donald Cook: Great, thanks, Tim. And just in terms of AI, I know, I know, you're not going to talk about your plans, but do you believe, do you believe in the edge thesis that AI and processing on smartphones and devices like yours is going to have a huge role in AI and AI apps, and that it's something you guys can take advantage of? Let me just say that I think there's a huge opportunity for Apple with Gen AI and AI, um, and without getting into more details and getting out in front of myself.

Do you believe are you a believer in the edge thesis that AI and processing on smartphones and devices like yours is going to have a huge role.

Speaker Change: In AI and AI apps and that is something you guys can take advantage of.

Speaker Change: Let me just say that I think there's a huge opportunity for Apple with <unk>.

Speaker Change: <unk> and <unk> and AI.

Speaker Change: And without getting into some more details and getting out in front of myself.

Timothy Donald Cook: Thanks, Tim. Yeah, thanks, Ben. Thank you, Ben. A replay of today's call will be available for two weeks on Apple Podcasts, as a webcast on apple.com slash investor, and via telephone. The number for the telephone replay is 866-583-1035. Please enter confirmation code 0106234, followed by the pound sign. These replays will be available by approximately 5 pm 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.

Speaker Change: Thanks, Tim Yeah. Thank.

Timothy Donald Cook: Thanks Beth.

Speaker Change: Alright. Thank you Ben a replay of today's call will be available for two weeks on Apple podcasts as a webcast on Apple Dot com slash investor and via telephone number for the telephone replay at 866583103. Please.

Speaker Change: Please enter confirmation code 0106234, followed by the pound sign.

Replays will be available by approximately five P M Pacific time today.

Speaker Change: Members of the press with additional questions can contact Josh Rosenstock at 40886 to one one for two and financial analysts can contact me to ask me Chunter Mally with additional questions at 4089743123, Thanks again for joining us.

Speaker Change: Once again this does conclude today's conference we do appreciate your participation.

Speaker Change: Mhm.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: The same way.

Speaker Change: From the kitchen.

Suhasini Chandramouli: Thanks again for joining us. Once again, this does conclude today's conference. This night is cold in the kingdom; I can feel you fade away From the kitchen to the bathroom sink, and your steps keep me awake. Don't cut me down, throw me out, leave me here to waste. I once was a man with dignity and grace. Now I'm slipping through the cracks of your cold embrace. Oh, please, please. Did you find a way to let me down slowly? A little sympathy; I hope you can show me. If you wanna go, then I'll be shown. Thanks for watching! If you want to go, then I'll be soon,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Speaker Change: Ken.

Speaker Change: Keith.

Speaker Change: Don.

Speaker Change: Ah ones.

Speaker Change: Great.

Speaker Change: Sure.

Speaker Change: Can you just.

Speaker Change: King.

Speaker Change: Thank you.

Speaker Change: Amit.

Speaker Change: Yes.

Speaker Change: Here with me.

Speaker Change: Let me down.

Thank you.

Sure.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Hi.

Speaker Change: Okay.

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Got it.

Speaker Change: Okay.

Speaker Change: Hi.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

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