Q4 2025 Apple Inc Earnings Call

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Today's call is being recorded.

Speaking first today is Apple CEO, Tim Cook and he'll be followed by CFO, Kevin correct. After that we'll open the call to questions from analysts.

Please note that some of the information you'll hear during our discussion today will consist of forward looking statements, including without limitation those regarding revenue gross margin operating expenses other income and expense taxes capital allocation and future business outlook. These state.

Speaker #2: Good afternoon and welcome to the Apple Q4 Fiscal Year 2025 Earnings Conference Call . My name is Suhasini Chandramouli , Director of Investor Relations .

Suhasini Chandramouli: Good afternoon and welcome to the Apple Q4 Fiscal Year 2025 Earnings Conference call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple CEO Tim Cook, and he'll be followed by CFO Kevan Parekh. After that, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions, tariffs and other measures, and legal and regulatory proceedings.

<unk> involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions tariffs and other measures and legal and regulatory proceedings.

Speaker #2: Today's call is being recorded . Speaking first , today is Apple CEO Tim Cook , and he'll be followed by CFO Kevin . After that , we'll open the call to questions from analysts .

Speaker #2: 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 .

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

Additional information will also be in our report on Form 10-K for the year ended September 27, 2025 to be filed tomorrow and in other reports and filings we make with the SEC.

Speaker #2: These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast , including risks related to the potential impact to the company's business and results of operations from macroeconomic conditions , tariffs and other measures , and legal and regulatory proceedings .

Apple assumes no obligation to update any forward looking statements, which speak only as of the date they are made.

Additionally, today's discussion will refer to certain non-GAAP financial measures you can find a reconciliation of these measures in our fourth quarter earnings release, which is available on our Investor Relations website.

Speaker #2: For more information , please refer to the Risk factors discussed in Apple's most recently filed reports on form 10-q and form 10-K , and form 8-K filed with the SEC today , along with the Associated Press release .

Suhasini Chandramouli: For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K, and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-K for the year ended September 27, 2025, to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made. Additionally, today's discussion will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures in our fourth quarter earnings release, which is available on our Investor Relations website. I'd now like to turn the call over to Tim for introductory remarks.

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

Thank you Austin and good afternoon, everyone and thanks for joining the call.

Speaker #2: Additional information will also be in our Report on Form 10-K for the year ended September 27th , 2025 , to be filed tomorrow and in other reports and filings we make with the SEC .

Today, Apple is proud to report $102 $5 billion in revenue up 8% from a year ago and a September quarter record.

Speaker #2: Apple assumes no obligation to update any forward looking statements which speak only as of the date they are made . Additionally , today's discussion will refer to certain non-GAAP financial measures .

Services achieved an all time revenue record of $28 8 billion growing.

Growing 15% from a year ago.

EPS came in at $1 85, setting a September quarter record.

Speaker #2: You can find a reconciliation of these measures in our fourth quarter earnings release , which is available on our Investor Relations website . I'd now like to turn the call over to Tim for introductory remarks .

We grew in the vast majority of markets, we track and had September quarter revenue records in dozens of markets, including the U S. Canada Latin America, Western Europe, the Middle East, Japan, Korea, and South Asia. We also set a September quarter revenue record in emerging markets and in all.

Speaker #3: Thank you . Suhasini . Good afternoon , everyone , and thanks for joining the call today . Apple is proud to report $102.5 billion in revenue , up 8% from a year ago , and a September quarter record .

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

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These results come at the close of an extraordinary year for Apple in which we achieved an all time revenue record of $416 billion for the fiscal year.

Speaker #3: Services achieved an all time revenue record of $28.8 billion , growing 15% from a year ago . EPs came in at $1.85 , setting a September quarter record .

We set all time revenue records in emerging and developed markets. We set an all time revenue record for iPhone and in services. We achieved all time records across every geographic segment.

Speaker #3: We grew in the vast majority of markets . We track and . Had September quarter revenue records in dozens of markets , including the US , Canada , Latin America , Western Europe , the Middle East , Japan , Korea and South Asia .

These results reflect the tremendous customer enthusiasm for Apple products and services as well as our deep commitment to innovation.

Speaker #3: We also set a September quarter revenue record in emerging markets and an all time revenue record in India . These results come at the close of an extraordinary year for Apple , in which we achieved an all time revenue record of $416 billion for the fiscal year .

We are incredibly excited about the strength, we're seeing across our products and services and we expect the December quarter's revenue to be the best ever for the company and the best ever for iPhone.

We are heading into the holiday season with a truly remarkable lineup that includes the biggest leap ever for iPhone, which has had a tremendous response from our users around the world. Our Apple watch lineup is more capable than ever to giving users ways to take charge of their health like never before through new fee.

Speaker #3: We set all time revenue records in emerging and developed markets . We set an all time revenue record for iPhone and in services .

Tim Cook: We set all-time revenue records in emerging and developed markets. We set an all-time revenue record for iPhone. In services, we achieved all-time records across every geographic segment. These results reflect the tremendous customer enthusiasm for Apple Inc. products and services, as well as our deep commitment to innovation. We are incredibly excited about the strength we're seeing across our products and services, and we expect the December quarter's revenue to be the best ever for the company and the best ever for iPhone. We are heading into the holiday season with a truly remarkable lineup that includes the biggest leap ever for iPhone, which has had a tremendous response from our users around the world. Our Apple Watch lineup is more capable than ever too, giving users ways to take charge of their health like never before through new features like hypertension notifications and sleep score.

Speaker #3: We achieved all time records across every geographic segment . These results reflect the tremendous customer enthusiasm for Apple products and services , as well as our deep commitment to innovation .

Features like hypertension, notifications and sleep score.

And the next level sound quality and active noise cancellation of Airpods Pro three are hitting all the right notes for our users.

Speaker #3: We are incredibly excited about the strength we're seeing across our products and services , and we expect the December quarter revenue to be the best ever for the company and the best ever for iPhone .

In October we also broke new ground in power efficient performance would be Uncompassionate, Billy fast implied chip packwood neural accelerators in each GPU core to supercharge AI workflows.

Speaker #3: We are heading into the holiday season with a truly remarkable lineup that includes the biggest leap ever for iPhone , which has had a tremendous response from our users around the world .

IPad Pro combines game changing features that iPad is 26 with the power of <unk> to create our most capable iPad ever.

Speaker #3: Our Apple Watch lineup is more capable than ever to giving users ways to take charge of their health like never before , through new features like hypertension notifications and Sleep Score .

At the same time, the implied Macbook pro raises the bar for what users can do with a laptop while the new <unk> powered Apple vision pro opens up amazing possibilities on its infinite canvas.

Speaker #3: And the At the heart of it all is Apple Silicon , and we were thrilled to launch new products powered by the A19 Pro chip and M5 .

Speaker #3: next level sound quality and active noise cancellation of AirPods Pro three are hitting all the right notes for our users in October , we also broke new ground in power efficient performance with the incomparably fast M5 chip packed with neural accelerators in each GPU core to supercharge AI workflows .

Tim Cook: The next-level sound quality and active noise cancellation of AirPods Pro 2 are hitting all the right notes for our users. In October, we also broke new ground in power-efficient performance with the uncomparably fast M2 chip, packed with neural accelerators in each GPU core to supercharge AI workflows. iPad Pro combines game-changing features in iPadOS with the power of M2 to create our most capable iPad ever. At the same time, the M2 MacBook Pro raises the bar for what users can do with a laptop, while the new M2-powered Apple Vision Pro opens up amazing possibilities on its infinite canvas. We also launched a beautiful new software design that creates a unified experience across all of our platforms for the very first time. The design is crafted with a new material called liquid glass that brings fluidity, vitality, and flexibility to our products.

We also launched a beautiful new software design that creates a unified experience across all of our platforms for the very first time.

The design is crafted with our new material called liquid glass that brings fluidity vitality and flexibility to our products.

Along with a new design, we delivered powerful new features to enable users to do even more with their devices that includes updates to the phone and messages apps in iOS 'twenty six to help users stay connected continuity enhancements and Mac to deliver an even more seamless experience across devices.

And a powerful new windowing system that fundamentally transforms the user experience on iPad OS 'twenty six.

As we continue to expand our investment in AI, we're bringing intelligence to more of what people already love about our products and services, making every experience even more personal capable and effortless at the heart of it all is Apple silicon and we were thrilled to launch new products powered by the <unk> 19 <unk>.

Tim Cook: Along with the new design, we delivered powerful new features to enable users to do even more with their devices. That includes updates to the phone and messages apps in iOS 26 to help users stay connected, continuity enhancements in Mac to deliver an even more seamless experience across devices, and a powerful new windowing system that fundamentally transforms the user experience in iPadOS 26. As we continue to expand our investment in AI, we're bringing intelligence to more of what people already love about our products and services, making every experience even more personal, capable, and effortless. At the heart of it all is Apple Silicon, and we were thrilled to launch new products powered by the A19 Pro chip and M5. These incredibly advanced chips make Apple products the very best place to experience the power of AI.

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These incredibly advanced chips make apple products, the very best place to experience the power of AI.

With Apple intelligence, we've introduced dozens of new features that are powerful intuitive private and deeply integrated into the things people do every day.

Features like live translation, which help users communicate across languages in real time, and visual intelligence, which opens new ways to learn about and explore the world. We also introduced workout Buddy a new experience that uses AI to provide personalized motivational insights based on our users.

Work out data and fitness history.

Speaker #3: These incredibly advanced chips make Apple products the very best place to experience the power of AI . With Apple Intelligence , we've introduced dozens of new features that are powerful , intuitive , private , and deeply integrated into the things people do every day .

And these joined so many others from cleanup and photos of new image creation tools to powerful writing tools. We're also seeing developers take advantage of our own device foundation models to create entirely new experiences for users around the world.

Tim Cook: With Apple Intelligence, we've introduced dozens of new features that are powerful, intuitive, private, and deeply integrated into the things people do every day. Features like live translation, which help users communicate across languages in real time, and visual intelligence, which opens new ways to learn about and explore the world. We also introduced Workout Buddy, a new experience that uses AI to provide personalized motivational insights based on a user's workout data and fitness history. These join so many others, from cleanup in photos and new image creation tools to powerful writing tools. We're also seeing developers take advantage of our on-device foundation models to create entirely new experiences for users around the world. We're also excited for a more personalized Siri. We're making good progress on it, and as we've shared, we expect to release it next year.

Speaker #3: Features like live translation , which help users communicate across languages in real time and visual intelligence , which opens new ways to learn about and explore the world .

We're also excited for a more personalized theory, we're making good progress on it and as we've shared we expect to release it next year.

Now, let's take a closer look at the September quarter results across our lineup starting with iPhone.

Speaker #3: We also introduced workout Buddy , a new experience that uses AI to provide personalized motivational insights based on a user's workout data and fitness history .

IPhone set a revenue record for the September quarter at 49 billion.

Up 6% from a year ago with growth in the vast majority of markets. We track despite supply constraints, we faced on several iPhone <unk> and iPhone 17 models given strong demand.

Speaker #3: And these joined so many others from cleanup and photos and new image creation tools to powerful writing tools . We're also seeing developers take advantage of our on device foundation models to create entirely new experiences for users around the world .

Redesigned from the inside out empowered by the outstanding a 19 <unk>. The iPhone 17 pro is by far the most powerful iPhone, we've ever made setting a whole new standard for the smartphone industry.

Speaker #3: We're also excited for our more personalized Siri . We're making good progress on it , and as we've shared , we expect to release it next year .

Speaker #3: Now let's take a closer look at the September quarter results across our lineup , starting with iPhone . iPhone set a revenue record for the September quarter at $49 billion , up 6% from a year ago , with growth in the vast majority of markets .

Tim Cook: Now let's take a closer look at the September quarter results across our lineup, starting with iPhone. iPhone set a revenue record for the September quarter at $49 billion, up 6% from a year ago, with growth in the vast majority of markets we track, despite supply constraints we faced on several iPhone 16 and iPhone 17 models given strong demand. Redesigned from the inside out and powered by the outstanding A19 Pro chip, the iPhone 17 Pro is by far the most powerful iPhone we've ever made, setting a whole new standard for the smartphone industry. The iPhone 17 Pro also offers our best camera system ever, with an all-new 8X telephoto camera and looks stunning with bold new finishes like Cosmic Orange.

The iPhone 17 Pro also offers our best camera system ever with an all new AVX telephoto camera and look stunning with bold new finishes like cosmic orange.

IPhone Air introduces an incredibly breakthrough design and with a bigger and brighter display with promotion. The iPhone 17 is a fantastic upgrades packed with features users will law.

Speaker #3: We track despite supply constraints we faced on several iPhone six and iPhone 17 models . Given strong demand . Redesigned from the inside out and powered by the outstanding A19 Pro chip , the iPhone 17 Pro is by far the most powerful iPhone we've ever made , setting a whole new standard for the smartphone industry .

And Mac, we had a strong September quarter with revenue of $8 7 billion.

Up 13% year over year, driven by the strength of the Macbook Air the Macbook Air enables users to get things done easily on the world's most popular laptop.

Speaker #3: The iPhone 17 Pro also offers our best camera system ever , with an all new telephoto camera and looks stunning with bold new finishes like Cosmic Orange , the iPhone Air introduces an incredibly breakthrough design , and with a bigger and brighter display with promotion , the iPhone 17 is a fantastic upgrade packed with features users will love in Mac .

Like many users are loving how much performance is packed into our smallest Mac ever made while Max studio customers are pushing the envelope of what's possible with our most powerful Mac ever.

Tim Cook: The iPhone Air introduces an incredibly breakthrough design, and with a bigger and brighter display with ProMotion, the iPhone 17 is a fantastic upgrade packed with features users will love. In Mac, we had a strong September quarter with revenue of $8.7 billion, up 13% year over year, driven by the strength of the MacBook Air. The MacBook Air enables users to get things done easily on the world's most popular laptop. Mac Mini users are loving how much performance is packed into our smallest Mac ever made, while Mac Studio customers are pushing the envelope of what's possible with our most powerful Mac ever. The latest 14-inch MacBook Pro unlocks incredible speed and next-level performance with the all-new M5 chip, which delivers three and a half times faster AI performance than M4. Turning to iPad, revenue was $7 billion for the September quarter.

And the latest 14 inch Macbook pro unlocks incredible speed and next level performance with the all new <unk> chip, which delivers three five times faster AI performance the NIM for.

Speaker #3: We had a strong September quarter with revenue of $8.7 billion , up 13% year over year , driven by the strength of the MacBook air .

Turning to iPad revenue was $7 billion for the September quarter.

Last month, we released one of the most attention grabbing software updates we've had in years with iPad OS 26, and we recently gave iPad users even more to love with the launch of the incredible in five iPad Pro which offers an incredible boost in AI performance.

Speaker #3: The MacBook air enables users to get things done easily on the world's most popular laptop , Mac mini users are loving how much performance is packed into our smallest Mac ever made .

Speaker #3: While Mac Studio customers are pushing the envelope of what's possible with our most powerful Mac ever and the latest 14 inch MacBook Pro unlocks incredible speed and next level performance with the all new M5 chip , which delivers three and a half times faster AI performance than M4 .

With an unmatched combination of power and versatility the new iPad Pro makes every interaction delightful with it's been light and portable design.

In Wearables home and accessories revenue was $9 billion.

Speaker #3: Turning to iPad , revenue was $7 billion for the September quarter last month , we released one of the most attention grabbing software updates we've had in years with iPadOS 26 , and we recently gave iPad users even more to love with the launch of the incredible M5 iPad Pro , which offers an incredible boost in AI performance with an unmatched combination of power and versatility .

As I mentioned earlier, we were excited to unlock new possibilities for users with the launch of our newest Apple watch lineup, making the world's most popular watch even better.

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

That includes Apple watch ultra three with a largest display ever in an Apple watch improve battery life and emergency Sos via satellite.

Apple Watch series 11 brings our users the most comprehensive set of health features yet and Apple watch SEC three delivers advanced capabilities at an incredible value.

Speaker #3: The new iPad Pro makes every interaction delightful with its thin , light , and portable design in wearables , home , and accessories .

AI and advanced machine learning are at the core of powerful health features like heart rate monitoring fall detection crash detection and more with our latest Apple watch lineup. We were proud to introduce hypertension notifications developed using large scale machine learning models.

Speaker #3: Revenue was $9 billion . As I mentioned earlier , we were excited to unlock new possibilities for users with the launch of our newest Apple Watch lineup , making the world's most popular watch .

Speaker #3: Even better . That includes Apple Watch Ultra three , with the largest display ever in an Apple Watch , improved battery life and emergency SOS via satellite .

Hypertension is one of the leading risk factors for heart attack and stroke affecting more than $1 billion adults worldwide and we expect to notify more than 1 million users of this life threatening condition.

Speaker #3: The Apple Watch Series 11 brings our users the most comprehensive set of health features yet, and the Apple Watch SE 3 delivers advanced capabilities at an incredible value.

Tim Cook: Apple Watch Series 11 brings our users the most comprehensive set of health features yet, and Apple Watch SE 3 delivers advanced capabilities at an incredible value. AI and advanced machine learning are at the core of powerful health features like heart rate monitoring, fall detection, crash detection, and more. With our latest Apple Watch lineup, we were proud to introduce hypertension notifications developed using large-scale machine learning models. Hypertension is one of the leading risk factors for heart attack and stroke, affecting more than 1 billion adults worldwide, and we expect to notify more than a million users of this life-threatening condition. We're also excited about Sleep Score, a simple, intuitive way to help users better understand their sleep quality and discover ways to improve it. That's something I'm sure we can all benefit from. Meanwhile, AirPods Pro 2 have been a huge hit.

We're also excited about sleep score a simple intuitive way to help users better understand their sleep quality and discover ways to improve it.

Speaker #3: AI and advanced machine learning are at the core of powerful health features like heart rate monitoring , fall detection , crash detection , and more .

That's something I am sure we can all benefit from.

Meanwhile, Airpods pro three have been a huge hit you have to hear them to really understand just how remarkable they are users and reviewers alike are pricing their incredible sound quality and improved fit.

Speaker #3: With our latest Apple Watch lineup , we were proud to introduce hypertension notifications developed using large scale machine learning models . Hypertension is one of the leading risk factors for heart attack and stroke , affecting more than 1 billion adults worldwide , and we expect to notify more than a million users of this life threatening condition .

A feature of the world's best in ear active noise cancellation, removing up to two times as much noise as the previous generation.

And with live translation powered by Apple Intelligence, Airpods deliver an incredibly new and exciting experience for users around the world.

Speaker #3: We're also excited about Sleep Score , a simple , intuitive way to help users better understand their sleep quality and discover ways to improve it .

Turning to services as I mentioned earlier revenue was $28 8 billion for the September quarter, 15% higher year over year and an all time record we saw double digit growth in both developed and emerging markets and set new all time records across advertising App store.

Speaker #3: That's something I'm sure we can all benefit from . Meanwhile , AirPods Pro three have been a huge hit . You have to hear them to really understand just how remarkable they are .

Tim Cook: You have to hear them to really understand just how remarkable they are. Users and reviewers alike are praising their incredible sound quality and improved fit. They feature the world's best in-ear active noise cancellation, removing up to two times as much noise as the previous generation. With live translation powered by Apple Intelligence, AirPods deliver an incredibly new and exciting experience for users around the world. Turning to services, as I mentioned earlier, revenue was $28.8 billion for the September quarter, 15% higher year over year and an all-time record. We saw double-digit growth in both developed and emerging markets and set new all-time records across advertising, App Store, cloud services, music, payment services, and video. Apple TV+ celebrated a big night at this year's Emmy Awards with 22 wins. The studio led the night with 13 wins, the most of any comedy series in Emmy history.

Speaker #3: Users and reviewers alike are praising their incredible sound quality and improved fit . They feature the world's best in-ear active noise cancellation , removing up to two times as much noise as the previous generation .

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Apple TV celebrated a big night at this year's Emmy Awards with 22 wins the.

Speaker #3: And with live translation powered by Apple Intelligence , AirPods deliver an incredibly new and exciting experience for users around the world . Turning to services .

The studio led the night with 13 wins, the most of any comedy series in <unk> history.

Severance topped all dramas with eight wins, adding to the accolades for this landmark series.

Speaker #3: As I mentioned earlier , revenue was $28.8 billion for the September quarter , 15% higher year over year , and an all time record .

To date, Apple TV productions have now earned over 600 wins and 2800 nominations in total driven by powerful original storytelling.

Speaker #3: We saw double digit growth in both developed and emerging markets , and set new all time records across advertising , App store , cloud services , music , payment services and video .

And we're excited for audiences to discover new productions like poor of us and to catch returning favorites like slow horses in the morning show.

Speaker #3: Apple TV celebrated a big night at this year's Emmy Awards with 22 wins. The studio led the night with 13 wins, the most of any comedy series in Emmy history.

And soon Apple TV will be the destination for F. One fans across the U S. On track day, Thanks to our new partnership with Formula One.

F. One is one of the most exciting and fastest growing sports in the world and starting next year Apple TV will build a place for subscribers to follow every twist and turn of the new season.

Speaker #3: Severance topped all dramas with eight wins , adding to the accolades for this landmark series to date . Apple TV productions have now earned over 600 wins and 2800 nominations in total , driven by powerful original storytelling , and we're excited for audiences to discover new productions like Pluribus and to catch returning favorites like Slow Horses and The Morning Show .

Tim Cook: Severance topped all dramas with eight wins, adding to the accolades for this landmark series. To date, Apple TV+ productions have now earned over 600 wins and 2,800 nominations in total, driven by powerful, original storytelling. We're excited for audiences to discover new productions like Pluribus and to catch returning favorites like Slow Horses and The Morning Show. Soon, Apple TV+ will be the destination for Formula One fans across the U.S. on track day, thanks to a new partnership with Formula One. Formula One is one of the most exciting and fastest-growing sports in the world, and starting next year, Apple TV+ will be the place for subscribers to follow every twist and turn of the new season. In addition, F1: The Movie, one of the year's biggest blockbusters, will be coming to Apple TV+ on December 12th.

And in addition F. One the movie one of the year's biggest blockbusters will be coming to Apple TV on December 12.

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

Speaker #3: And soon , Apple TV will be the destination for F1 fans across the US . On track day . Thanks to a new partnership with formula One , F1 is one of the most exciting and fastest growing sports in the world , and starting next year , Apple TV will be the place for subscribers to follow every twist and turn of the new season .

Turning to retail we're heading into our busiest time of year with our best ever lineup.

In the last few months, we've opened new stores in emerging markets like India, and the UAE and new locations in the U S and China.

Speaker #3: And in addition , F1 , the Movie , one of the year's biggest blockbusters , will be coming to Apple TV on December 12th during the September quarter , we also marked the ten year anniversary of Apple News .

I was also in Tokyo last month for the opening of the redesigned and re imagined Apple Ginza store and the energy among the crowd was truly remarkable.

Tim Cook: During the September quarter, we also marked the 10-year anniversary of Apple News. Apple News provides access to front-page news from all around the world, putting hundreds of publications right at users' fingertips. Turning to retail, we're heading into our busiest time of year with our best-ever lineup. In the last few months, we've opened new stores in emerging markets like India and the UAE and new locations in the U.S. and China. I was also in Tokyo last month for the opening of the redesigned and reimagined Apple Ginza store, and the energy among the crowd was truly remarkable. When it originally opened, it was our first store outside the U.S., and so it was especially meaningful to come back to welcome customers to the beautiful new space.

We entered originally opened it was our first store outside the United States and so it was especially meaningful to come back to welcome customers to the beautiful new space.

Speaker #3: Apple news provides access to front page news from all around the world , putting hundreds of publications right at user's fingertips . Turning to retail , we're heading into our busiest time of year with our best ever lineup in the last few months , we've opened new stores in emerging markets like India and the UAE , and new locations in the US and China .

Everywhere, we operate and in everything we do we strive to give the best to our users while living by our values, whether that's building new accessibility features into our most recent software releases or advancing our environmental work by using even more recycled materials in our latest lineup or providing free edge.

Speaker #3: I was also in Tokyo last month for the opening of the redesigned and reimagined Apple Ginza store , and the energy among the crowd was truly remarkable when it originally opened .

Locational programming to train and support American businesses with our new Apple manufacturing Academy in Detroit.

And we're continuing to invest in innovation and user experiences that will transform our future.

Speaker #3: It was our first store outside the United States , and so it was especially meaningful to come back to welcome customers to the beautiful new space everywhere we operate and in everything we do , we strive to give the best to our users while living by our values , whether that's building new accessibility features into our most recent software releases or advancing our environmental work by using even more recycled materials in our latest lineup or providing free educational programming to train and support American businesses with our new Apple Manufacturing Academy in Detroit .

A great example is the work we're doing in the U S, where we're committed to invest $600 billion over the next four years with a focus on innovation and strategic areas like advanced manufacturing Silicon engineering and artificial intelligence.

Tim Cook: Everywhere we operate and in everything we do, we strive to give the best to our users while living by our values, whether that's building new accessibility features into our most recent software releases, advancing our environmental work by using even more recycled materials in our latest lineup, or providing free educational programming to train and support American businesses with our new Apple Manufacturing Academy in Detroit. We're continuing to invest in innovation and user experiences that will transform our future. A great example is the work we're doing in the U.S., where we're committed to invest $600 billion over the next four years with a focus on innovation in strategic areas like advanced manufacturing, silicon engineering, and artificial intelligence. These commitments build on our longstanding investments in America while supporting more than 450,000 jobs with thousands of suppliers across all 50 states.

These commitments build on our long standing investments in America, while supporting more than 450000 jobs with thousands of suppliers across all 50 states.

We built a new factory in Houston for Advanced AI Service for example, which just started shipping its first products off the line and we're leading the creation of end to end silicon supply chain across the country.

Speaker #3: And we're continuing to invest in innovation and user experiences that will transform our future . A great example is the work we're doing in the US , where we're committed to invest $600 billion over the next four years with a focus on innovation and strategic areas like advanced manufacturing , silicon engineering and artificial intelligence .

In recent months I've connected with developers innovators artists entrepreneurs and so many others around the world people passionate about innovation and all of those things they can do with Apple products.

Each one is another reminder of why we do what we do.

Speaker #3: These commitments build on our long investments in America . While supporting more than 450,000 jobs with thousands of suppliers across all 50 states .

We are driven to empower people to do more of the things that matter most to them and enrich their lives along the way.

As we head into the holiday season, with our most powerful lineup ever I couldnt be more excited for what's to come.

Speaker #3: We built a new factory in Houston for advanced AI service for example , which just started shipping its first products off the line .

Tim Cook: We built a new factory in Houston for advanced AI service, for example, which just started shipping its first products off the line, and we're leading the creation of end-to-end silicon supply chain across the country. In recent months, I've connected with developers, innovators, artists, entrepreneurs, and so many others around the world, people passionate about innovation and all the things they can do with Apple products. Each one is another reminder of why we do what we do. We're driven to empower people to do more of the things that matter most to them and enrich their lives along the way. As we head into the holiday season with our most powerful lineup ever, I couldn't be more excited for what's to come. With that, I'll turn it over to Kevan. Thanks, Tim, and good afternoon, everyone.

With that I'll turn it over to Kevin.

Speaker #3: And we're leading the creation of end to end silicon supply chain across the country . In recent months , I've connected with developers , innovators , artists , entrepreneurs , and so many others around the world .

Thanks, Kim and good afternoon, everyone. Our revenue of $102 5 billion was up 8% year over year and as a new September quarter record, we set some temporal quarter records in the Americas, Europe, Japan, and the rest of Asia Pacific and grew and the vast majority of markets we track.

Speaker #3: People passionate about innovation and all the things they can do with Apple products . Each one is another reminder of why we do what we do .

Products revenue was $73 7 billion.

Speaker #3: We're driven to empower people to do more . The things that matter most to them and enrich their lives along the way . As we head into the holiday season with our most powerful lineup ever , I couldn't be more excited for what's to come with that , I'll turn it over to Kevin .

Up 5% year over year, driven by growth across iPhone, and Mac and reached a September quarter record. Thanks.

Thanks to our exceptional customer satisfaction and strong levels of loyalty our install base of active devices has reached another all time high across all product categories and geographic segments.

Speaker #3: Thanks , Tim , and .

Speaker #4: Good afternoon , everyone . Our revenue of $102.5 billion was up 8% year over year , and is a new September quarter record .

Services revenue was $28 8 billion up 15% year over year, and an all time record.

Tim Cook: Our revenue of $102.5 billion was up 8% year over year and is a new September quarter record. We set September quarter records in the Americas, Europe, Japan, and the rest of Asia-Pacific and grew in the vast majority of markets we track. Products revenue was $73.7 billion, up 5% year over year, driven by growth across iPhone and Mac, and reached a September quarter record. Thanks to our exceptional customer satisfaction and strong levels of loyalty, our install base of active devices has reached another all-time high across all product categories and geographic segments. Services revenue was $28.8 billion, up 15% year-over-year, and an all-time record. The performance was broad-based, with double-digit growth in the vast majority of the markets we track and double-digit growth across most of our services categories.

The performance was broad based with double digit growth in the vast majority of the markets, we track and double digit growth across most of our services categories.

Speaker #4: We set some Temple Quarter records in the Americas , Europe , Japan and the rest of Asia Pacific and grew in the vast majority of markets .

Speaker #4: We track products , revenue was $73.7 billion , up 5% year over year , driven by growth across iPhone and Mac , and reached a September quarter record thanks to our exceptional customer satisfaction and strong levels of loyalty .

Company gross margin was 47, 2% above the high end of our guidance range and up 70 basis points sequentially.

Driven by favorable mix.

This includes approximately $1 1 billion of tariff related costs, which is in line with what we had estimated on our last call.

Speaker #4: Our install base of active devices has reached another all time high across all product categories and geographic segments . Services revenue was $28.8 billion , up 15% year over year , and an all time record .

Products gross margin was 36, 2% up 170 basis points sequentially driven by favorable mix.

Services gross margin was 75, 3% down 30 basis points sequentially.

Speaker #4: The performance was broad based , with double digit growth in the vast majority of the markets . We track , and double digit growth across most of our services categories .

Operating expenses landed at $15 9 billion.

Up 11% year over year, driven by increased investment in R&D.

Speaker #4: Company gross margin was 47.2% above the high end of our guidance range , and up 70 basis points sequentially , driven by favorable mix .

Tim Cook: Company gross margin was 47.2%, above the high end of our guidance range and up 70 basis points sequentially, driven by favorable mix. This includes approximately $1.1 billion of tariff-related costs, which is in line with what we had estimated on our last call. Products gross margin was 36.2%, up 170 basis points sequentially, driven by favorable mix. Services gross margin was 75.3%, down 30 basis points sequentially. Operating expenses landed at $15.9 billion, up 11% year-over-year, driven by increased investment in R&D. These strong levels of business performance led to September quarter records for both net income and diluted earnings per share. Net income was $27.5 billion. Diluted earnings per share was $1.85, up 13% year-over-year on an adjusted basis, excluding the one-time charge we recognized during the fourth quarter of 2024. Operating cash flow was also a September quarter record at $29.7 billion.

These strong levels of business performance led to September quarter Records for both net income and diluted earnings per share.

Speaker #4: This includes approximately $1.1 billion of tariff-related costs, which is in line with what we had estimated on our last call. Products.

Net income was $27 5 billion.

And diluted earnings per share was $1 85 up 13% year over year on an adjusted basis, excluding the onetime charge, we recognized during the fourth quarter of 2024.

Speaker #4: Gross margin was 36.2% , up 170 basis points sequentially , driven by favorable mix services . Gross margin was 75.3% , down 30 basis points sequentially .

Operating cash flow was also a September quarter record at $29 7 billion.

Now I am going to provide some more details for each of our revenue categories.

Speaker #4: Operating expenses landed at $15.9 billion , up 11% year over year , driven by increased investment in R&D . These strong levels of business performance led to September quarter records for both net income and diluted earnings per share .

IPhone revenue was $49 billion.

Up 6% year over year, driven by the iPhone <unk> family.

IPhone grew and the vast majority of the markets. We track with September quarter Records in many emerging markets, including Latin America, the Middle East and South Asia, and an all time record in India.

Speaker #4: Net income was $27.5 billion and diluted earnings per share was $1 . $0.85 , up 13% year over year . On an adjusted basis , excluding the one time charge we recognized during the fourth quarter of 2020 .

The iPhone active installed base grew to an all time high and we set a September quarter record for upgrades.

Speaker #4: For operating cash flow was also a September quarter record at $29.7 billion . Now , I'm going to provide some more details for each of our revenue categories .

According to the recent survey from World panel iPhone with a top selling model in the U S urban China, the UK, France, Australia and Japan.

Tim Cook: Now, I'm going to provide some more details for each of our revenue categories. iPhone revenue was $49 billion, up 6% year-over-year, driven by the iPhone 16 family. iPhone grew in the vast majority of the markets we track, with September quarter records in many emerging markets, including Latin America, the Middle East, and South Asia, and an all-time record in India. The iPhone active install base grew to an all-time high, and we set a September quarter record for upgraders. According to the recent survey from World Panel, iPhone was a top-selling model in the U.S., urban China, the UK, France, Australia, and Japan. We continue to see very high levels of customer satisfaction in the U.S. at 98%, as measured by 451 Research. Mac revenue was $8.7 billion, up 13% year-over-year, driven by MacBook Air. We grew in every geographic segment with strong double-digit growth in emerging markets.

We continue to see very high levels of customer satisfaction in the U S at 98% as measured by 451 research.

Speaker #4: iPhone revenue was $49 billion , up 6% year over year , driven by the iPhone 16 family . iPhone grew in the vast majority of the markets we track , with September quarter records in many emerging markets , including Latin America , the Middle East and South Asia , and an all time record in India .

Mac revenue was $8 7 billion.

Up 13% year over year, driven by Macbook Air We grew in every geographic segment with strong double digit growth in emerging markets.

<unk> installed base reached another all time high with nearly half of customers, who purchased a Mac being new to the product.

Speaker #4: The iPhone active installed base grew to an all time high , and we set a September quarter record for Upgraders , according to the recent survey from World iPhone was a top selling model in the US urban China .

And the latest customer satisfaction for Mac in the U S was reported at 96%.

IPad revenue was $7 billion flat year over year keep in mind, we faced a difficult compare against a full quarter impact of the iPad Air and iPad Pro launch from last year offset by the better than expected performance on the iPad.

Speaker #4: The UK , France , Australia and Japan . We continue to see very high levels of customer satisfaction in the US at 98% , as measured by 451 research .

Speaker #4: Mac revenue was $8.7 billion , up 13% year over year , driven by MacBook air . We grew in every geographic segment with strong double digit growth in emerging markets .

The installed base reached an all time high with a September quarter record for upgrader and over half of the customers who purchased an iPad during the quarter were new to the product.

Based on the latest reports from 45, one research customer satisfaction was 98% in the U S.

Speaker #4: The Mac installed base reached another all time high , with nearly half of customers who purchased a mac being new to the product and the latest customer satisfaction for Mac in the US was reported at 96% .

Tim Cook: The Mac install base reached another all-time high, with nearly half of customers who purchased a Mac being new to the product. The latest customer satisfaction for Mac in the U.S. was reported at 96%. iPad revenue was $7 billion, flat year over year. Keep in mind we faced a difficult compare against the full quarter impact of the iPad Air and iPad Pro launch from last year, offset by the better-than-expected performance on the iPad. The install base reached an all-time high, with a September quarter record for upgraders, and over half of the customers who purchased an iPad during the quarter were new to the product. Based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S. Wearables, home, and accessories revenue was $9 billion, flat year over year.

Wearables home and accessories revenue was $9 billion flat year over year. This was driven by growth on watch and Airpods offset by accessories, which was impacted by strong performance in the year ago quarter, driven by the iPad launches.

Speaker #4: iPad revenue was $7 billion , flat year over year . Keep in mind , we faced a difficult compare against the full quarter impact of the iPad air and iPad Pro launch from last year , offset by the better than expected performance on the iPad .

Both the Apple watch and Airpods installed basis reached new all time highs over half of the customers purchasing an Apple watch during the quarter were new to the product and we also set a September record for upgrader than Apple watch.

Speaker #4: The installed base reached an all time high with a September quarter record for Upgraders and over half of the customers who purchased an iPad during the quarter were new to the product .

And in the U S customer satisfaction was recently measured at 95%.

Speaker #4: Based on the latest reports from 451 Research, customer satisfaction was 98% in the U.S. Wearables, home, and accessories revenue was $9 billion.

Our services revenue reached an all time high of $28 $8 billion.

Up 15% year over year, we achieved all time revenue records in the Americas, Europe, Japan, and rest of Asia Pacific as well as of September quarter record in greater China.

Speaker #4: Flat year over year . This was driven by growth on watch and AirPods , offset by accessories , which was impacted by strong performance in the year ago quarter , driven by the iPad launches .

Tim Cook: This was driven by growth on Watch and AirPods, offset by accessories, which was impacted by strong performance in the year-ago quarter, driven by the iPad launches. Both the Apple Watch and AirPods install bases reached new all-time highs. Over half of the customers purchasing an Apple Watch during the quarter were new to the product, and we also set a September record for upgraders on Apple Watch. In the U.S., customer satisfaction was recently measured at 95%. Our services revenue reached an all-time high of $28.8 billion, up 15% year over year. We achieved all-time revenue records in the Americas, Europe, Japan, and rest of Asia-Pacific, as well as a September quarter record in Greater China.

The majority of categories saw a sequential acceleration and as Tim mentioned, we set many all time revenue records, including payment services, where we reached an all time revenue record and solid double digit growth year over year on Apple pay active users.

Speaker #4: Both the Apple Watch and AirPods install bases reached new all time highs . Over half of the customers purchasing an Apple Watch during the quarter were new to the product , and we also set a September record for Upgraders on Apple Watch and in the US , customers was recently measured at 95% .

This strong momentum in the September quarter drove our total fiscal year services revenue to surpass 100 billion.

Speaker #4: Our services revenue reached an all time high of $28.8 billion , up 15% year over year . We achieved all time revenue records in the Americas , Europe , Japan and rest of Asia Pacific , as well as the September quarter record in Greater China .

Up 14% year over year, and our best ever.

The growth of our installed base of active devices continues to offer us great opportunities for the future customer engagement across our services offerings also continued to grow both transacting and paid accounts reached new all time highs and we continue to improve the quality and expand the reach of our services offerings from additional markets for Apple pay.

Speaker #4: The majority of categories saw a sequential acceleration , and as Tim mentioned , we set many all time revenue records , including payment services , where we reached an all time revenue record and saw double digit growth year over year on Apple Pay , active users .

Tim Cook: The majority of categories saw a sequential acceleration, and as Tim mentioned, we set many all-time revenue records, including payment services, where we reached an all-time revenue record and saw double-digit growth year over year on Apple Pay active users. This strong momentum in the September quarter drove our total fiscal year services revenue to surpass $100 billion, up 14% year over year and our best ever. The growth of our install base of active devices continues to offer us great opportunities for the future. Customer engagement across our services offerings also continued to grow. Both transacting and paid accounts reached new all-time highs, and we continue to improve the quality and expand the reach of our services offerings. From additional markets for Apple Pay, now available in nearly 90 countries, to AppleCare One, a great new way to cover multiple Apple products in a single plan.

Now available in nearly 90 countries to applecare, one a great new way to cover multiple Apple products in a single plan.

Speaker #4: This strong momentum in the September quarter drove our total fiscal year . Services revenue to surpass $100 billion , up 14% year over year .

Turning to enterprise, we are seeing an adoption of apple products accelerate across industries to improve productivity and drive innovation.

The BMW group has been deploying tens of thousands of iphones, including the factory employees to further strengthen our digital capabilities and advanced innovation at the company.

Speaker #4: And our best ever . The growth of our installed base of active devices continues to offer us great opportunities for the future . Customer engagement across our services offerings also continue to grow , both transacting and paid accounts reached new all time highs , and we continue to improve the quality and expand the reach of our services offerings from additional markets for Apple Pay , now available in nearly 90 countries to AppleCare one , a great new way to cover multiple Apple products in a single plan .

Capital one has expanded its Matt choice program by adding thousands more macbook airs across its workforce.

In the Czech Republic, its largest bank Jessica sports Downer continues to invest in the Apple ecosystem with over 5000 iphones. In addition to its existing thousands of ipads and Macs.

And Purdue University has launched a spatial computing hub built around vision pro designed to help prepare students to lead the next wave of innovation in critical industries like semiconductor and pharmaceutical manufacturing.

Speaker #4: Turning to enterprise , we are seeing an adoption of Apple products accelerate across industries to improve productivity and drive innovation . The BMW Group has been deploying tens of thousands of iPhones , including the factory employees , to further strengthen its digital capabilities and advance innovation at the company .

Tim Cook: Turning to enterprise, we are seeing an adoption of Apple products accelerate across industries to improve productivity and drive innovation. The BMW Group has been deploying tens of thousands of iPhones, including the factory employees, to further strengthen its digital capabilities and advance innovation at the company. Capital One has expanded its Mac Choice program by adding thousands more MacBook Airs across its workforce. In the Czech Republic, its largest bank, Česká Spořitelna, continues to invest in the Apple ecosystem with over 5,000 iPhones in addition to its existing thousands of iPads and Macs. Purdue University has launched a spatial computing hub built around Vision Pro, designed to help prepare students to lead the next wave of innovation in critical industries like semiconductor and pharmaceutical manufacturing. Let's turn to our cash position and capital return program. We ended the quarter with $132 billion in cash and marketable securities.

Let's turn to our cash position and capital return program.

We ended the quarter with $132 billion in cash and marketable securities.

Speaker #4: Capital one has expanded its Mac Choice program by adding thousands more MacBook airs across its workforce in the Czech Republic . Its largest bank , Cesca Sporitelna , continues to invest in the Apple ecosystem , with over 5000 iPhones .

We had $1 3 billion of debt maturities and decreased commercial paper by $1 9 billion.

Resulting in $99 billion in total debt.

Therefore at the end of the quarter net cash was 34 billion.

Speaker #4: In addition to its existing thousands of iPads and Macs and Purdue University has launched a spatial computing hub built around Vision Pro designed to help prepare students to lead the next wave of innovation in critical industries like semiconductor and pharmaceutical manufacturing .

During the quarter, we returned $24 billion to shareholders. This included $3 9 billion in dividends and equivalents and $20 billion through open market repurchases of 89 million Apple shares.

Taking a step back we are very pleased with our record fiscal year 2025 results as Tim mentioned total company revenue for the year with 416 billion with growth in iPhone, Mac and iPad and services and all time records in the vast majority of markets we track.

Speaker #4: Let's turn to our cash position and capital return program . We ended the quarter with $132 billion in cash and marketable securities . We had $1.3 billion of debt maturities and decreased commercial paper by $1.9 billion , resulting in $99 billion in total debt .

Tim Cook: We had $1.3 billion of debt maturities and decreased commercial paper by $1.9 billion, resulting in $99 billion in total debt. Therefore, at the end of the quarter, net cash was $34 billion. During the quarter, we returned $24 billion to shareholders. This included $3.9 billion in dividends and equivalents and $20 billion through open market repurchases of 89 million Apple shares. Taking a step back, we are very pleased with our record fiscal year 2025 results. As Tim mentioned, total company revenue for the year was $416 billion, with growth in iPhone, Mac, iPad, and services and all-time records in the vast majority of markets we track. This revenue performance led to very strong full-year operating results, with all-time records for net income and for diluted EPS, which grew double digits year over year on an adjusted basis.

This revenue performance led to very strong full year operating results with all time records for net income and for diluted EPS, which grew double digits year over year on an adjusted basis.

Speaker #4: Therefore , at the end of the quarter , net cash was $34 billion . During the quarter , we returned $24 billion to shareholders .

Speaker #4: This included $3.9 billion in dividends and equivalents and $20 billion through open market repurchases of 89 million Apple shares . Taking a step back , we are very pleased with our record fiscal year 2020 results .

As we move ahead into the December quarter I'd like to review our outlook, which includes the types of forward looking information to asking referred to.

Importantly, the color, we're providing assumes that the global tariff rates policies and application remain in effect as of this call and the global macroeconomic outlook does not worsen from today.

Speaker #4: As Tim mentioned , total company revenue for the year was 416 billion , with growth in iPhone , Mac , iPad and services and all time records in the vast majority of markets .

We expect our December quarter of total company revenue to grow by 10% to 12% year over year, which would be our best quarter ever.

Speaker #4: We track this revenue performance led to very strong full year operating results , with all time records for net income and for diluted EPs , which grew double digits year over year on an adjusted basis .

We expect iPhone revenue to grow double digits year over year.

Which would be our best iPhone quarter ever.

On Mac keep in mind, we expect to face a very difficult compare against the <unk> for Macbook Pro Mac mini and imac launches in the year ago quarter.

Speaker #4: As we move ahead into the December quarter , I'd like to review our outlook , which includes the types of forward looking information Suhasini referred to .

Tim Cook: As we move ahead into the December quarter, I'd like to review our outlook, which includes the types of forward-looking information Suhaasi referred to. Importantly, the color we're providing assumes that the global tariff rates, policies, and application remain in effect as of this call, and the global macroeconomic outlook does not worsen from today. We expect our December quarter total company revenue to grow by 10% to 12% year over year, which would be our best quarter ever. We expect iPhone revenue to grow double digits year over year, which would be our best iPhone quarter ever. On Mac, keep in mind we expect to face a very difficult compare against the M4 MacBook Pro, Mac Mini, and iMac launches in the year-ago quarter. We expect services revenue to grow at a year-over-year rate similar to what we reported in the fiscal year 2025.

We expect services revenue to grow at a year over year rate similar to what we reported in the fiscal year 2025.

Speaker #4: Importantly , the color providing assumes that the global tariff rates , policies and application remain in effect as of this call , and the global macroeconomic outlook does not worsen from today .

We expect gross margin to be between 47% and 48%, which includes an estimated impact of $1 $4 billion of tariff related costs.

Speaker #4: We expect our December quarter total company revenue to grow by 10 to 12% year over year , which would be our best quarter ever .

And as we've said before we are significantly increasing our investments in AI, while continuing to invest in our product roadmap and so for the December quarter, we expect operating expenses to be between $18 1 billion.

Speaker #4: We expect iPhone revenue to grow double digits year over year , which would be our best iPhone quarter ever on Mac . Keep in mind , we expect to face a very difficult compare against the M4 MacBook Pro , Mac mini , and iMac launches in the year ago quarter .

And $18 5 billion.

We expect <unk> to be around $150 million, excluding any potential impact from the mark to market of minority investments and our tax rate to be around 17%.

Speaker #4: We expect services revenue to grow at a year over year rate , similar to what we reported in the fiscal year 2025 . We expect gross margin to be between 47% and 48% , which includes an estimated impact of $1.4 billion of tariff related costs .

Finally today, our board of directors has declared a cash dividend of <unk> 26 per share of common stock payable on November 13th 2025 to shareholders of record as of November 10th 2025.

Tim Cook: We expect gross margin to be between 47% and 48%, which includes an estimated impact of $1.4 billion of tariff-related costs. As we've said before, we are significantly increasing our investments in AI while continuing to invest in our product roadmap. For the December quarter, we expect operating expenses to be between $18.1 billion and $18.5 billion. We expect OI&E to be around $150 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17%. Finally, today our board of directors has declared a cash dividend of $0.26 per share of common stock payable on November 13, 2025, to shareholders of record as of November 10, 2025. With that, let's open the call to questions. Thank you, Kevan. We ask that you limit yourself to two questions. Operator, may we have the first question, please? Certainly.

Speaker #4: And as we've said before , we are significantly increasing our investments in AI while continuing to invest in our product roadmap . And so for the December quarter , we expect operating expenses to be between $18.1 billion and $18.5 billion .

With that let's open the call to questions.

Thank you Kevin we ask that you limit yourself to two questions. Operator may we have the first question. Please.

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

Speaker #4: We expect to be around $150 million , excluding any potential impact from the mark to market of minority investments and our tax rate to be around 17% .

Hey, good afternoon, guys. Thank you for taking my question and congrats on the results.

Tim can you maybe share a bit more detail on why you think the iPhone 17, having the degree of success that it is at this point and really the question is do you believe this is the aged installed base.

Speaker #4: Finally , today , our board of directors has declared a cash dividend of $0.26 per share of common stock , payable on November 13th , 2025 to shareholders of record as of November 10th , 2025 , with that , let's open the call to questions .

Replacement cycle kicking in or are there specific features or functionality you believe standout this cycle versus past cycles that consumers are really looking for and then just a quick follow up thanks.

Speaker #2: Thank you Kevin , we ask that you limit yourself to two questions . Operator . May we have the first question , please ?

Eric Thanks for your comments.

Speaker #2: Certainly .

Speaker #5: We will . Go ahead and take our first question from Eric Woodring with Morgan Stanley . Please go ahead .

Tim Cook: We will go ahead and take our first question from Erik Woodring with Morgan Stanley. Please go ahead. Hey, good afternoon, guys. Thank you for taking my question. Congrats on the results. Tim, can you maybe share a bit more detail on why you think the iPhone 17 is having the degree of success that it is at this point? The question is, do you believe this is the age install base replacement cycle kicking in, or are there specific features or functionality you believe stand out this cycle versus past cycles that consumers are really looking for? Just a quick follow-up, thanks. Eric, thanks for your comments. I think it's all about the product. The product lineup is incredibly strong. Our strongest ever, the 17 Pro, is the most pro phone we've ever done. It's incredible in the design.

It's all about the product.

The product lineup is incredibly strong our strongest ever the 17 pro is the most profound we've ever done it.

Speaker #6: Good afternoon , guys . Thank you for taking my question . And congrats on the results . Tim , can you maybe share a bit more detail on why you think the the iPhone 17 is having the degree of success that it is at this point ?

Incredible design.

Sings.

The iPhone <unk> is it feels so thin and so light in your hand, it feels like it's going to fly away and then the 17 Fone is.

Speaker #6: And really the question is , do you believe this is , you know , the age base replacement cycle kicking in , or are there specific features or functionality you believe stand out ?

Is an incredible value and takes several of the features that were reserved for pro before and brings them down to the consumer lineup.

Speaker #6: This cycle versus past cycles that consumers are really looking for ? And then just a quick follow up . Thanks , Eric .

Speaker #3: Thanks for your comments . I think it's all about the product . The the product lineup is incredibly strong . There . Strongest ever the 17 Pro is the most fun we've ever done .

Overall strongest iPhone lineup ever and it's resonating around the world.

Great. Thank you. Thank you, Kevin and then maybe a follow up.

For you Kevin can you maybe just discuss your approach to managing component costs inflation. During this time.

Speaker #3: It's it's incredible . And the design sings the iPhone air is feels so thin and so light in your hand . It feels like it's going to fly away .

Tim Cook: The iPhone Air feels so thin and so light in your hand, it feels like it's going to fly away. The 17 phone is an incredible value and takes several of the features that were reserved for Pro before and brings them down to the consumer lineup. Overall, strongest iPhone lineup ever, and it's resonating around the world. Great. Thank you, Tim. Maybe a follow-up for you, Kevan. Can you maybe just discuss your approach to managing component cost inflation during this time? You're obviously increasing the memory content in your devices quite substantially at the same time memory prices are going through some pretty significant inflation. Just how are you managing through this cycle? Thanks so much, guys. Yeah. Hey, Erik, thanks for the question. Look, as you know, we've got a pretty incredible world-class procurement team, and we're constantly finding ways to continue to drive cost opportunities.

Obviously, increasing the memory content in your devices quite substantially at the same time memory prices are going through some pretty significant inflation. So just how are you managing through this cycle. Thanks, So much guys Hey, Eric Thanks for the question.

Speaker #3: And then the 17 phone is is an incredible value and takes several of the features that were reserved for Pro before and brings them down to the consumer lineup .

As you know, we've got a pretty incredible world class procurement team and they're constantly finding ways to continue to drive cost opportunities right now on the commodity side I would say we are seeing.

Speaker #3: So overall , strongest iPhone lineup ever . And it's resonating around the world .

Slight tailwind on memory and storage prices and nothing really to note there.

Speaker #6: Great . Thank you . Thank you Tim . And then maybe a follow up for you Kevin , can you maybe just discuss your approach to to managing component cost inflation during this time ?

And as we saw our gross margin performance, we and landed in a pretty good spot above behind the guidance range. We provided at 47, 2% and as well, we're guiding at 47% to 48%.

Speaker #6: You're obviously increasing the memory content in your devices quite substantially . At the same time , memory prices are going through some pretty significant inflation .

So I think we're managing cost pretty well as youll recall, when we talked about this time in the cycle. We have launched a bunch of new products. Those new products do you have a slightly higher cost structure than the products. They replace but the team does a very good job of focusing our efforts on getting those costs down over time, and we feel pretty good about the performance, we're seeing right now raw material cost savings.

Speaker #6: So, just how are you managing through this cycle? Thanks so much, guys.

Speaker #4: Yeah . Hey Eric , thanks for the question . Look , as you know , we've got a pretty incredible world class procurement team .

Speaker #4: And so we're constantly finding ways to continue to drive cost opportunities . Right now in the commodity side I would say we're seeing , you know , a slight tailwind on memory in storage prices and nothing really to note .

Tim Cook: Right now, on the commodity side, I would say we're seeing a slight tailwind on memory and storage prices, and nothing really to note there. As we saw from our gross margin performance, we landed in a pretty good spot above the high end of the guidance range we provided at 47.2%. As well, we're guiding at 47% to 48%. I think we're managing costs pretty well. As you'll recall, when we talked about this time in the cycle, we just launched a bunch of new products. Those new products do have a slightly higher cost structure than the products they replace, but the team does a very good job of focusing our efforts on getting those costs down over time, and we feel pretty good about the performance we're seeing right now overall on material cost savings. Great. Thanks so much. Good luck, guys. All right. Thank you.

Great. Thanks, so much good luck guys alright. Thank you Eric operator can we get the next question. Please.

Speaker #4: There . And as we saw from our gross margin performance , we landed in a pretty good spot above the high end of the guidance range we provided at 47.2% .

Our next question is from Ben <unk> with Melius Research. Please go ahead.

Hey, guys. Thanks for this.

Speaker #4: And as well , we're guiding at 47 to 48% . So I think we're managing pretty well . As you'll recall . You know , when we talked about this this time in the cycle , we just launched a bunch of new products .

Tim can.

Can you talk a little bit about iPhone in China, specifically, how is that going to trend in the December quarter and have you turned the corner there and how do you think that trajectory is going and then I have a quick follow up. Thanks, Yes, Ben I was just there it's incredibly vibrant and dynamic <unk>.

Speaker #4: Those new products do have a slightly higher cost structure than the products they replace . But the team does a very good job of focusing our efforts on getting those costs down over time , and we feel pretty good about the performance we're seeing right now .

Speaker #4: Overall , on material cost savings .

Store traffic is up significantly year over year.

Speaker #6: Great . Thanks so much . Good luck guys .

The iPhone.

Speaker #2: All right . Thank you . Thanks , Eric . Operator can we get the next question , please ?

17 has been the family has been very well received.

Tim Cook: Thanks, Erik. Operator, can we get the next question, please? Our next question is from Ben Reitzes with Melius Research. Please go ahead. Hey, guys. Thanks for this. Tim, can you talk a little bit about iPhone in China specifically? How is that going to trend in the December quarter? Have you turned the corner there, and how do you think that trajectory is going? I have a quick follow-up. Thanks. Yeah. Ben, I was just there. It's incredibly vibrant and dynamic. The store traffic is up significantly year-over-year. The iPhone 17 family has been very well received there. We do believe that we'll return to growth in Q1, and that is largely based on the reception of the iPhone there. I couldn't be more pleased with how things are going there in the early going. All right. That's great. Services, great upside there. A little surprising, right?

Speaker #5: Our next question is from Ben Reitzes with Melius Research . Please go ahead .

There we do believe that we will return to growth in Q1 and that is largely based on the reception of the iPhone, there and so I couldnt be more pleased with.

Speaker #7: Hey , guys . Thanks for this . Tim , can you talk a little bit about iPhone in China , specifically ? How is that going to trend in the December quarter ?

With how things are going there in the early going.

Speaker #7: And have you turned the corner there ? And how do you think that trajectory is going . And then I have a quick follow up .

All right, that's great and then services.

Speaker #7: Thanks .

Great upside there little surprising right.

Speaker #3: Yeah . Ben , I was just there . It's incredibly vibrant and dynamic . The store traffic is up significantly year over year .

We're a little worried about that one only a few quarters ago.

I was wondering if.

There were any tax payments in there or if the resolution that we saw with the antitrust ruling with one of your partners was a boost in and if that played a role or if it was all really just organic outperformance with many of the things you mentioned, thanks, Hey, Ben It's Kevin here, let me try to ask.

Speaker #3: The iPhone 17 has been the family has been very well received . There . And we do believe that we'll return to growth in Q1 .

Speaker #3: And that is largely based on the reception of the iPhone . There . And so I couldn't be more pleased with with how things are going there in the early going .

That question Youre, referring just wanted to clarify when you're referring to the antitrust piece Youre talking about the Google trial that what you're referring to.

Speaker #7: Okay . That's great . And then services , great upside there a little surprising , right ? We were a little worried about that one .

Yes, yes, Sir Okay. Yes, there is no calculated impact and what I would say is our strong performance of the quarterly organically driven.

Tim Cook: We were a little worried about that one only a few quarters ago. I was wondering if there were any tax payments in there or if the resolution that we saw with the antitrust ruling with one of your partners was a boost and if that played a role or if it was all really just organic outperformance with many of the things you mentioned. Thanks. Yeah. Hey, Ben. It's Kevan here. Let me try to answer that question you're referring to, just wanted to clarify. When you're referring to the antitrust piece, you're talking about the Google trial. Is that what you're referring to? Yeah. Yes, sir. Okay. There was no tax-related impact. What I would say is our strong performance for the quarter is really organically driven. Just to reiterate, we had an all-time revenue record here for the quarter at $28.8 billion.

Speaker #7: Only a few quarters ago . I was wondering if there were any tax payments in there or , you know , if the resolution that we saw with the the antitrust ruling with one of your partners was a boost and and if that played a role or if it was all really just organic outperformance with many of the things you mentioned , thanks .

And again just to reiterate we had.

All time revenue record here for the quarter at $28 8 billion and as well, we surpassed 100 billion. So our best best year ever at 14% year on year. So they really that was all organic growth.

As Tim outlined and outlined in the prepared remarks, we saw.

A majority of the categories have sequential acceleration and we had many all time revenue records, but nothing abnormal at all really related pretty much all organic growth.

Speaker #4: Yeah . Hey , Ben , it's Kevin here . Let me try to answer that question . You're referring . Just wanted to clarify when you're referring to the antitrust piece , you're talking about the Google trial , is that what you're referring to ?

Thank you.

Thanks, Dan operator can we get the next question. Please.

Speaker #7: Yeah , yeah . Yes , sir .

Speaker #4: Okay . Yeah . There was no tax related impact . And what I would say is our strong performance for the quarter is really organically driven .

Our next question is from.

Speaker #4: And again , just to reiterate , we had a all time revenue record here for the quarter at 28.8 billion . And as well we surpassed 100 billion .

Michael Please go ahead.

Okay.

Hi, good afternoon, and thank you for the question I just have two as well.

Tim Cook: As well, we surpassed $100 billion. Best year ever at 14% year-over-year. That was all organic growth. As Tim outlined and I outlined in the prepared remarks, we saw a majority of the categories have sequential acceleration, and we had many all-time revenue records, but nothing abnormal at all. Pretty much all organic growth. Thank you. Thanks, Ben. Operator, could we get the next question, please? Our next question is from Michael Ng. Please go ahead. Hi. Good afternoon. Thank you for the question. I just have two as well. First, just to follow up on the last one. The services revenue growth, I think, was the fastest across many categories and certainly the fastest in the last two years. I was just wondering if you could just unpack a little bit more of the drivers of the acceleration. Was there kind of cross-selling with the new iPhone launch?

First just to follow up on the last one.

Speaker #4: So the best best year ever at 14% year on year . So really that was all organic growth . As Tim outlined and I outlined in the prepared remarks .

The services revenue growth I think was the fastest across.

Many categories and Thats certainly the fastest in the last two years.

Speaker #4: You know , we saw a majority of the categories have sequential acceleration . And we had many all time revenue records . But nothing abnormal at all .

I'm just wondering if you could just unpack a little bit more of the drivers of the acceleration.

Speaker #4: Really , really , pretty much all organic growth .

Was there kind of cross selling with the new iPhone launch was it just install base growth I know you've been doing a lot of bundling with the Apple one at Apple care one.

Speaker #7: Thank you .

Speaker #2: Thanks , Ben . Operator . Could we get the next question , please ?

So any thoughts on that would be very helpful. And then I just have a quick follow up thank you.

Speaker #5: Our next question is from Michael Ng . Please go ahead .

Michael It's Kevin Thanks for the question Yeah, Let me build on the answer there I think that the way we look at it is not one thing to point to that would have driven.

Speaker #8: Hi . Good afternoon . Thank you for the question . I just have two as well . First , just to follow up on the last one , you know , the services revenue growth I think was the fastest across many categories and certainly the fastest in the last two years .

This higher performance Youre right that it is slightly higher than we've seen in the last few quarters, but as you know our services portfolio is very broad with a broad range of businesses all have different growth profiles and different performance characteristics of those can vary in any given quarter I would say our strength again was very broad based both across categories and also geographic.

Speaker #8: I was just wondering if you could just unpack a little bit more of the drivers of the acceleration , you know , was there kind of cross-selling with the new iPhone launch ?

Speaker #8: Was it just install base growth ? I know you've been doing a lot of bundling with Apple one and and AppleCare one , so any thoughts on on that would be very helpful .

Tim Cook: Was it just install base growth? I know you've been doing a lot of bundling with Apple One and AppleCare. Any thoughts on that would be very helpful. I just have a quick follow-up. Thank you. Hi, Michael. It's Kevan. Thanks for the question. Let me build on the answer there. I think that the way we look at it is not one thing to point to that would have driven this higher performance. You're right that it is slightly higher than we've seen in the last few quarters. As you know, our services portfolio is very broad with a broad range of businesses. All have different growth profiles and different performance characteristics, so those can vary in any given quarter. I would say our strength, again, was very broad-based both across categories and also geographically.

And so I wouldn't point to any particular.

Factor that drove any kind of outperformance at all on where it is very pleased to see see that result.

Speaker #8: And then I just have a quick follow up . Thank you .

Speaker #4: Hi Michael . It's Kevin . Thanks for the question . Yeah . Let me build on the answer there . I think that the way we look at it is not one thing to point to .

Great. Thank you.

And just on iPhone sell through I was wondering if youre seeing any.

Speaker #4: That would have driven , you know , this higher performance . You're right that it is slightly higher than we've seen in the last few quarters .

Notable shifts.

And trends between the sell through coming from Upgrader is versus switchers.

Speaker #4: But as you know, our services portfolio is very broad, with a broad range of businesses, all of which have different growth profiles and different performance characteristics.

As the U S carrier.

<unk> dynamic helping at all in terms of promotional activity.

Speaker #4: So those can vary in any given quarter . I would say our strength again was very broad based . Both across categories and also geographically .

And any thoughts on channel inventory. Thank you.

Okay.

We did.

Speaker #4: So I wouldn't point to any particular factor that drove any kind of outperformance at all . We were just very pleased to see , you know , see that result .

Tim Cook: I wouldn't point to any particular factor that drove any kind of outperformance at all. We were just very pleased to see that result. Great. Thank you. Just on iPhone sell-through, I was wondering if you were seeing any notable shifts in trends between the sell-through coming from upgraders versus switchers. Is the U.S. carrier competitive dynamic helping at all in terms of promotional activity? Any thoughts on channel inventory? Thank you. We did set a September quarter record for upgraders, and it was a great quarter from that point of view. It's really too early in the cycle on iPhone 17 to make any comments about upgraders or switchers. In terms of channel inventory, we ended the quarter toward the low end of the targeted range, obviously because we had constraints on several models of the iPhone 16 and the iPhone 17.

The September quarter record for upgrader.

So it was it was a great quarter from that point of view, it's really too early in the cycle on on <unk> to make any comments about upgrade orders or or switchers in terms of channel inventory. We ended the quarter toward the low end of the targeted range obviously.

Speaker #8: Great . Thank you . And just on iPhone , sell through , I was wondering if you were seeing any notable shifts in , in trends between the sell through coming from Upgraders versus switchers is the US carrier competitive dynamic helping at all in terms of promotional activity ?

Because we had constraints on the on several models of the 16 and the and.

In 2017 and for for complete transparency and clarity we're constrained today.

Speaker #8: And any thoughts on on channel inventory ? Thank you .

Speaker #3: Okay , we did set a September quarter record for Upgraders . And so it was a it was a great quarter from that point of view .

On several models of the iPhone 17, theres not a ramp issue.

It's just we have very strong demand.

And we're working very hard to.

Speaker #3: It's really too early in the cycle . On on 17 to make any comments about Upgraders or or switchers in terms of channel inventory .

Fulfill.

All of the orders that we have.

Great. Thank you Tim Thank you Kevin Alright, Thank you Mike.

Speaker #3: We ended the quarter toward the low end of the targeted range , obviously , because we had constraints on the on several models of the 16 and the and the 17 .

Operators can we get the next question please.

Our next question Amit <unk> with Evercore. Please go ahead.

Thanks, a lot art too as well I guess, Kevin maybe just start with gross margins can you just walk through the expectations with December quarter, I think it implies up 30 basis points sequentially.

Speaker #3: And for for complete transparency and clarity , we're constrained today on several models of the iPhone 17 . There's not a ramp issue .

Tim Cook: For complete transparency and clarity, we're constrained today on several models of the iPhone 17. There's not a ramp issue. We just have very strong demand, and we're working very hard to fulfill all the orders that we have. Thank you, Tim. Thank you, Kevan. Thank you. Thanks, Mike. Operator, could we get the next question, please? Our next question is from Amit Daryanani with Evercore. Please go ahead. Hey, Paul. Thanks a lot. I have two as well. Kevan, maybe just to start with gross margins, can you just walk through the expectations for December quarter? I think it implies up 30 basis points or so sequentially. Can you just talk about the puts and takes on gross margin, given you do have very sizable operating leverage in the quarter? Maybe what are the puts and takes around that would be really helpful. Yeah, sure.

Can you just talk about the puts and takes on gross margin given you do have very sizable operating leverage in the quarter. So just maybe one of the puts and takes around that would be really helpful.

Speaker #3: It's just we have very strong demand and we're working very hard to fulfill all the orders that we have . .

Sure Amit, let me walk through the outlook.

As we mentioned in our outlook.

Speaker #8: Great. Thank you, Tim. Thank you, Kevin.

We're getting a range of 47%, 48% and we take the midpoint of that range. The 47 and a half you said is roughly 25 basis points 30 basis points higher.

Speaker #2: All right . Thanks , Mike . Operator , could we get the next question , please ?

Speaker #5: Our next question is from Amit Daryanani with Evercore . Please go ahead .

Really there's a lot of puts and takes as I talked about earlier. This is the quarter, we launched a lot of new products. The new products tend to have a higher cost structure than the products. They replace so there's definitely an impact from the cost side of things, but that was more than offset by favorable mix, especially on the product side as well as you outlined we typically see higher leverage in this quarter. So I would say those are the two.

Speaker #9: Yep . Thanks a lot . I have two as well . I guess Kevin , maybe just start with gross margins . Can you just walk through the expectations with December quarter ?

Speaker #9: I think it implies up 30 basis points. So sequentially, can you just talk about the puts and takes on gross margin, given you do have very sizable operating leverage in the quarter?

Big drivers and this is a sequential increase is really going to be driven by favorable mix, particularly from the product side.

Speaker #9: So just maybe what are the puts and takes around that would be really helpful .

Speaker #4: Yeah, sure. I mean, let me walk through the outlook. As we mentioned in our outlook, we're targeting a range of 47% to 48%.

Tim Cook: Let me walk through the outlook. As we mentioned in our outlook, we're targeting a range of 47% to 48%. We take the midpoint of that range at 47.5%. You said it's roughly 25 basis points, 30 basis points higher. There's a lot of puts and takes, as I talked about earlier. This is a quarter we launched with a lot of new products. Those new products tend to have a higher cost structure than the products they replace, so there's definitely an impact from the cost side of things, but that was more than offset by a favorable mix, especially on the product side. As you outlined, we typically see higher leverage in this quarter. I would say those are the two big drivers, and the sequential increase is really going to be driven by favorable mix, particularly from the product side. Got it.

Got it.

If I just go back to the China discussion for a minute the performance in China at least in September quarter was a bit muted up could you just talk about what resulted in the weakness over there and do think it was a bit more of a pause given iPhone and for example, I don't think was available until a few weeks ago. So just talk about what drove the weakness in September and.

Speaker #4: If you take the midpoint of that range at the 47.5 , it's roughly 25 basis points , 30 basis points higher . Really , there's a lot of puts and takes , as I talked about earlier , this is a quarter we launched a lot of new products .

Speaker #4: you said

Speaker #4: There's new products tend to have a higher cost structure than the products . They replace . So there's definitely a impact from the cost side of things .

The uptake of a better expectation with December there just from the iPhone are coming out are there other factors as well. Thank you.

Speaker #4: But that was more than offset by favorable mix , especially on the product side as well as you outlined , we typically see higher leverage in this quarter .

Yes.

Greater China revenue was down 4%.

Speaker #4: So I would say those are the two big drivers . And so sequential increase is really going to be driven by favorable mix , particularly from the product side .

Year over year in the September quarter, it was driven by iPhone.

And if you look at the iPhone the majority of the sequential year over year change was due to supply constraints that I mentioned earlier.

Speaker #9: Got it. And then if I just go back to the China discussion for a minute, the performance in China, at least in the September quarter, was a bit muted.

Tim Cook: If I just go back to the China discussion for a minute, the performance in China, at least in September quarter, was a bit muted. Could you just talk about what resulted in the weakness over there? Do you think it was a bit more of a pause, given iPad Air, for example, I don't think was available until a few weeks ago? Just talk about what drove the weakness in September, and is the uptick or better expectations for December there just from the iPhone Air coming out, or are there other factors as well? Thank you. Yeah. The Greater China revenue was down 4% year over year in the September quarter. It was driven by iPhone. If you look at the iPhone, the majority of the sequential year-over-year change was due to supply constraints that I mentioned earlier. It was basically supply constraints that drove the results.

And so it was basically supply constraints that.

Speaker #9: Could you just talk about what resulted in the weakness

Speaker #9: over there , and do you think it was a bit more of a pause given the iPhone air , for example , I don't think was available until a few weeks ago .

That drove the results we're thrilled with what we're seeing right now with Detroit traffic being up significantly year over year and the reception of the <unk> family.

Speaker #9: So just talk about what drove the weakness in September . And , you know , is the uptick or better expectations for December .

Speaker #9: There just from the iPhone air coming out , or are there other factors as well ? Thank you .

We expect to return to growth this quarter.

Speaker #3: Yeah . Greater China revenue was down 4% in the year over year in the September quarter . It was driven by iPhone . And if you look at the iPhone , the majority of the sequential year over year change was due to supply constraints that I mentioned earlier .

Great. Thank you. Thank you. Thanks, Amit operator could we have the next question. Please.

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

Yes. Thank you so much Tim if I could follow up on your comments about the constrained supply in the quarter just given the very strong demand for our iphones.

Speaker #3: And so it was basically supply constraints that that drove the results . We're thrilled with what we're seeing right now with with traffic being up significantly year over year .

Tim Cook: We're thrilled with what we're seeing right now, with traffic being up significantly year over year and the reception of the 17 family. We expect to return to growth this quarter. Great. Thank you. Thank you. Thanks, Amit. Operator, could 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. Tim, if I could follow up on your comments about the constrained supply in the quarter, just given the very strong demand for iPhones, do you expect that, as you can see your visibility across demand and supply, do you think that you will be exiting December at a point where you wouldn't be constrained anymore, or do you still expect that there could be constraints as you exit the December quarter?

Do you expect that as you can see our visibility across demand and supply do you think that you will be exiting December at a point, where you wouldn't be constrained anymore or do you still expect that there could be constraints as you exited the December quarter, and then any any way to quantify sort of what revenue could have been.

Speaker #3: And the reception of the 17 family , we expect to return to growth this quarter .

Speaker #9: Great . Thank you .

Speaker #3: Thank you .

Speaker #2: Thanks , Amit . Operator . Could we have the next question , please ?

In this quarter without constraints.

Speaker #5: Our next question is from Wamsi Mohan with Bank of America . Please go ahead .

Yes.

If you look at the supply constraints today, where we are constrained on several 17 models.

Speaker #10: Hi . Yes , thank you so much . Tim , if I could follow up on your comments about the constrained supply in the quarter , just given the very strong demand for for iPhones , do you expect that ?

We're not predicting.

When those supply demand will balance.

We're obviously working very hard to achieve that because.

Speaker #10: As you can see , your visibility across demand and supply ? Do you think that you will be exiting December at a point where you wouldn't be constrained anymore ?

Because we want to get as many of these products out to the customers as possible, but today I'm not going to predict.

Speaker #10: Or do you still expect that there could be constraints as you exit the December quarter ? And any , any way to quantify sort of what revenue could have been in this quarter without constraints ?

Okay. Okay. Thanks, Tom and then as a follow up.

Tim Cook: Any way to quantify sort of what revenue could have been in this quarter without constraints? Yeah. If you look at the supply constraints, today we are constrained on several 17 models. We're not predicting when the supply demand will balance. We're obviously working very hard to achieve that because we want to get as many of these products out to the customers as possible. Today, I'm not going to predict. Okay. Okay. Thanks, Tim. As a follow-up, I heard you talk about new records across a lot of categories and services. I didn't hear search explicitly called out.

I heard you talk about new records across a lot of categories and services I Didnt hear search explicitly called out so maybe a little bit of a follow up to Ben's question, but.

Speaker #3: Yeah . The if you look at the supply constraints today , we're we are constrained on several 17 models . We're not predicting when the supply demand will balance .

Given that there are some concerns around search volumes decelerating at the expense of AI. How do you think about the broader sustainability of these very strong mid teens growth rates for services or extended period of time, not just not just for next quarter, where you're obviously guiding to 14.

Speaker #3: We're obviously working very hard to achieve that because we want to get as many of these products out to the customers as possible.

Speaker #3: But but today I'm not going to to predict .

This is Tim the advertising category, which is a combination of third party.

Speaker #10: Okay . Okay . Thanks , Tim . Yeah . And then as a follow up , you know , I heard you talk about new records across a lot of categories and services .

And first party.

Did set a record during the quarter.

Speaker #10: I didn't hear search explicitly called out . So maybe it's a little bit of a follow up to Ben's question , but given that there are some concerns around search volumes decelerating at the expense of AI , how do you think about the broader sustainability of these very strong mid-teens growth rates for for services ?

Tim Cook: Maybe it's a little bit of a follow-up to Ben's question, but given that there are some concerns around search volumes decelerating at the expense of AI, how do you think about the broader sustainability of these very strong mid-teens growth rates for services for an extended period of time, not just for next quarter where you're obviously guiding to 14%? This is Tim. The advertising category, which is a combination of third-party and first-party, did set a record during the quarter. Okay. Sorry, just to be clear, both Apple's own internal advertising and within the licensing individually set records? I'm not saying that. I'm just saying that the combination of the two set a record. I'm dodging the question intentionally because we don't split it at that level. Okay. I understand. Thank you. Thank you. All right. Thank you, Whamsi. Operator, could we get the next question, please?

Okay, and sorry, just to be clear, both apples on internal advertising and within the licensing.

Individually set records.

I'm, not saying that I am just saying that the combination of the two set a record we don't.

Speaker #10: So , you know , extended period of time , not just not just for next quarter , where you're obviously guiding to 14 .

Im.

Dodging the question intentionally because we don't split it at that level.

Speaker #3: This is Tim , the advertising category , which is a combination of third party and first party . Did set a record during the quarter .

Okay. Okay understood. Thank you.

Thank you.

Alright, Thank you Ronny operator could we get the next question. Please.

Our next question Sam.

Nick Chatterji with Jpmorgan. Please go ahead.

Hi, Thanks for taking my question, maybe for the first time, you've talked about the strong momentum you're seeing in China, which is also driving your confidence for the December quarter.

Speaker #10: Okay . And sorry , just to be clear , both both Apple's own internal advertising and within the licensing individually set records .

He talks on the road.

Speaker #3: I'm sure I'm not saying that . I'm just saying that the combination of the two set a record . We don't . I'm dodging the question intentionally because we don't split it at that level .

Smartphone subsidies in that region are playing in this momentum and how do you think about sort of what portion of consumers that may be using some of those subsidies leveraging subsidies at this point.

A more insights into that.

Speaker #10: Okay , okay , thanks .

Follow up thank you.

Speaker #3: Thank you . .

Yes, the subsidies play.

Speaker #2: All right . Thank you . Operator , could we get the next question , please ?

Play a favorable role.

The subsidies as you know or you sort of across multiple categories from Pcs to tablets smartwatch is in smartphones.

Speaker #5: Our next question is from Samik Chatterjee with JP Morgan . Please go ahead .

Tim Cook: Our next question is from Samik Chatterjee with JPMorgan. Please go ahead. Hi, Paul. Thanks for taking my question. Maybe for the first one, Tim, you talked about the strong momentum you're seeing in China, which is also driving your confidence for the December quarter. Any thoughts on the role that the smartphone subsidies in that region are playing in this momentum? How do you think about sort of what portion of consumers are maybe using some of those subsidies, leveraging the subsidies at this point? Any more insights into that? I have a follow-up. Thank you. The subsidies play a favorable role. The subsidies, as you know, are across multiple categories from PCs to tablets to smartwatches and smartphones. However, it's important to note they only apply to certain price ranges.

Speaker #11: Hi . Thanks for taking my question . Maybe for the first one , Tim , you talked about the strong momentum you're seeing in China , which is also driving your confidence for the December quarter .

However, it's important to note they only apply to certain price ranges and so there is a maximum price and there are several of our products that are that cell.

Speaker #11: Any thoughts on the role that the smartphone subsidies in that region are playing in this momentum? And how do you think about sort of what portion of consumers are maybe using some of those subsidies, leveraging the subsidies at this point?

Above that price and therefore are not eligible for a subsidiary.

And.

Speaker #11: Any more insights into that and have a follow up ? Thank you .

But it does have a favorable effect.

Speaker #3: Yeah , the subsidies play a favorable role . The subsidies , as you know , are sort of across multiple categories , from PCs to tablets to smart watches and smartphones .

It's clearly an at least from our vantage point driving some consumer demand.

Okay, Okay got it and a follow up for Kevin here on the Opex increase going into the December quarter, a fairly sizable step up. So if you could just dig into that number a bit more what's.

Speaker #3: And however , it's important to note they only apply to certain price ranges . And so there's a maximum price . And there's several of our products that are that sell above that price and therefore are not eligible for a subsidy .

Sort of the components.

Tim Cook: There is a maximum price, and there are several of our products that sell above that price and therefore are not eligible for a subsidy. It does have a favorable effect. It's clearly, at least from our vantage point, driving some consumer demand. Okay. Got it. A follow-up for Kevan here on the OpEx increase going into the December quarter, fairly sizable step up. If you could just dig into that number a bit more, what are sort of the components towards what you're spending? That increase year over year in OpEx does sort of exceed your revenue growth. Is that sort of what we should expect on a going-forward basis as well, where you probably need to invest a bit more in the near future? Thank you. Samik, thanks for that question. As we've been outlining and reiterated in our last call, we are increasing our investments in AI.

What is what you're spending and then that increase year over year in Opex does sort of exceed your revenue growth. So is that sort of what we should expect on a going forward basis, as well, where you probably need to invest a bit more in the near future. Thank you.

Speaker #3: And , but , but but it does have a favorable effect . And it's it's clearly in at least from our vantage point , driving some consumer demand .

Yes, Amit thanks for that question.

As we've been outlining and reiterated in our last call. We are increasing our investments in AI will also continuing to invest in our product road map. So the vast majority of the increase to our operating expenses are driven by R&D.

Speaker #11: Okay, okay. Got it. And a follow-up for Kevin here on the OpEx increase going into the December quarter. It's a fairly sizable step up.

While we continue to manage the company in a thoughtful and disciplined way. We're also managing the business for the long term and are Super excited about all the opportunities we see ahead.

Speaker #11: So if you could just dig into that number a bit more . What's what is sort of the components towards what you're spending .

Speaker #11: And then that increase year over year in opex does sort of exceed your revenue growth . So is that sort of what we should expect on a going forward basis as well , where you probably need to invest a bit more in the near future ?

As it relates to the question around Opex and revenue growth, while Opex had been growing at a faster rate than revenue, we have seen gross margin expansion and so when we look at that on a combined basis. It does allow us to have healthy operating leverage in our operating income growth has been generally outpacing revenue growth for the past several years.

Speaker #11: Thank you .

Speaker #4: Yes . Thanks for that question . You know , as we've been outlining and reiterated in our last call , we are increasing our investments in AI while also continuing to invest in our product roadmap .

Okay. Thank you thanks a lot.

Thank you operator could we get the next question. Please.

Tim Cook: We'll also continue to invest in our product roadmap. The vast majority of the increase to our operating expenses are driven by R&D. While we continue to manage the company in a thoughtful and disciplined way, we're also managing the business for the long term and are super excited about all the opportunities we see ahead. As it relates to the question around OpEx and revenue growth, while OpEx has been growing at a faster rate than revenue, we have seen gross margin expansion. When we look at that on a combined basis, it does allow us to have healthy operating leverage, and our operating income growth has been generally outpacing revenue growth for the past several years. Clear. Thank you. Thanks a lot. Thank you, Samik. Operator, could we get the next question, please? Our next question is from David Vogt with UBS. Please go ahead. Great.

Speaker #4: So the vast majority of the increase to our operating expenses are driven by R&D , while we continue to manage the company in a thoughtful and disciplined way .

Our next question is from David <unk>.

Yes.

I had.

Speaker #4: We're also managing the business for the long term and are super excited about all the opportunities we see ahead as it relates to the question around OpEx and revenue growth , while OpEx has been growing at a faster rate than revenue , we have seen gross margin expansion .

Great. Thanks, guys for taking my questions. So maybe Kevin can I ask first can you help us understand sort of the tariff impact sequentially from the September quarter, the December quarter, particularly around iPhone supply constraints, because I think I heard you say tariffs go from one one to $1 4 billion, but the sequential uplift in iPhone revenue.

Speaker #4: And so when we look at that on a combined basis , it does allow us to have healthy operating leverage and our operating income growth has been generally outpacing revenue growth for the past several years .

And presumably production given supply chain constraints is dramatically bigger. So you can help us understand how to think about the timing of those tariff headwinds as we move forward and sort of that correlation and then I have a follow up.

Speaker #11: Clear. Thank you. Thanks a lot.

Speaker #2: Thank you . So , much . Operator , could we get the next question , please ?

David I'll take this one.

Speaker #5: Our next question is from David Vogt with UBS . Please go ahead .

Youre right. It goes from one one to a projection of one four.

Speaker #12: Great . Thanks , guys , for taking my questions . So maybe Kevin , can I ask first , can you help us understand sort of the tariff impact sequentially from the September quarter to the December quarter , particularly around iPhone supply constraints ?

Tim Cook: Thanks, guys, for taking my questions. Maybe, Kevan, can I ask first, can you help us understand sort of the tariff impact sequentially from the September quarter to the December quarter, particularly around iPhone supply constraints? I think I heard you say tariffs go from $1.1 billion to $1.4 billion, but the sequential uplift in iPhone revenue and presumably production, given supply chain constraints, is dramatically bigger. You can help us understand how to think about the timing of those tariff headwinds as we move forward and that correlation. I have a follow-up. David, I'll take this one. You're right. It goes from $1.1 billion to a projection of $1.4 billion. The $1.4 billion is based on what we know right now and where the tariff rates and policies and so forth are. It assumes a stable kind of environment for the quarter.

And the one four is based on sort of what we know right now and where the tariff rates and policies.

Fourth our so it assumes a.

Speaker #12: Because I think I heard you say tariffs go from 1.1 to 1.4 billion , but the sequential uplift and iPhone revenue and presumably production , given supply chain constraints , is dramatically bigger .

Stable kind of environment for the quarter. It does comprehend the change that was just made which we're very encouraged to see.

Speaker #12: So, you can help us understand how to think about the timing of those tariff headwinds as we move forward, and sort of that correlation.

With the.

The tariffs moving from 20% to 10% in China.

Speaker #12: And then I have a follow up .

Speaker #3: David , I'll take this one . You're right . It goes from one one to a projection of one four . And the one four is based on sort of what we know right now and where the tariff rates and policies and , and so forth are .

And so that is factored in.

And that is one of the reasons why the.

It's not linear to volume if you will.

That makes sense got it no. That's helpful. That's all I was asking if the changes reflected in that outlook.

Speaker #3: So it assumes a . Stable kind of environment for the quarter . It does comprehend the change that was just made , which we're very encouraged to see with the the tariffs moving from 20% to 10% in China .

Just as a follow up when you think about I think on the Max I know people aren't asking you about it you talked about the tough comp that youre going into sort of a holiday season, I understand that but when you think about the attach possibility for other products to the iPhone in the holiday season, how do we think about sort of where the consumers had that in their wallet is at this point in the cycle in.

Tim Cook: It does comprehend the change that was just made, which we're very encouraged to see, with the tariffs moving from 20% to 10% in China. That is factored in, and that is one of the reasons why it's not linear to volume, if you will. Does that make sense? Got it. No, that's helpful. That's what I was asking, if the change is reflected in that outlook. Just as a follow-up, when you think about, I think on the Macs, I know people aren't asking about it, you talked about the tough comp, but you're going into a holiday season. I understand that. When you think about the attached possibility for other products to the iPhone in the holiday season, how do we think about where the consumer's heads at and their wallet is at this point in the cycle?

Granted it is a tough comp, but is there an opportunity to see some maybe upside from an attach rate perspective, given the strength of the iPhone portfolio.

Speaker #3: And so that is factored in . And that is one of the reasons why the it's not linear to volume , if you will , does that make sense ?

We always like to remind people that buy an iPhone all of the other things that we offer and so you can bet that we're doing that from a from a Mac point of view the challenges that last year was sort of the mother of all Mac launches.

Speaker #12: Got it . No that's helpful . That's I was asking if the change is reflected in that outlook . And then just as a follow up , when you think about I think on the Macs , I know people aren't asking about it .

Speaker #12: You talked about the tough comp , but you're going into sort of a holiday season . I understand that , but when you think about the attached possibility for other products to the iPhone in the holiday season , how do we think about sort of where the consumer's head's at in their wallet is at this point in the cycle ?

All of these from Mac mini to imac to all the Macbook Pros all launched.

Literally at the same time.

And this year that compares to launching the 14 inch Macbook pro and so there is a very difficult compare.

Speaker #12: And granted , it is a tough comp , but is there an opportunity to see some upside from an attachment perspective , given the strength in the iPhone portfolio .

Tim Cook: Granted, it is a tough comp, but is there an opportunity to see some maybe upside from an attached rate perspective, given the strength of the iPhone portfolio? We always like to remind people that by an iPhone, all the other things that we offer, and you can bet that we're doing that. From a Mac point of view, the challenge is that last year was sort of the mother of all Mac launches. All of these, from Mac Mini to iMac to all the MacBook Pros, all launched literally at the same time. This year, that compares to launching the 14-inch MacBook Pro, and there's a very difficult compare. Of course, in the long run, I'm very bullish on the Mac. You can see that the Mac, again, last quarter, outgrew the market.

Speaker #3: We always like to remind people that buy an iPhone , all the other things that we offer and and so you can bet that we're doing that from a from a mac point of view , the challenges that last year was sort of the mother of all Mac launches , all of these from Mac mini to iMac to all the MacBook pros , all launched literally at the same time .

Of course in the long run I'm very bullish on the market.

And you can see that the Mac again last quarter outgrew the market.

And so we feel really well about how <unk> positioned but this certain quarter.

It is extremely difficult compare and Tim I'll add to that that we also have the DRAM upgrade last year for the Mac lineup will also was another factor.

Speaker #3: And this year that compares to launching the 14 inch MacBook Pro . And so there's a very difficult compare , of course , in the long run , I'm very bullish on the Mac , and you can see that the Mac again last quarter outgrew the the market .

Great. Thanks, Tim Thanks, Kevin Yeah sure. Thank.

Thank you David operator could we get the next question. Please.

Our next question is from Krish Sanka with TD Cowen. Please go ahead.

Yes. Thanks for taking my question. My first one is on the iPhone constrained is that or maybe quantify how much business is left on the table because of the constraints and.

Speaker #3: And so we feel really well about how Mac is positioned. But this certain quarter is an extremely difficult compare.

Tim Cook: We feel really well about how Mac is positioned, but this certain quarter is an extremely difficult compare. Tim, I'll add to that that we also had the DRAM upgrade last year for the Mac lineup. Good point. Which also was another factor. Great. Thanks, Tim. Thanks, Kevan. Yeah. Sure. Thank you, David. Operator, could we get the next question, please? Our next question is from Chris Sanker with TD Cowen. Please go ahead. Yeah. Thanks for taking my question. My first one is on the iPhone constraints. Is it a way to quantify how much business you left on the table because of those constraints? Is the different iPhone manufacturing from two different regions contributing to the constraint? I have a follow-up for you. To be clear, the constraint was not related to manufacturing capacity per se.

Different iPhone manufacturing from two different regions.

Pivoting a bit constrained.

A follow up for you.

Speaker #4: And Tim I'll add to that that we also have the Dram upgrades last year for the Mac lineup . Good point . Also is another factor .

To be clear the constraint was not related to.

Speaker #12: Great . Thanks , Tim . Thanks , Kevin .

Speaker #3: Yeah .

Manufacturing capacity per se it was that we.

Speaker #13: Sure .

Speaker #2: Thank you David . Operator . Could we get the next question , please ?

Call the number of iPhone six teams that we were going to make.

Speaker #5: Our next question is from Krish Sankar with TD Cowan . Please go ahead .

And.

We're a bit short of where the demand really was so we could have sold more we're not publicly at least estimating.

Speaker #14: Yeah . Thanks for taking my question . My first one is on the iPhone . Constraints . Is there a way to quantify how much business you left on the table because of those constraints and is there a different iPhone manufacturing from two different regions contributing to the constraint ?

The extent of that and then on iPhone 17 family.

The demand is very strong.

Speaker #14: And then had a follow up for you .

So we obviously came out of the Q4.

Speaker #3: To be clear , the constraint was not related to manufacturing capacity per se . It was that we called the number of iPhone sixteens that we were going to make .

Timeframe with lots of back orders.

Robert Thanks for that Tim and then a quick follow up.

Tim Cook: It was that we called the number of iPhone 16s that we were going to make and were a bit short of where the demand really was. We could have sold more. We're not, publicly at least, estimating the extent of that. On iPhone 17 family, the demand is very strong. We obviously came out of the Q4 timeframe with lots of back orders. Got it. Thanks for that, Tim. A quick follow-up. Given the prevalence of chatbots and now some of these AI-infused web services, do you think that could change the consumer behavior on mobile app ecosystems? Are you seeing any of that? Would that have any impact on your App Store? I think there are opportunities on the App Store with artificial intelligence. As we have made our on-device models available for developers, we've seen developers begin to adopt them.

Given like the equivalent of Chad Boston.

In field services.

Speaker #3: And we're a bit short of where the demand really was . So we could have sold more . We're not publicly at least estimating the extent of that .

Do you think that could change the consumer behavior on mobile app ecosystem.

Are you seeing any of that and would that have any impact on your app store.

Speaker #3: And then on iPhone 17 family , it's the demand is is very strong . And so we obviously came out of the Q4 time frame with lots of back .

I think there are.

Opportunities on the App store with artificial intelligence.

And so I think.

We have made our on device models available for developers and we've seen developers began to adopt.

Speaker #14: Thanks to the Tim . And then a quick follow up , you know , given like the prevalence of chatbots and now some of these AI infused web services , do you think that could change the consumer behavior on mobile app ecosystems , or are you seeing any of that .

And so I think as you as that.

Great.

There is an opportunity to.

Our developers and for Apple to benefit from that from adding features to their apps and so forth.

Speaker #14: And would that have any impact on your App Store?

Thanks, a lot Tim appreciate it. Thank you. Thanks, Krish operator could we get the next question. Please.

Speaker #3: I think there are opportunities on the App Store with artificial intelligence . And so I think , you know , as we have made our on device models available for developers , and we've seen developers begin to adopt them .

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

Yes, thanks for taking the question I have two as well I guess the first question is when we look at the iPhone 17 demand, which you've repeatedly highlighted as very strong im curious if theres been any discernible kind of change in the mix within the iPhone 17 categories between the pro.

Speaker #3: And so I think as you as that proliferates , there's an opportunity to for developers and for Apple to , to benefit from that , from adding features to their apps .

Tim Cook: As that proliferates, there's an opportunity for developers and for Apple to benefit from that, from adding features to their apps and so forth. Thanks a lot, Tim. Appreciate it. Thank you. Thanks, Chris. Operator, could we get the next question, please? Our next question is from Aaron Rakers with Wells Fargo. Please go ahead. Yeah. Thanks for taking the question. I have two as well. I guess the first question is, when we look at the iPhone 17 demand, which you've repeatedly highlighted as very strong, I'm curious if there's been any discernible kind of change in the mix within the iPhone 17 categories between the Pro and the Pro Max versions relative to prior cycles? It's really too early to call the mix, to be honest. We don't like to publicly disclose that for competitive reasons.

And our pro Max versions relative to prior cycles.

It's really too early to call the mix to be honest and we don't like to publicly disclose that because of the competitive for competitive reasons, but frankly, we don't really know what the mix will be because we have constraints on both sides of the larger at the top end at the entry.

Speaker #3: And so forth .

Speaker #14: Thanks a lot , Tim .

Speaker #3: Appreciate it . Thank you .

Speaker #2: Thanks , Chris . Operator could we get the next question , please ?

Speaker #5: Our next question is from Aaron Rakers with Wells Fargo . Please go ahead .

Speaker #7: Yeah .

Speaker #15: Thanks for taking the question . I have two as well . I guess the first question is when we look at the iPhone 17 demand , which you've repeatedly highlighted , is very strong .

And so we'll see what happens and as we get more supply.

And then as a.

Speaker #15: I'm curious if there's been any discernible kind of change in the mix within the iPhone 17 categories between the Pro and the Pro Max versions relative to prior cycles.

Quick follow up I'm curious as we kind of work through kind of the AI narrative that continues to build.

Could you provide any kind of updated thoughts around the build out of apples private compute cloud and how we should think about that kind of as we look forward.

Speaker #3: It's really too early to call the mix , to be honest , and we don't like to publicly disclose that because of the competitive for competitive reasons .

Yes, we're obviously using a PC PCC, our private cloud compute today.

Speaker #3: But frankly , we don't really know what the mix will be yet because we have constraints on both sides of the ledger at the top and at the entry .

Tim Cook: Frankly, we don't really know what the mix will be yet because we have constraints on both sides of the ledger, at the top and at the entry. We'll see what happens as we get more supply. Yep. As a quick follow-up, I'm curious as we kind of work through the AI narrative that continues to build. Could you provide any kind of updated thoughts around the buildout of Apple’s private compute cloud and how we should think about that as we look forward? Yeah. We're obviously using PCC, our private cloud compute, today for a number of queries for Siri. We will continue to build it out. In fact, the manufacturing plant that makes the servers used for Apple Intelligence just started manufacturing in Houston a few weeks ago, and we've got a ramp planned there for use in our data centers. It's robust. Yeah.

For a number of queries for Siri.

And we will continue to build it out in fact the.

Speaker #3: And so it we'll see what happens as we get more supply .

Manufacturing plant that makes the servers used for Apple intelligence.

Speaker #13: Yeah .

Speaker #15: And then as a quick follow up , I'm curious as we kind of work through kind of the AI narrative that continues to build , is there could you provide any kind of updated thoughts around the build out of Apple's private compute cloud and how we should think about that kind of as we look forward ?

Just started manufacturing in Houston.

A few weeks ago and we've got.

Our ramp plan there.

For use in our data centers.

And.

It's robust.

Speaker #3: Yeah , we're obviously using PCC , our private cloud compute today for a number of queries for Siri , and we will continue to build it out in fact , the the manufacturing plant that makes the the servers use for Apple Intelligence just started manufacturing in Houston a few weeks ago .

I'll add maybe in their infusions you asked the question about private cloud compute that.

In 2005, we did have capex costs associated with building out our private cloud computing environment and our first party data centers. So you would have seen that in some of the capex investment in the year.

Thank you.

Alright. Thank you. Thanks, Erin operator can we get the next question. Please.

Our next question is from <unk> Malik with Citi. Please go ahead.

Speaker #3: And we've got a , you know , a ramp plan there for use in our data centers . And , you know , it's it's robust .

Hi, Thank you for taking my questions and great execution and the first question is on iPhone does the consumer reception and iPhone.

It gives you will feel on perhaps the affordable corn market or the <unk> form factor is very different.

Speaker #3: .

Speaker #4: And and I'll add maybe there too , since you asked the question about private cloud compute that we in 25 , we did have CapEx costs associated with building out our private cloud compute environment in our first party data centers .

Tim Cook: Aaron, I'll add maybe there too, since you asked the question about private cloud compute, that in 2025, we did have CapEx costs associated with building out our private cloud compute environment in our first-party data centers. You would have seen that in some of the CapEx investment in the year. Thank you. All right. Thank you. Thanks, Aaron. Operator, could we get the next question, please? Our next question is from Atif Malik with Citigroup. Please go ahead. Hi. Thank you for taking my questions and great execution. The first question is on iPhone Air. Does the consumer reception on iPhone Air give you a feel on perhaps the foldable phone market, or are the two form factors very different? I'm not sure that one is a proxy for the other.

I'm not sure that there.

Speaker #4: So you would have seen that in some of the CapEx investment in the year .

One is a proxy for the other the thing that I would say is that we don't get into the model kinds of demand at the aggregate level. We are thrilled with how iPhone has been received and that's the reason that we are expecting double digit growth in the current quarter.

Speaker #15: Thank you .

Speaker #13: Thank you . Thanks , Erin .

Speaker #2: Operator: Can we get the next question, please?

Speaker #5: Our next question is from Otis Malik with Citi . Please go ahead .

Speaker #13: Hi . Thank you for taking my questions and great execution . The first question is on iPhone air . Does the consumer reception on iPhone air gives you a feel on perhaps the foldable phone market ?

Great and then as a follow up.

To know that the personalized QE is making good progress and on track for next year would you continue to use a three pronged approach with your own foundation models and partner with other <unk> providers and maybe potential M&A or is one strategy mode emphasize over another.

Speaker #13: Or are the true form factors very different ?

Speaker #3: Are . I'm not sure that there that one is a proxy for the other . The thing that I would say is that where we don't get into the model kind of demand at the aggregate level , we are thrilled with how iPhone has been received , and that's the reason that we're expecting double digit growth in the current quarter .

We are obviously, creating Apple foundation models.

Tim Cook: The thing that I would say is that where we don't get into the model kind of demand, at the aggregate level, we are thrilled with how iPhone has been received. That's the reason that we're expecting double-digit growth in the current quarter. Great. Tim, as a follow-up. Good to know that the personalized Siri is making good progress and on track for next year. Will you continue to use a three-pronged approach with your own foundation models and partner with other LLM providers and maybe potential M&A, or is one strategy more emphasized over another? We're obviously creating Apple foundation models within Apple. We ship them on-device and use them in the private cloud compute as well. We've got several in development. We also continually surveil the market on M&A and are open to pursuing M&A if we think that it will advance our roadmap. Thank you. Yep.

Within Apple.

We ship them on device and use them in the private cloud compute as well and we've got several.

Development.

Speaker #13: Great . And , Tim , as a follow up , good to know that the personalized theory is making a good progress and on track for next year .

So.

We also from a.

Continually to survey the market on M&A and are open to.

Speaker #13: Will you continue to use the three pronged approach with your own foundation models and partner with other providers , and maybe potential M&A ?

Pursuing M&A.

We think that it will advance our roadmap.

Speaker #13: Or is one strategy more emphasized over another ?

Thank you yep. Thank you. Thanks.

Speaker #3: We're obviously creating Apple Foundation models within Apple . We we ship them on device and use them in the the private cloud compute as well .

Operator can we get our last question. Please.

Our last question is from Richard Kramer with Arete Research. Please go ahead.

Thank you very much Tim we've often seen Apple will be a fast follower with iPhone and new technology, whether large displays or <unk>, but with all the hype around AI are you seeing evidence that AI capabilities or features are a material purchase consideration for consumers.

Speaker #3: And we've got several in development . And so we also from a continually to surveil the market on M&A and are open to .

Speaker #3: Pursuing M&A if if we think that it will advance our roadmap . Thank you . Yep . Thank you .

The record sales levels, you're you're reporting simply reflecting other factors like the retention of your Io space.

Tim Cook: Thank you. Thanks, Optus. Operator, can we get our last question, please? Our last question is from Richard Kramer with Array Research. Please go ahead. Thank you very much. Tim, we've often seen Apple be a fast follower with iPhone and new technology, whether large displays or 4G or 5G. With all the hype now around AI, are you seeing evidence that AI capabilities or features are a material purchase consideration for consumers, or are the record sales levels you're reporting simply reflecting other factors like the retention of your iOS base? I think that there are many factors that influence people's purchasing considerations. We don't have a great in-depth survey yet on the current iPhone 17 because it's very new in the cycle, and we give it some time to formulate.

Speaker #2: Thanks , Otis . Operator can we get our last question , please ?

I think that.

There are many factors that influence peoples purchasing considerations and so.

Speaker #5: Our last question is from Richard Cramer with a rate research . Please go ahead .

And.

We don't have a.

Speaker #15: Thank you very much , Tim . We've often seen Apple be a fast follower with iPhone and new technology . Whether large displays or 4G or 5G .

Great.

Depth survey yet on the current iPhone 17, because it's very new in the cycle and we.

Speaker #15: But with all the hype now around AI , are you seeing evidence that AI capabilities are features are a material purchase consideration for consumers ?

Give it some time to to formulate but I would say that Apple intelligence is a factor.

And we are very bullish on it becoming a greater factor.

Speaker #15: The record sales levels your your reporting simply reflecting other factors like the retention of your iOS base .

So that's the way that we look at it.

Speaker #3: I think that there are many factors that influence people's purchasing considerations . And so and we don't have a great in-depth survey yet on the current iPhone 17 because it's very new in the cycle , and we give it some time to to formulate .

Okay. Thanks, and then one for Kevin in the wake of nearly every other large tech company massively increasing their capex in advance of AI demand and also mentioning that theres scarce capacity do you anticipate apple altering its sort of long standing hybrid approach to your own and third party data centers.

And maybe can you talk a little bit off the role you see for Apple Silicon with the new <unk> series of chipsets.

Speaker #3: But I would say that Apple intelligence is a factor . And , you know , we're very bullish on it becoming a greater factor .

Tim Cook: I would say that Apple Intelligence is a factor, and we're very bullish on it becoming a greater factor. That's the way that we look at it. Okay. Thanks. Then one for Kevan. In the wake of nearly every other large tech company massively increasing their CapEx in advance of AI demand and also mentioning that there's scarce capacity, do you anticipate Apple altering its sort of long-standing hybrid approach to your own and third-party data centers? Maybe can you talk a little bit about the role you see for Apple Silicon with the new M5 series of chipsets? Hi, Richard. Thanks for the question. In general, I think, as we've talked about before, we are expecting increases in our CapEx spending related to AI investments. For example, as I mentioned earlier, we did end up having investments this year to build out our private cloud compute environment.

Hi, Richard functions.

Thanks for the question in General I think as we've talked about before we are expecting increases in our capex spending related to AI investments for example, as I mentioned earlier.

Speaker #3: And so that's that's the way that we look at it .

We did end up having investments this year to build out our private cloud compute environment and we do believe this hybrid model has served us very well and we continue to want to leverage it and so I don't see us moving away from this hybrid model, where we leverage both first party capacity as well as leverage third party capacity will continue want to build out private cloud compute.

Speaker #15: Okay, thanks. And then one for Kevin in the wake of nearly every other large tech company massively increasing their CapEx in advance of AI demand and also mentioning that they're facing scarce capacity.

Speaker #15: Do you anticipate Apple altering its sort of long standing hybrid approach to your own and third party data centers , and maybe can you talk a little bit about the role you see for Apple Silicon with the new M5 series of chipsets ?

As Tim outlined as we have more usage there over time, but I think in general we want to continue to have this hybrid model.

Speaker #4: Hi , Richard , thanks for the question . In general , I think as we've talked about before , we are expecting increases in our CapEx spending related to AI investments .

Okay. Thanks.

Thanks, Victor a replay of today's call will be available for two weeks on Apple podcast as a webcast on Apple Dot com slash investor and via telephone the number for the telephone replay at 865831035. Please enter confirmation code Euro six 897.

Speaker #4: For example , as I mentioned earlier , we did end up having investments this year to build out our private cloud compute environment , and we do believe this hybrid model has served us very well .

Tim Cook: We do believe this hybrid model has served us very well, and we continue to want to leverage it. I don't see us moving away from this hybrid model where we leverage both first-party capacity as well as leverage third-party capacity. We'll continue to want to build out private cloud compute, as Tim outlined, as we have more usage there over time. I think, in general, we'll want to continue to have this hybrid model. Okay. Thanks. Thanks, Richard. A replay of today's call will be available for two weeks on Apple Podcasts, as a webcast on apple.com/investor, and via telephone. The number for the telephone replay is 866-583-1035. Please enter confirmation code 0689794 followed by the pound sign. These replays will be available by approximately 5:00 P.M. Pacific Time today. Members of the press with additional questions can contact Josh Rosenstock at 408-862-1142.

Speaker #4: And we continue to want to leverage it . And so I don't see us moving away from this hybrid model where we leverage both first party capacity as well as leverage third party capacity .

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Speaker #4: We'll continue to want to build out private cloud compute . As Tim outlined , as we have more usage there over time . But I think in general , we want to continue to have this hybrid model .

Members of the press with additional questions can contact Josh Rosenstock at 4086 to 142 and financial analysts can contact me to Hassan each under O'malley with additional questions. At 408 970 43123, thanks again for joining us.

Speaker #15: Okay . Thanks .

Speaker #2: Thanks , Richard . A replay of today's call will be available for two weeks on Apple Podcasts . As a webcast on Apple.com and via telephone .

Once again this does conclude today's conference. Thank you I appreciate your participation.

Speaker #2: The number for the telephone replay is (866) 583-1035. Please enter confirmation code 0689794, followed by the pound sign. These replays will be available by approximately 5 p.m.

Speaker #2: Pacific Time today . Members of the press , with additional questions can contact Josh Rosenstock at (408) 862-1142 , and financial analyst can contact me Suhasini Chandramouli with additional questions at (408) 974-3123 .

Tim Cook: Financial analysts can contact me, Suhasini Chandramouli, with additional questions at 408-974-3123. Thanks again for joining us. Once again, this does conclude today's conference. We do appreciate your participation.

Speaker #2: Thanks again for joining us .