“On iPhone, we expect to continue to see high levels of demand.”

In context

“Kevan Parekh (CFO): Thanks, Tim, good afternoon, everyone. Here's a quick rundown of our key financial metrics. Our revenue of $109.4 billion was up 16% year-over-year, a June quarter revenue record. We saw strong performance around the world, with double-digit growth in every geographic segment despite supply constraints. Products revenue was $78.7 billion, up 18% year-over-year, driven by double-digit growth on iPhone and Mac, both of which set new June quarter records. Our installed base of over two and a half billion active devices has reached another all-time high across all major product categories and geographic segments. Services revenue was $30.7 billion, up 12% year-over-year. We set revenue records in every services category, including all-time records in cloud services and payment services. Company gross margin was 50.1%, up 80 basis points sequentially. This included a benefit from tariff refunds, which had a favorable impact of approximately two percentage points. When you remove this favorable impact, we would have been at the midpoint of the guidance range we provided last quarter. Products gross margin was 40.1%, up 140 basis points sequentially. This also included a benefit from the tariff refunds I just mentioned, which had a favorable impact of over two and a half percentage points. Services gross margin was 75.6%, down 110 basis points sequentially, driven by a different mix. Operating expenses came in at $19.1 billion, up 23% year-over-year, driven by investments in R&D. Net income was $29.8 billion. Diluted earnings per share was $2.02, up 29% year-over-year, and included $0.11 of favorable impact from tariff refunds. Operating cash flow was very strong at $34.4 billion. All three of these metrics set June quarter records, even when excluding the tariff refund benefit. I'm going to provide some more details for each of our revenue categories. iPhone revenue was $54.3 billion, up 22% year-over-year, driven by the iPhone 17 family. We grew double digits in the vast majority of markets we track and reached June quarter revenue records across both developed and emerging markets. The iPhone active install base grew to an all-time high and set a June quarter record for upgraders. According to a recent survey from Worldpanel, iPhone was the top-selling model in the U.S., urban China, the U.K., France, Australia, and Japan. We were thrilled with the response to the iPhone 17 family. Customer satisfaction in the U.S. was recently measured at 99% by 451 Research. Mac revenue was $10.4 billion, up 29% year-over-year, a new June quarter record, driven by the strength of MacBook Neo and MacBook Pro. We grew in both developed and emerging markets, with strong double-digit growth in markets like Latin America, India, and Southeast Asia. The customer reception to MacBook Neo has been incredible. We continue to attract new customers to the product around the world. As Tim mentioned, Mac had its best quarter ever for customers new to the Mac and for upgraders worldwide, including in the U.S., China Mainland, and India. In the U.S., customer satisfaction for Mac was recently measured at 95%. iPad revenue was $6.2 billion, down 6% year-over-year, driven by the continued difficult compare against the launch of the A16-powered iPad in the prior year. At the same time, the iPad install base reached a new all-time high, and over half of the customers who purchased an iPad were new to the product. 451 Research recently measured customer satisfaction at 98% in the U.S. Wearables, home, and accessories revenue was $7.9 billion, up 6% year-over-year, driven by strength in wearables and accessories, and we saw growth in both developed and emerging markets. The wearables install base reached a new all-time high. We set a June quarter record for upgraders on Apple Watch, and over half the customers purchasing an Apple Watch during the quarter were new to the product. In the U.S., customer satisfaction on Apple Watch was reported at 95%. Our services revenue reached a June quarter record of $30.7 billion, up 12% year-over-year, despite significant sequential FX headwinds. For the total services business, we saw double-digit growth in the vast majority of markets we track. We set records in every category, with June quarter records in advertising, App Store, AppleCare, Apple Music, and Apple TV+, as well as all-time records in cloud services and payment services. We are optimistic about the long-term future of our services business. With our large install base of over two and a half billion active devices, we have an incredibly strong foundation for growth opportunities. Our services continue to attract more customers, and we have now surpassed one and a half billion in paid subscriptions. Both transacting and paid accounts reached new all-time highs in the quarter, with double-digit growth for both in emerging markets. We continue to improve and expand our services offerings, from powerful updates to Creator Studio to exciting new features we're bringing to services later this year, like splitting bills with Apple Cash using visual intelligence. Turning now to enterprise and education. Organizations are using the Apple platform to drive AI innovation and empower the next generation of students. Starting with enterprise, Morgan Stanley has deployed over 20,000 iPhone 17 devices globally as part of a shift from employee-owned to corporate-owned devices for liability and security. More companies are choosing Mac for on-device AI advantages, including lower costs, better performance, and enhanced privacy and security. At Disney, creative teams are increasingly turning to Mac for on-device AI workflows that reduce overall cloud token costs and keep their IP secure. Crédit Agricole, France's leading retail bank, is using on-device AI on MacBook Pro to streamline regulatory workflows, reducing manual processing time by over 80%. Our newest addition to the Mac lineup, MacBook Neo, is reaching new enterprise users in many environments, from bank branches to retail storefronts. In education, MacBook Neo continued to accelerate adoption of Apple products, with many districts leveraging Apple Financial Services to deploy at scale. Pinellas County Schools, one of the largest districts in Florida, is transitioning 25,000 students from Windows devices to MacBook Neo across its 18 high schools. In Washington, Peninsula School District 401 moved over 8,000 students from Chromebooks to MacBook Neo. In Oklahoma, Midwest City-Del City School District purchased over 6,000 MacBook Neos to become an all-Apple district for students. In fact, in the last quarter, about half of the MacBook Neo large purchases by U.S. education institutions displaced Windows and Chromebook devices. Let's turn to our cash position and capital return program. We ended the quarter with $147 billion in cash and marketable securities and $84 billion in total debt. During the quarter, we returned $33 billion to shareholders. This included $4 billion in dividends and equivalents and $25.8 billion in share repurchases. As we move ahead into the September quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to. Importantly, the color we're providing assumes that global tariff rates, policies, and their application remain in effect as of this call, and the global macroeconomic outlook does not worsen from today. We also expect our September quarter total company revenue to be impacted by two main factors. First, we expect foreign exchange to be a sequential headwind of about two and a half percentage points to the year-over-year total company growth rate from the June quarter to the September quarter. Second, we expect the impact from supply constraints to increase significantly sequentially. The projected supply constraints in the September quarter affect iPhone, Mac, and iPad. As a result, we expect our September quarter total company revenue to grow between 9%-11% year-over-year. On iPhone, we expect to continue to see high levels of demand. However, we do expect iPhone revenue to be impacted by these foreign exchange headwinds and supply constraints. Therefore, we expect the September quarter reported growth rate for iPhone to be mid-teens year-over-year. For services, we expect the September quarter year-over-year reported growth rate to be largely similar to what we reported in the June quarter after removing the negative sequential impact of about two and a half percentage points from foreign exchange that we just described. We expect gross margin to be between 47%-48%. This includes an expected benefit of approximately one percentage point related to tariff refunds. We expect operating expenses to be between $19.1 billion-$19.4 billion. We expect OIE to be around $350 million, excluding any potential impact from the mark to market of minority investments, and our tax rate to be around 16.5%. Finally, today, our board of directors has declared a cash dividend of $0.27 per share of common stock payable on August 13th, 2026, to shareholders of record as of August 10th, 2026. Before we take questions, let me turn it back over to Tim.”