What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2025-01-31 · 92 added, 59 removed, 100 unchanged (60% of the section changed)

2 unchanged sentences

Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

For example, statements in this Form 10-Q regarding the potential future impact of macroeconomic conditions on the Company’s business and results of operations are forward-looking statements .

For example, statements in this Form 10-Q regarding the potential future impact of macroeconomic conditions and tariffs and other trade measures on the Company’s business and results of operations are forward-looking statements .

Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms.

6 unchanged sentences

The Company periodically provides certain information for investors on its corporate website, www.apple.com, and its investor relations website, investor.apple.com.

This includes press releases and other information about financial performance, information on environmental, social and governance matters, and details related to the Company’s annual meeting of shareholders.

This includes press releases and other information about financial performance, information on corporate governance, and details related to the Company’s annual meeting of shareholders.

The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing.

5 unchanged sentences

Net sales can also be affected when consumers and distributors anticipate a product introduction.

During the first quarter of 2025, the Company announced the following product updates:

• MacBook Pro ®

• iPad mini ®

During the second quarter of 2025, the Company announced the following new or updated products:

• MacBook Air ®

• Mac Studio ®

Macroeconomic Conditions

1 unchanged sentence

| Q2 2025 Form 10-Q | 12

Tariffs and Other Trade Measures

Beginning in the second quarter of 2025, new tariffs were announced on imports to the U.S.

Tariffs”), including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the European Union (“EU”), among others.

In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S.

and other retaliatory measures.

Various modifications and delays to the U.S.

Tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures.

For example, the U.S.

Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into, among other things, imports of semiconductors, semiconductor manufacturing equipment, and their derivative products, including downstream products that contain semiconductors.

Tariffs and other measures that are applied to the Company’s products or their components can have a material adverse impact on the Company’s business, results of operations and financial condition, including impacting the Company’s supply chain, the availability of rare earths and other raw materials and components, pricing and gross margin.

The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S.

Tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, and the overall magnitude and duration of these measures.

Trade and other international disputes can have an adverse impact on the overall macroeconomic environment and result in shifts and reductions in consumer spending and negative consumer sentiment for the Company’s products and services, all of which can further adversely affect the Company’s business and results of operations.

Segment Operating Performance

The following table shows net sales by reportable segment for the three months ended December 28, 2024 and December 30, 2023 (dollars in millions):

Three Months Ended

2024 December 30,

The following table shows net sales by reportable segment for the three- and six-month periods ended March 29, 2025 and March 30, 2024 (dollars in millions):

Three Months Ended Six Months Ended

2025 March 30,

2024 Change March 29,

2025 March 30,

Americas $ 40,315 $ 37,273 8 % $ 92,963 $ 87,703 6 %

4 unchanged sentences

Total net sales $ 95,359 $ 90,753 5 % $ 219,659 $ 210,328 4 %

Americas net sales increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to higher net sales of Services and iPhone.

Americas net sales increased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to higher net sales of iPhone and Services.

The weakness in foreign currencies relative to the U.S.

dollar had an unfavorable year-over-year impact on Americas net sales during the first quarter of 2025.

Europe net sales increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to higher net sales of Services and iPhone.

The strength in foreign currencies relative to the U.S.

dollar had a net favorable year-over-year impact on Europe net sales during the first quarter of 2025.

dollar had an unfavorable year-over-year impact on Americas net sales during the second quarter and first six months of 2025.

Europe net sales were relatively flat during the second quarter of 2025 compared to the second quarter of 2024.

Year-over-year Europe net sales increased during the first six months of 2025 due primarily to higher net sales of Services, Mac and iPad.

The weakness in foreign currencies relative to the U.S.

dollar had a net unfavorable year-over-year impact on Europe net sales during the second quarter of 2025.

Greater China

Greater China net sales decreased during the first quarter of 2025 compared to the same quarter in 2024 due to lower net sales of iPhone.

The strength in the renminbi relative to the U.S.

dollar had a favorable year-over-year impact on Greater China net sales during the first quarter of 2025.

Japan net sales increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to higher net sales of iPhone and Services.

Rest of Asia Pacific

Rest of Asia Pacific net sales were relatively flat during the first quarter of 2025 compared to the same quarter in 2024.

Greater China net sales decreased during the first six months of 2025 compared to the same period in 2024 due to lower net sales of iPhone.

The weakness in the renminbi relative to the U.S.

dollar had an unfavorable year-over-year impact on Greater China net sales during the second quarter of 2025.

Japan net sales increased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to higher net sales of iPhone and Services.

The weakness in the yen relative to the U.S.

dollar had an unfavorable year-over-year impact on Japan net sales during the second quarter and first six months of 2025.

| Q2 2025 Form 10-Q | 13

Rest of Asia Pacific

Rest of Asia Pacific net sales increased during the second quarter of 2025 compared to the second quarter of 2024 due primarily to higher net sales of Services and iPhone.

Year-over-year Rest of Asia Pacific net sales increased during the first six months of 2025 due primarily to higher net sales of Services.

Changes in foreign currencies relative to the U.S.

dollar had a net unfavorable year-over-year impact on Rest of Asia Pacific net sales during the second quarter of 2025, while they had a net favorable impact during the first six months of 2025.

Products and Services Performance

The following table shows net sales by category for the three months ended December 28, 2024 and December 30, 2023 (dollars in millions):

Three Months Ended

2024 December 30,

The following table shows net sales by category for the three- and six-month periods ended March 29, 2025 and March 30, 2024 (dollars in millions):

Three Months Ended Six Months Ended

2025 March 30,

2024 Change March 29,

2025 March 30,

iPhone $ 46,841 $ 45,963 2 % $ 115,979 $ 115,665 — %

4 unchanged sentences

Total net sales $ 95,359 $ 90,753 5 % $ 219,659 $ 210,328 4 %

iPhone net sales were relatively flat during the first quarter of 2025 compared to the same quarter in 2024.

Mac net sales increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to higher net sales of laptops.

iPad net sales increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to higher net sales of iPad Air ® .

iPhone net sales increased during the second quarter of 2025 compared to the second quarter of 2024 due primarily to higher net sales of Pro models.

Year-over-year iPhone net sales were relatively flat during the first six months of 2025.

Mac net sales increased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to higher net sales of both laptops and desktops.

iPad net sales increased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to higher net sales of iPad Air.

Wearables, Home and Accessories

Wearables, Home and Accessories net sales decreased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to lower net sales of Wearables.

Services net sales increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to higher net sales from advertising, the App Store ® and cloud services.

Wearables, Home and Accessories net sales decreased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to lower net sales of Wearables.

Services net sales increased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to higher net sales from advertising, the App Store ® and cloud services.

| Q2 2025 Form 10-Q | 14

Products and Services gross margin and gross margin percentage for the three months ended December 28, 2024 and December 30, 2023 were as follows (dollars in millions):

Three Months Ended

2024 December 30,

Products and Services gross margin and gross margin percentage for the three- and six-month periods ended March 29, 2025 and March 30, 2024 were as follows (dollars in millions):

Three Months Ended Six Months Ended

2025 March 30,

2024 March 29,

2025 March 30,

Gross margin:

7 unchanged sentences

Products Gross Margin

Products gross margin and Products gross margin percentage were relatively flat during the first quarter of 2025 compared to the same quarter in 2024.

Products gross margin was relatively flat during the second quarter of 2025 compared to the second quarter of 2024.

Year-over-year Products gross margin increased during the first six months of 2025 due primarily to favorable costs, partially offset by a different mix of products and weakness in foreign currencies relative to the U.S.

Products gross margin percentage decreased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to a different mix of products and weakness in foreign currencies relative to the U.S.

dollar, partially offset by favorable costs.

Services Gross Margin

Services gross margin increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to higher Services net sales and a different Services mix.

Services gross margin percentage increased during the first quarter of 2025 compared to the same quarter in 2024 due primarily to a different Services mix, partially offset by higher Services costs.

Services gross margin increased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to higher Services net sales.

Services gross margin percentage increased during the second quarter and first six months of 2025 compared to the same periods in 2024 due primarily to a different mix of services, partially offset by higher Services costs and weakness in foreign currencies relative to the U.S.

The Company’s future gross margins can be impacted by a variety of factors, as discussed in Part I, Item 1A of the 2024 Form 10-K and Part II, Item 1A of this Form 10-Q, in each case under the heading “Risk Factors.” As a result, the Company believes, in general, gross margins will be subject to volatility and downward pressure.

| Q2 2025 Form 10-Q | 15

Operating Expenses

Operating expenses for the three months ended December 28, 2024 and December 30, 2023 were as follows (dollars in millions):

Three Months Ended

2024 December 30,

Operating expenses for the three- and six-month periods ended March 29, 2025 and March 30, 2024 were as follows (dollars in millions):

Three Months Ended Six Months Ended

2025 March 30,

2024 March 29,

2025 March 30,

Research and development $ 8,550 $ 7,903 $ 16,818 $ 15,599

5 unchanged sentences

Research and Development

The growth in research and development expense during the first quarter of 2025 compared to the same quarter in 2024 was driven primarily by increases in headcount-related expenses and infrastructure-related costs.

The growth in research and development expense during the second quarter and first six months of 2025 compared to the same periods in 2024 was driven primarily by increases in headcount-related expenses and infrastructure-related costs.

Selling, General and Administrative

The growth in selling, general and administrative expense during the first quarter of 2025 compared to the same quarter in 2024 was driven primarily by higher variable selling expenses and increases in headcount-related expenses.

| Q1 2025 Form 10-Q | 15

The growth in selling, general and administrative expense during the second quarter of 2025 compared to the second quarter of 2024 was driven primarily by increases in professional services and headcount-related expenses.

Year-over-year selling, general and administrative expense increased during the first six months of 2025 due primarily to increases in variable selling expenses, headcount-related expenses and professional services.

Provision for Income Taxes

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three months ended December 28, 2024 and December 30, 2023 were as follows (dollars in millions):

Three Months Ended

2024 December 30,

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three- and six-month periods ended March 29, 2025 and March 30, 2024 were as follows (dollars in millions):

Three Months Ended Six Months Ended

2025 March 30,

2024 March 29,

2025 March 30,

Provision for income taxes $ 4,530 $ 4,422 $ 10,784 $ 10,829

1 unchanged sentence

Statutory federal income tax rate 21 % 21 % 21 % 21 %

The Company’s effective tax rate for the first quarter of 2025 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, tax benefits from share-based compensation, the impact of foreign currency loss regulations issued by the U.S.

The Company’s effective tax rate for the second quarter of 2025 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, including the impact of changes in unrecognized tax benefits, partially offset by state income taxes.

The Company’s effective tax rate for the first six months of 2025 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, including the impact of changes in unrecognized tax benefits, tax benefits from share-based compensation, the impact of foreign currency loss regulations issued by the U.S.

Department of the Treasury in December 2024, and the tax impact from foreign currency revaluations related to the State Aid Decision.

The Company’s effective tax rate for the first quarter of 2025 was lower compared to the same quarter in 2024 due primarily to the impact of foreign currency loss regulations issued by the U.S.

The Company’s effective tax rate for the second quarter of 2025 was lower compared to the second quarter of 2024 due primarily to the impact of changes in unrecognized tax benefits, partially offset by a higher effective tax rate on foreign earnings.

The Company’s effective tax rate for the first six months of 2025 was lower compared to the same period in 2024 due primarily to the impact of changes in unrecognized tax benefits, the impact of foreign currency loss regulations issued by the U.S.

Department of the Treasury in December 2024, and the tax impact from foreign currency revaluations related to the State Aid Decision, partially offset by a higher effective tax rate on foreign earnings.

| Q2 2025 Form 10-Q | 16

Liquidity and Capital Resources

The Company believes its balances of unrestricted cash, cash equivalents and marketable securities, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond.

The Company’s contractual cash requirements have not changed materially since the 2024 Form 10-K, except for commercial paper, manufacturing purchase obligations and the State Aid Decision tax payable.

Commercial Paper

The Company issues unsecured short-term promissory notes pursuant to a commercial paper program.

As of December 28, 2024, the Company had $2.0 billion of commercial paper outstanding, which was payable within 12 months.

The Company believes its balances of cash, cash equivalents and marketable securities, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond.

The Company’s contractual cash requirements have not changed materially since the 2024 Form 10-K, except for manufacturing purchase obligations and the State Aid Decision tax payable.

Manufacturing Purchase Obligations

1 unchanged sentence

The Company also obtains individual components for its products from a wide variety of individual suppliers.

As of December 28, 2024, the Company had manufacturing purchase obligations of $39.8 billion, which were payable within 12 months.

As of March 29, 2025, the Company had manufacturing purchase obligations of $38.4 billion, which were payable within 12 months.

State Aid Decision Tax Payable

During the first quarter of 2025, the Company paid €11.0 billion or $11.9 billion to Ireland in connection with the State Aid Decision.

As of December 28, 2024, the Company had a remaining obligation to pay €3.3 billion or $3.4 billion, which was expected to be paid within 12 months.

The funds necessary to settle the remaining obligation were held in escrow as of December 28, 2024, and restricted from general use.

During the first six months of 2025, the Company released from escrow €14.2 billion or $15.4 billion to Ireland in connection with the State Aid Decision, which fully settled the obligation.

Capital Return Program

In addition to its contractual cash requirements, the Company has an authorized share repurchase program.

The program does not obligate the Company to acquire a minimum amount of shares.

As of December 28, 2024, the Company’s quarterly cash dividend was $0.25 per share.

In addition to its contractual cash requirements, the Company has an authorized share repurchase program, under which the remaining availability was $40.8 billion as of March 29, 2025.

On May 1, 2025, the Company announced the Board of Directors had authorized an additional program to repurchase up to $100 billion of the Company’s common stock.

The programs do not obligate the Company to acquire a minimum amount of shares.

On May 1, 2025, the Company also announced the Board of Directors raised the Company’s quarterly cash dividend from $0.25 to $0.26 per share, beginning with the dividend to be paid during the third quarter of 2025.

The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.

During the first quarter of 2025, the Company repurchased $23.3 billion of its common stock and paid dividends and dividend equivalents of $3.9 billion.

| Q1 2025 Form 10-Q | 16

During the second quarter of 2025, the Company repurchased $25.0 billion of its common stock and paid dividends and dividend equivalents of $3.8 billion.

Recent Accounting Pronouncements

13 unchanged sentences

The Company will adopt ASU 2023-09 in its fourth quarter of 2026 using a prospective transition method.

| Q2 2025 Form 10-Q | 17

Segment Reporting

9 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s market risk during the first three months of 2025.

There have been no material changes to the Company’s market risk during the first six months of 2025.

For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2024 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis