What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-01 compared with 2025-05-02 · 67 added, 78 removed, 114 unchanged (56% 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 and tariffs and other trade measures 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 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.

14 unchanged sentences

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

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

• MacBook Air ®

• Mac Studio ®

During the third quarter of 2025, the Company announced iOS 26, macOS ® Tahoe 26, iPadOS ® 26, watchOS ® 26, visionOS ® 26 and tvOS ® 26.

Macroeconomic Conditions

1 unchanged sentence

| Q3 2025 Form 10-Q | 13

Tariffs and Other Trade Measures

Tariffs and Other Measures

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

2 unchanged sentences

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.

Various modifications to the U.S.

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

For example, the U.S.

5 unchanged sentences

Segment Operating Performance

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,

The following table shows net sales by reportable segment for the three- and nine-month periods ended June 28, 2025 and June 29, 2024 (dollars in millions):

Three Months Ended Nine Months Ended

2025 June 29,

2024 Change June 28,

2025 June 29,

Americas $ 41,198 $ 37,678 9 % $ 134,161 $ 125,381 7 %

4 unchanged sentences

Total net sales $ 94,036 $ 85,777 10 % $ 313,695 $ 296,105 6 %

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 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.

Americas net sales increased during the third quarter and first nine 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 a net unfavorable year-over-year impact on Europe net sales during the second quarter of 2025.

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

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

Greater China

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

Greater China net sales increased during the third quarter of 2025 compared to the third quarter of 2024 due primarily to higher net sales of iPhone and Mac.

Greater China net sales decreased during the first nine months of 2025 compared to the same period in 2024 due to lower net sales of iPhone, partially offset by higher net sales of Mac.

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

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

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

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.

Rest of Asia Pacific net sales increased during the third quarter and first nine months of 2025 compared to the same periods in 2024 due primarily to higher net sales of Services and iPhone.

| Q3 2025 Form 10-Q | 14

Products and Services Performance

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,

The following table shows net sales by category for the three- and nine-month periods ended June 28, 2025 and June 29, 2024 (dollars in millions):

Three Months Ended Nine Months Ended

2025 June 29,

2024 Change June 28,

2025 June 29,

iPhone $ 44,582 $ 39,296 13 % $ 160,561 $ 154,961 4 %

4 unchanged sentences

Total net sales $ 94,036 $ 85,777 10 % $ 313,695 $ 296,105 6 %

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.

iPhone net sales increased during the third quarter and first nine months of 2025 compared to the same periods in 2024 due to higher net sales of Pro models.

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

iPad net sales decreased during the third quarter of 2025 compared to the third quarter of 2024 due to lower net sales of iPad Pro ® , partially offset by higher net sales of all other iPad models.

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

Wearables, Home and Accessories

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.

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

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

| Q3 2025 Form 10-Q | 15

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,

Products and Services gross margin and gross margin percentage for the three- and nine-month periods ended June 28, 2025 and June 29, 2024, were as follows (dollars in millions):

Three Months Ended Nine Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Gross margin:

7 unchanged sentences

Products Gross Margin

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.

Products gross margin increased during the third quarter of 2025 compared to the third quarter of 2024 due primarily to a different mix of products and favorable costs, partially offset by tariffs.

Products gross margin increased during the first nine months of 2025 compared to the same period in 2024 due primarily to favorable costs and a different mix of products, partially offset by tariffs and the weakness in foreign currencies relative to the U.S.

Products gross margin percentage decreased during the third quarter of 2025 compared to the third quarter of 2024 due primarily to tariffs and a different mix of products, partially offset by favorable costs.

Products gross margin percentage decreased during the first nine months of 2025 compared to the same period in 2024 due primarily to a different mix of products and tariffs, partially offset by favorable costs.

Services Gross Margin

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.

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

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

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.

1 unchanged sentence

Operating Expenses

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,

Operating expenses for the three- and nine-month periods ended June 28, 2025 and June 29, 2024, were as follows (dollars in millions):

Three Months Ended Nine Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Research and development $ 8,866 $ 8,006 $ 25,684 $ 23,605

5 unchanged sentences

Research and Development

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.

The growth in research and development (“R&D”) expense during the third quarter and first nine 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 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.

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

Provision for Income Taxes

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, effective tax rate and statutory federal income tax rate for the three- and nine-month periods ended June 28, 2025 and June 29, 2024, were as follows (dollars in millions):

Three Months Ended Nine Months Ended

2025 June 29,

2024 June 28,

2025 June 29,

Provision for income taxes $ 4,597 $ 4,046 $ 15,381 $ 14,875

1 unchanged sentence

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

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 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.

The Company’s effective tax rate for the third quarter of 2025 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, the impact of the U.S.

federal R&D credit, and tax benefits from share-based compensation, partially offset by state income taxes.

The Company’s effective tax rate for the first nine 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, and the impact of the U.S.

federal R&D credit, partially offset by state income taxes.

The Company’s effective tax rate for the third quarter of 2025 was higher compared to the third quarter of 2024 due primarily to the impact from foreign currency revaluations of unrecognized tax benefits.

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

| Q3 2025 Form 10-Q | 17

5 unchanged sentences

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

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

As of June 28, 2025, the Company had manufacturing purchase obligations of $44.1 billion, with $43.8 billion payable within 12 months.

State Aid Decision Tax Payable

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.

During the first nine 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, 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.

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

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.

As of June 28, 2025, the Company’s quarterly cash dividend was $0.26 per share.

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

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.

During the third quarter of 2025, the Company repurchased $21.0 billion of its common stock and paid dividends and dividend equivalents of $3.9 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

4 unchanged sentences

The Company will adopt ASU 2023-07 in its fourth quarter of 2025 using a retrospective transition method.

| Q3 2025 Form 10-Q | 18

Critical Accounting Estimates

3 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

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

There have been no material changes to the Company’s market risk during the first nine 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