Apple Inc. 10-Q

Item 1. Financial Statements Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions, except number of shares, which are reflected in thousands, and per-share amounts) Three Months Ended December 27, 2025 December 28, 2024 Net sales: Products $ 113,743 $ 97,960 Services 30,013 26,340 Total net sales 143,756 124,300 Cost of sales: Products 67,478 59,447 Services 7,047 6,578 Total cost of sales 74,525 66,025 Gross margin 69,231 58,275 Operating expenses: Research and development 10,887 8,268 Selling, general and administrative 7,492 7,175 Total operating expenses 18,379 15,443 Operating income 50,852 42,832 Other income/(expense), net 150 ( 248 ) Income before provision for income taxes 51,002 42,584 Provision for income taxes 8,905 6,254 Net income $ 42,097 $ 36,330 Earnings per share: Basic $ 2.85 $ 2.41 Diluted $ 2.84 $ 2.40 Shares used in computing earnings per share: Basic 14,748,158 15,081,724 Diluted 14,810,356 15,150,865 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q1 2026 Form 10-Q | 1 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In millions) Three Months Ended December 27, 2025 December 28, 2024 Net income $ 42,097 $ 36,330 Other comprehensive income/(loss): Change in foreign currency translation, net of tax ( 159 ) ( 625 ) Change in unrealized gains/losses on derivative instruments, net of tax: Change in fair value of derivative instruments 211 1,651 Adjustment for net (gains)/losses realized and included in net income 237 784 Total change in unrealized gains/losses on derivative instruments 448 2,435 Change in unrealized gains/losses on marketable debt securities, net of tax: Change in fair value of marketable debt securities 424 ( 1,647 ) Adjustment for net (gains)/losses realized and included in net income 4 220 Total change in unrealized gains/losses on marketable debt securities 428 ( 1,427 ) Total other comprehensive income 717 383 Total comprehensive income $ 42,814 $ 36,713 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q1 2026 Form 10-Q | 2 Apple Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions, except number of shares, which are reflected in thousands, and par value) December 27, 2025 September 27, 2025 ASSETS: Current assets: Cash and cash equivalents $ 45,317 $ 35,934 Marketable securities 21,590 18,763 Accounts receivable, net 39,921 39,777 Vendor non-trade receivables 30,399 33,180 Inventories 5,875 5,718 Other current assets 15,002 14,585 Total current assets 158,104 147,957 Non-current assets: Marketable securities 77,888 77,723 Property, plant and equipment, net 50,159 49,834 Other non-current assets 93,146 83,727 Total non-current assets 221,193 211,284 Total assets $ 379,297 $ 359,241 LIABILITIES AND SHAREHOLDERS’ EQUITY: Current liabilities: Accounts payable $ 70,587 $ 69,860 Other current liabilities 68,543 66,387 Deferred revenue 9,413 9,055 Commercial paper 1,997 7,979 Term debt 11,827 12,350 Total current liabilities 162,367 165,631 Non-current liabilities: Term debt 76,685 78,328 Other non-current liabilities 52,055 41,549 Total non-current liabilities 128,740 119,877 Total liabilities 291,107 285,508 Commitments and contingencies Shareholders’ equity: Common stock and additional paid-in capital, $ 0.00001 par value: 50,400,000 shares authorized; 14,702,703 and 14,773,260 shares issued and outstanding, respectively 95,221 93,568 Accumulated deficit ( 2,177 ) ( 14,264 ) Accumulated other comprehensive loss ( 4,854 ) ( 5,571 ) Total shareholders’ equity 88,190 73,733 Total liabilities and shareholders’ equity $ 379,297 $ 359,241 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q1 2026 Form 10-Q | 3 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (In millions, except per-share amounts) Three Months Ended December 27, 2025 December 28, 2024 Total shareholders’ equity, beginning balances $ 73,733 $ 56,950 Common stock and additional paid-in capital: Beginning balances 93,568 83,276 Common stock withheld related to net share settlement of equity awards ( 2,058 ) ( 1,891 ) Share-based compensation 3,711 3,383 Ending balances 95,221 84,768 Accumulated deficit: Beginning balances ( 14,264 ) ( 19,154 ) Net income 42,097 36,330 Dividends and dividend equivalents declared ( 3,880 ) ( 3,819 ) Common stock withheld related to net share settlement of equity awards ( 936 ) ( 1,102 ) Common stock repurchased ( 25,194 ) ( 23,476 ) Ending balances ( 2,177 ) ( 11,221 ) Accumulated other comprehensive loss: Beginning balances ( 5,571 ) ( 7,172 ) Other comprehensive income 717 383 Ending balances ( 4,854 ) ( 6,789 ) Total shareholders’ equity, ending balances $ 88,190 $ 66,758 Dividends and dividend equivalents declared per share or RSU $ 0.26 $ 0.25 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q1 2026 Form 10-Q | 4 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Three Months Ended December 27, 2025 December 28, 2024 Cash, cash equivalents, and restricted cash and cash equivalents, beginning balances $ 35,934 $ 29,943 Operating activities: Net income 42,097 36,330 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 3,214 3,080 Share-based compensation expense 3,594 3,286 Other ( 528 ) ( 2,009 ) Changes in operating assets and liabilities: Accounts receivable, net ( 153 ) 3,597 Vendor non-trade receivables 2,781 3,166 Inventories ( 211 ) 215 Other current and non-current assets ( 10,250 ) 939 Accounts payable 848 ( 6,671 ) Other current and non-current liabilities 12,533 ( 11,998 ) Cash generated by operating activities 53,925 29,935 Investing activities: Purchases of marketable securities ( 12,693 ) ( 6,124 ) Proceeds from maturities of marketable securities 7,510 15,967 Proceeds from sales of marketable securities 2,824 3,492 Payments for acquisition of property, plant and equipment ( 2,373 ) ( 2,940 ) Other ( 154 ) ( 603 ) Cash generated by/(used in) investing activities ( 4,886 ) 9,792 Financing activities: Payments for taxes related to net share settlement of equity awards ( 2,922 ) ( 2,921 ) Payments for dividends and dividend equivalents ( 3,921 ) ( 3,856 ) Repurchases of common stock ( 24,701 ) ( 23,606 ) Repayments of term debt ( 2,164 ) ( 1,009 ) Repayments of commercial paper, net ( 5,910 ) ( 7,944 ) Other ( 38 ) ( 35 ) Cash used in financing activities ( 39,656 ) ( 39,371 ) Increase in cash, cash equivalents, and restricted cash and cash equivalents 9,383 356 Cash, cash equivalents, and restricted cash and cash equivalents, ending balances $ 45,317 $ 30,299 Supplemental cash flow disclosure: Cash paid for income taxes, net $ 3,434 $ 18,651 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q1 2026 Form 10-Q | 5 Apple Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 – Summary of Significant Accounting Policies Basis of Presentation and Preparation The condensed consolidated financial statements include the accounts of Apple Inc. and its wholly owned subsidiaries (collectively “Apple” or the “Company”). In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the use of management estimates. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended September 27, 2025 (the “2025 Form 10-K”). The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. An additional week is included in the first fiscal quarter every five or six years to realign the Company’s fiscal quarters with calendar quarters. The Company’s fiscal years 2026 and 2025 span 52 weeks each. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Note 2 – Revenue The following table shows disaggregated net sales, as well as the portion of total net sales that was previously deferred, for the three months ended December 27, 2025 and December 28, 2024 (in millions): Three Months Ended December 27, 2025 December 28, 2024 iPhone ® $ 85,269 $ 69,138 Mac ® 8,386 8,987 iPad ® 8,595 8,088 Wearables, Home and Accessories 11,493 11,747 Services 30,013 26,340 Total net sales $ 143,756 $ 124,300 Portion of total net sales that was included in deferred revenue as of the beginning of the period $ 4,050 $ 3,690 The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 10, “Segment Information” for the three months ended December 27, 2025 and December 28, 2024, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales. As of December 27, 2025 and September 27, 2025, the Company had total deferred revenue of $ 14.3 billion and $ 13.7 billion, respectively. As of December 27, 2025, the Company expects 66 % of total deferred revenue to be realized in less than a year, 23 % within one-to-two years, 9 % within two-to-three years and 2 % in greater than three years. Apple Inc. | Q1 2026 Form 10-Q | 6 Note 3 – Earnings Per Share The following table shows the computation of basic and diluted earnings per share for the three months ended December 27, 2025 and December 28, 2024 (net income in millions and shares in thousands): Three Months Ended December 27, 2025 December 28, 2024 Numerator: Net income $ 42,097 $ 36,330 Denominator: Weighted-average basic shares outstanding 14,748,158 15,081,724 Effect of dilutive share-based awards 62,198 69,141 Weighted-average diluted shares 14,810,356 15,150,865 Basic earnings per share $ 2.85 $ 2.41 Diluted earnings per share $ 2.84 $ 2.40 Note 4 – Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of December 27, 2025 and September 27, 2025 (in millions): December 27, 2025 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Current Marketable Securities Non-Current Marketable Securities Cash $ 30,826 $ — $ — $ 30,826 $ 30,826 $ — $ — Level 1: Money market funds 5,959 — — 5,959 5,959 — — Mutual funds 792 195 ( 2 ) 985 — 985 — Subtotal 6,751 195 ( 2 ) 6,944 5,959 985 — Level 2 (1) : U.S. Treasury securities 18,715 64 ( 211 ) 18,568 2,302 5,341 10,925 U.S. agency securities 8,692 1 ( 114 ) 8,579 4,192 1,998 2,389 Non-U.S. government securities 6,675 117 ( 399 ) 6,393 — 771 5,622 Certificates of deposit and time deposits 1,737 — — 1,737 1,723 — 14 Commercial paper 991 — — 991 297 694 — Corporate debt securities 46,682 280 ( 695 ) 46,267 18 11,568 34,681 Municipal securities 154 — ( 1 ) 153 — 97 56 Mortgage- and asset-backed securities 25,296 158 ( 1,117 ) 24,337 — 136 24,201 Subtotal 108,942 620 ( 2,537 ) 107,025 8,532 20,605 77,888 Total $ 146,519 $ 815 $ ( 2,539 ) $ 144,795 $ 45,317 $ 21,590 $ 77,888 Apple Inc. | Q1 2026 Form 10-Q | 7 September 27, 2025 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Current Marketable Securities Non-Current Marketable Securities Cash $ 28,267 $ — $ — $ 28,267 $ 28,267 $ — $ — Level 1: Money market funds 5,272 — — 5,272 5,272 — — Mutual funds 679 177 ( 2 ) 854 — 854 — Subtotal 5,951 177 ( 2 ) 6,126 5,272 854 — Level 2 (1) : U.S. Treasury securities 16,074 56 ( 282 ) 15,848 1,190 3,712 10,946 U.S. agency securities 5,269 — ( 149 ) 5,120 251 2,456 2,413 Non-U.S. government securities 6,586 111 ( 424 ) 6,273 — 855 5,418 Certificates of deposit and time deposits 917 — — 917 904 — 13 Commercial paper 100 — — 100 50 50 — Corporate debt securities 47,210 266 ( 916 ) 46,560 — 10,623 35,937 Municipal securities 207 — ( 2 ) 205 — 119 86 Mortgage- and asset-backed securities 24,130 126 ( 1,252 ) 23,004 — 94 22,910 Subtotal 100,493 559 ( 3,025 ) 98,027 2,395 17,909 77,723 Total $ 134,711 $ 736 $ ( 3,027 ) $ 132,420 $ 35,934 $ 18,763 $ 77,723 (1) The valuation techniques used to measure the fair values of the Company’s Level 2 financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. As of December 27, 2025, 78 % of the Company’s non-current marketable debt securities other than mortgage- and asset-backed securities had maturities between 1 and 5 years, 17 % between 5 and 10 years, and 5 % greater than 10 years. As of December 27, 2025, 12 % of the Company’s non-current mortgage- and asset-backed securities had maturities between 1 and 5 years, 18 % between 5 and 10 years, and 70 % greater than 10 years. Derivative Instruments and Hedging The Company may use derivative instruments to partially offset its business exposure to foreign exchange and interest rate risk. However, the Company may choose not to hedge certain exposures for a variety of reasons, including accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange or interest rates. Foreign Exchange Rate Risk To protect gross margins from fluctuations in foreign exchange rates, the Company may use forwards, options or other instruments, and may designate these instruments as cash flow hedges. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months. To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign exchange rates, the Company may use forwards, cross-currency swaps or other instruments. The Company designates these instruments as either cash flow or fair value hedges. As of December 27, 2025, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for term debt–related foreign currency transactions is 17 years. The Company may also use derivative instruments that are not designated as accounting hedges to protect gross margins from certain fluctuations in foreign exchange rates, as well as to offset a portion of the foreign currency gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies. Interest Rate Risk To protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may use interest rate swaps, options or other instruments. The Company designates these instruments as either cash flow or fair value hedges. Apple Inc. | Q1 2026 Form 10-Q | 8 The notional amounts of the Company’s outstanding derivative instruments as of December 27, 2025 and September 27, 2025, were as follows (in millions): December 27, 2025 September 27, 2025 Derivative instruments designated as accounting hedges: Foreign exchange contracts $ 46,619 $ 62,647 Interest rate contracts $ 12,875 $ 12,875 Derivative instruments not designated as accounting hedges: Foreign exchange contracts $ 120,980 $ 109,079 As of both December 27, 2025 and September 27, 2025, the carrying amount of the Company’s current and non-current term debt subject to fair value hedges was $ 12.6 billion. Accounts Receivable Trade Receivables As of December 27, 2025, the Company had two customers that individually represented 10% or more of total trade receivables, which accounted for 15 % and 10 %. As of September 27, 2025, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 12 %. The Company’s third-party cellular network carriers accounted for 35 % and 34 % of total trade receivables as of December 27, 2025 and September 27, 2025, respectively. The Company requires third-party credit support or collateral from certain customers to limit credit risk. Vendor Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture subassemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. The Company does not reflect the sale of these components in products net sales. Rather, the Company recognizes any gain on these sales as a reduction of products cost of sales when the related final products are sold by the Company. As of December 27, 2025, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted f or 47 % and 26 %. A s of September 27, 2025, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 46 % and 23 %. Note 5 – Condensed Consolidated Financial Statement Details The following table shows the Company’s condensed consolidated financial statement details as of December 27, 2025 and September 27, 2025 (in millions): Property, Plant and Equipment, Net December 27, 2025 September 27, 2025 Gross property, plant and equipment $ 127,320 $ 125,848 Accumulated depreciation ( 77,161 ) ( 76,014 ) Total property, plant and equipment, net $ 50,159 $ 49,834 Apple Inc. | Q1 2026 Form 10-Q | 9 Note 6 – Debt Commercial Paper The Company issues unsecured short-term promissory notes pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of December 27, 2025 and September 27, 2025, the Company had $ 2.0 billion and $ 8.0 billion of commercial paper outstanding, respectively. The following table provides a summary of cash flows associated with commercial paper for the three months ended December 27, 2025 and December 28, 2024 (in millions): Three Months Ended December 27, 2025 December 28, 2024 Maturities 90 days or less: Repayments of commercial paper, net $ ( 2,122 ) $ ( 7,944 ) Maturities greater than 90 days: Repayments of commercial paper ( 3,788 ) — Total repayments of commercial paper, net $ ( 5,910 ) $ ( 7,944 ) Term Debt As of December 27, 2025 and September 27, 2025, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $ 88.5 billion and $ 90.7 billion, respectively (collectively the “Notes”). As of December 27, 2025 and September 27, 2025, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 78.1 billion and $ 80.4 billion, respectively. Note 7 – Shareholders’ Equity Share Repurchase Program During the three months ended December 27, 2025, the Company repurchased 93 million shares of its common stock for $ 25.0 billion. The Company’s share repurchase program does not obligate the Company to acquire a minimum amount of shares. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). Note 8 – Share-Based Compensation Restricted Stock Units A summary of the Company’s restricted stock unit (“RSU”) activity and related information for the three months ended December 27, 2025, is as follows: Number of RSUs (in thousands) Weighted-Average Grant-Date Fair Value Per RSU Balance as of September 27, 2025 151,574 $ 189.75 RSUs granted 61,897 $ 256.22 RSUs vested ( 33,905 ) $ 173.00 RSUs forfeited ( 3,470 ) $ 208.14 Balance as of December 27, 2025 176,096 $ 215.98 The total vesting-date fair value of RSUs was $ 8.6 billion and $ 8.4 billion for the three months ended December 27, 2025 and December 28, 2024, respectively. Apple Inc. | Q1 2026 Form 10-Q | 10 Share-Based Compensation The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of Operations for the three months ended December 27, 2025 and December 28, 2024 (in millions): Three Months Ended December 27, 2025 December 28, 2024 Share-based compensation expense $ 3,594 $ 3,286 Income tax benefit related to share-based compensation expense $ ( 1,293 ) $ ( 1,332 ) As of December 27, 2025, the total unrecognized compensation cost related to outstanding RSUs was $ 31.5 billion, which the Company expects to recognize over a weighted-average period of 2.9 years. Note 9 – Commitments and Contingencies Unconditional Purchase Obligations The Company has entered into certain off–balance sheet commitments that require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of supplier arrangements, licensed intellectual property and content, and distribution rights. Future payments under unconditional purchase obligations with a remaining term in excess of one year as of December 27, 2025, are as follows (in millions): 2026 (remaining nine months) $ 4,754 2027 8,066 2028 7,005 2029 6,538 2030 5,992 Thereafter 827 Total $ 33,182 Contingencies The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims. Apple Inc. | Q1 2026 Form 10-Q | 11 Note 10 – Segment Information The following table shows information by reportable segment for the three months ended December 27, 2025 and December 28, 2024 (in millions): Three Months Ended December 27, 2025 Americas Europe Greater China Japan Rest of Asia Pacific Corporate Total Net sales $ 58,529 $ 38,146 $ 25,526 $ 9,413 $ 12,142 $ — $ 143,756 Cost of sales ( 31,849 ) ( 19,061 ) ( 13,030 ) ( 4,511 ) ( 6,074 ) — ( 74,525 ) Research and development — — — — — ( 10,887 ) ( 10,887 ) Selling and marketing ( 2,727 ) ( 1,295 ) ( 704 ) ( 289 ) ( 382 ) — ( 5,397 ) General and administrative — — — — — ( 2,095 ) ( 2,095 ) Operating income/(loss) $ 23,953 $ 17,790 $ 11,792 $ 4,613 $ 5,686 $ ( 12,982 ) $ 50,852 Three Months Ended December 28, 2024 Americas Europe Greater China Japan Rest of Asia Pacific Corporate Total Net sales $ 52,648 $ 33,861 $ 18,513 $ 8,987 $ 10,291 $ — $ 124,300 Cost of sales ( 28,495 ) ( 18,043 ) ( 9,759 ) ( 4,393 ) ( 5,335 ) — ( 66,025 ) Research and development — — — — — ( 8,268 ) ( 8,268 ) Selling and marketing ( 2,644 ) ( 1,211 ) ( 594 ) ( 280 ) ( 372 ) — ( 5,101 ) General and administrative — — — — — ( 2,074 ) ( 2,074 ) Operating income/(loss) $ 21,509 $ 14,607 $ 8,160 $ 4,314 $ 4,584 $ ( 10,342 ) $ 42,832 Apple Inc. | Q1 2026 Form 10-Q | 12