What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-31 compared with 2026-05-01 · 65 added, 74 removed, 129 unchanged (52% of the section changed)

19 unchanged sentences

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

During the second quarter of 2026, the Company announced the following new or updated products:

• MacBook Pro ®

• MacBook Air ®

• MacBook Neo™

• AirPods Max ® 2

During the third quarter of 2026, the Company announced iOS 27, macOS ® 27 Golden Gate, iPadOS ® 27, watchOS ® 27, visionOS ® 27 and tvOS ® 27, and introduced Siri AI.

Macroeconomic Conditions

1 unchanged sentence

The Company is experiencing a period of supply constraints and increasing costs for components driven by factors such as industry supply-demand imbalances for components, including advanced semiconductors, storage (NAND) and memory (DRAM).

The Company expects these trends to intensify, which, together with actions that may be taken by the Company in response to such trends, may materially adversely affect demand for the Company’s products and negatively impact the Company’s revenue, costs, gross margin, results of operations and financial condition.

The Company expects these trends to intensify, which may materially negatively impact the Company’s revenue, costs, gross margin, results of operations and financial condition.

Actions, such as price increases, that have been and may in the future be taken by the Company may not effectively mitigate these negative impacts, and may also reduce demand for the Company’s products and materially adversely affect the Company’s revenue, costs, gross margin, results of operations and financial condition.

| Q3 2026 Form 10-Q | 13

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Separately, on February 20, 2026, the U.S.

Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act of 1977.

The Company is applying for a refund of tariffs paid, following the processes established by U.S.

Customs and Border Protection.

Supreme Court (“Supreme Court”) issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act of 1977.

The Company has applied for a refund of tariffs paid, following the processes established by U.S.

Customs and Border Protection, and has recognized any refunds received as a reduction of products cost of sales.

Various modifications to U.S.

tariffs have been announced, including the imposition of tariffs under Section 122 of the Trade Act of 1974, and further changes could be made in the future, which may include additional measures under the Section 232 semiconductor sector investigation, additional sector-based tariffs, actions under Section 301 of the Trade Act of 1974, or other measures.

tariffs have been announced, including the recent imposition of tariffs under Section 301 of the Trade Act of 1974, and further changes could be made in the future, which may include additional measures under the Section 232 semiconductor sector investigation, additional sector-based tariffs, further actions under Section 301, or other measures.

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.

3 unchanged sentences

Segment Operating Performance

The following table shows net sales by reportable segment for the three- and six-month periods ended March 28, 2026 and March 29, 2025 (dollars in millions):

Three Months Ended Six Months Ended

2026 March 29,

2025 Change March 28,

2026 March 29,

The following table shows net sales by reportable segment for the three- and nine-month periods ended June 27, 2026 and June 28, 2025 (dollars in millions):

Three Months Ended Nine Months Ended

2026 June 28,

2025 Change June 27,

2026 June 28,

Americas $ 45,781 $ 41,198 11% $ 149,403 $ 134,161 11%

4 unchanged sentences

Total net sales $ 109,417 $ 94,036 16% $ 364,357 $ 313,695 16%

Americas net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 due to higher net sales of iPhone and Services.

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

dollar had a favorable year-over-year impact on Americas net sales during the second quarter of 2026.

Europe net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone and Services.

Americas net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone, Services and Mac.

Europe net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone, Services and Mac.

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 second quarter and first six months of 2026.

dollar had a net favorable year-over-year impact on Europe net sales during the first nine months of 2026.

Greater China

Greater China net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 due to higher net sales of iPhone.

Greater China net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher 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 second quarter of 2026.

dollar had a favorable year-over-year impact on Greater China net sales during the third quarter and first nine months of 2026.

| Q3 2026 Form 10-Q | 14

Japan net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone.

Japan net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 due to higher net sales of iPhone.

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

dollar had an unfavorable year-over-year impact on Japan net sales during the first six months of 2026.

dollar had an unfavorable year-over-year impact on Japan net sales during the third quarter and first nine months of 2026.

Rest of Asia Pacific

Rest of Asia Pacific net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone and Services.

Rest of Asia Pacific net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone, Services and Mac.

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

dollar had a net favorable year-over-year impact on Rest of Asia Pacific net sales during the second quarter of 2026.

dollar had a net favorable year-over-year impact on Rest of Asia Pacific net sales during the third quarter of 2026.

Products and Services Performance

The following table shows net sales by category for the three- and six-month periods ended March 28, 2026 and March 29, 2025 (dollars in millions):

Three Months Ended Six Months Ended

2026 March 29,

2025 Change March 28,

2026 March 29,

The following table shows net sales by category for the three- and nine-month periods ended June 27, 2026 and June 28, 2025 (dollars in millions):

Three Months Ended Nine Months Ended

2026 June 28,

2025 Change June 27,

2026 June 28,

iPhone $ 54,252 $ 44,582 22% $ 196,515 $ 160,561 22%

4 unchanged sentences

Total net sales $ 109,417 $ 94,036 16% $ 364,357 $ 313,695 16%

iPhone net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 due to higher net sales of Pro models.

Mac net sales increased during the second quarter of 2026 compared to the second quarter of 2025 due to higher net sales of laptops.

Year-over-year Mac net sales during the first six months of 2026 were relatively flat.

iPad net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPad, partially offset by lower net sales of iPad mini ® .

iPhone net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of Pro models.

Mac net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 due to higher net sales of laptops.

iPad net sales decreased during the third quarter of 2026 compared to the third quarter of 2025 primarily due to lower net sales of iPad mini ® and iPad Air ® .

Year-over-year iPad net sales increased during the first nine months of 2026 primarily due to higher net sales of iPad, partially offset by lower net sales of iPad mini.

Wearables, Home and Accessories

Wearables, Home and Accessories net sales increased during the second quarter of 2026 compared to the second quarter of 2025 primarily due to higher net sales of Accessories and Wearables.

Year-over-year Wearables, Home and Accessories net sales during the first six months of 2026 were relatively flat.

Services net sales increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher net sales from advertising, the App Store ® and cloud services.

Wearables, Home and Accessories net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 due to higher net sales of Accessories and Wearables.

Services net sales increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher net sales from advertising and cloud services.

| Q3 2026 Form 10-Q | 15

Products and Services gross margin and gross margin percentage for the three- and six-month periods ended March 28, 2026 and March 29, 2025, were as follows (dollars in millions):

Three Months Ended Six Months Ended

2026 March 29,

2025 March 28,

2026 March 29,

Products and Services gross margin and gross margin percentage for the three- and nine-month periods ended June 27, 2026 and June 28, 2025, were as follows (dollars in millions):

Three Months Ended Nine Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

Gross margin:

7 unchanged sentences

Products Gross Margin

Products gross margin and gross margin percentage increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to a different mix of products and strength in foreign currencies relative to the U.S.

dollar, partially offset by higher costs.

Products gross margin and gross margin percentage increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to a different mix of products and tariff refunds, partially offset by higher costs, including memory.

Services Gross Margin

Services gross margin increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher Services net sales and a different mix of services.

Services gross margin percentage increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to a different mix of services and strength in foreign currencies relative to the U.S.

dollar, partially offset by higher costs.

Services gross margin increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher Services net sales and a different mix of services, partially offset by higher costs.

Services gross margin percentage was flat during the third quarter of 2026 compared to the third quarter of 2025.

Year-over-year Services gross margin percentage increased during the first nine months of 2026 primarily due 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 2025 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 28, 2026 and March 29, 2025, were as follows (dollars in millions):

Three Months Ended Six Months Ended

2026 March 29,

2025 Change March 28,

2026 March 29,

Operating expenses for the three- and nine-month periods ended June 27, 2026 and June 28, 2025, were as follows (dollars in millions):

Three Months Ended Nine Months Ended

2026 June 28,

2025 Change June 27,

2026 June 28,

Research and development $ 11,729 $ 8,866 32 % $ 34,035 $ 25,684 33 %

5 unchanged sentences

Research and Development

Research and development (“R&D”) expense increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher infrastructure-related costs and headcount-related expenses.

Research and development (“R&D”) expense increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher infrastructure-related costs, including investments in artificial intelligence, and headcount-related expenses.

Selling, General and Administrative

Selling, general and administrative expense increased during the second quarter and first six months of 2026 compared to the same periods in 2025 primarily due to higher headcount-related expenses, variable selling expenses and professional services.

Selling, general and administrative expense increased during the third quarter and first nine months of 2026 compared to the same periods in 2025.

The increases were driven by various factors, none of which were significant individually or in the aggregate.

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 28, 2026 and March 29, 2025, were as follows (dollars in millions):

Three Months Ended Six Months Ended

2026 March 29,

2025 March 28,

2026 March 29,

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three- and nine-month periods ended June 27, 2026 and June 28, 2025, were as follows (dollars in millions):

Three Months Ended Nine Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

Provision for income taxes $ 6,478 $ 4,597 $ 21,638 $ 15,381

1 unchanged sentence

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

The Company’s effective tax rate for the second quarter of 2026 was lower than the statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, the impact of the U.S.

federal R&D credit, and a change in valuation allowance, partially offset by state income taxes.

The Company’s effective tax rate for the first six months of 2026 was lower than the statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, the impact of the U.S.

The Company’s effective tax rate for the third quarter and first nine months of 2026 was lower than the statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, including the impact of changes in unrecognized tax benefits, 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 second quarter of 2026 was higher compared to the second quarter of 2025 primarily due to the impact of changes in unrecognized tax benefits, partially offset by a change in valuation allowance.

The Company’s effective tax rate for the first six months of 2026 was higher compared to the same period in 2025 primarily due to the impact of changes in unrecognized tax benefits, the impact of foreign currency loss regulations issued by the U.S.

The Company’s effective tax rate for the third quarter of 2026 was higher compared to the third quarter of 2025 primarily due to a higher effective tax rate on foreign earnings, partially offset by the impact of changes in unrecognized tax benefits and tax benefits from share-based compensation.

The Company’s effective tax rate for the first nine months of 2026 was higher compared to the same period in 2025 primarily due to a higher effective tax rate on foreign earnings, including 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 in the first quarter of 2025 related to the State Aid Decision.

6 unchanged sentences

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

As of March 28, 2026, the Company had manufacturing purchase obligations of $44.6 billion, with $43.9 billion payable within 12 months.

As of June 27, 2026, the Company had manufacturing purchase obligations of $57.0 billion, with $56.2 billion payable within 12 months.

Other Purchase Obligations

The Company’s other purchase obligations primarily consist of noncancelable obligations related to supplier arrangements, licensed intellectual property and content, distribution rights, and the acquisition of capital assets related to product manufacturing.

As of March 28, 2026, the Company had other purchase obligations of $30.4 billion, with $9.3 billion payable within 12 months.

As of June 27, 2026, the Company had other purchase obligations of $29.3 billion, with $9.2 billion payable within 12 months.

Deemed Repatriation Tax Payable

During the first six months of 2026, the Company paid the remaining $8.8 billion balance of the deemed repatriation tax payable imposed by the U.S.

During the first nine months of 2026, the Company paid the remaining $8.8 billion balance of the deemed repatriation tax payable imposed by the U.S.

Tax Cuts and Jobs Act of 2017.

Capital Return Program

In addition to its contractual cash requirements, the Company has an authorized share repurchase program, under which the remaining availability was $63.8 billion as of March 28, 2026.

On April 30, 2026, 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 April 30, 2026, the Company also announced the Board of Directors raised the Company’s quarterly cash dividend from $0.26 to $0.27 per share, beginning with the dividend to be paid during the third quarter of 2026.

As of June 27, 2026, the Company’s quarterly cash dividend was $0.27 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 2026, the Company repurchased $11.0 billion of its common stock and paid dividends and dividend equivalents of $3.8 billion.

During the third quarter of 2026, the Company repurchased $25.8 billion of its common stock and paid dividends and dividend equivalents of $4.0 billion.

Recent Accounting Pronouncements

6 unchanged sentences

The Company is currently evaluating the timing and method of its adoption of ASU 2025-06.

| Q2 2026 Form 10-Q | 18

Disaggregation of Income Statement Expenses

7 unchanged sentences

The Company will adopt ASU 2024-03 in its fourth quarter of 2028 using a prospective transition method.

| Q3 2026 Form 10-Q | 18

In December 2023, the FASB issued ASU No.

8 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 2026.

There have been no material changes to the Company’s market risk during the first nine months of 2026.

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 2025 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