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    AAPL
    Earnings call· Dec 2025(Q1 FY26)

    Apple Q1 FY26 earnings call AAPL

    Jan 29, 2026 Source

    Executive summary

    Apple Q1 FY26 — Record Revenue and EPS Driven by Strong iPhone Demand

    Apple delivered a record-breaking quarter, fueled by exceptional demand for the iPhone 17 lineup and robust growth in its Services segment. The company's installed base of active devices surpassed 2.5 billion, providing a strong foundation for future growth, particularly in emerging markets like India and Greater China. Management anticipates continued strong performance into the March quarter, despite some supply constraints for iPhone and rising memory costs, which are being managed through a range of options.

    Highlights

    5

    • Best-ever quarter with $143.8 billion in revenue, up 16% YoY

    • iPhone revenue grew 23% YoY to $85.3 billion, setting an all-time record

    • Services revenue reached an all-time record of $30 billion, up 14% YoY

    • EPS reached an all-time record of $2.84, growing 19% YoY

    • Operating cash flow hit an all-time record of $53.9 billion

    Concerns

    4

    • Mac revenue decreased 7% YoY to $8.4 billion due to difficult prior-year comparisons

    • Wearables, Home and Accessories revenue decreased 2% YoY to $11.5 billion due to AirPods Pro 3 constraints

    • iPhone supply constraints expected in Q2 FY26 due to advanced node capacity limitations

    • Memory pricing expected to increase significantly beyond Q2 FY26

    Guidance & targets

    6
    CategoryTargetConfidence
    March quarter total company revenue growth
    13% to 16% year-over-year
    high materiality
    High
    March quarter services revenue growth
    similar to what we reported in the December quarter
    medium materiality
    High
    March quarter gross margin
    between 48% and 49%
    high materiality
    High
    March quarter operating expenses
    between $18.4 billion and $18.7 billion
    medium materiality
    High
    March quarter OI&E
    around $100 million
    low materiality
    High
    March quarter tax rate
    around 17.5%
    low materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Total Company
    Best-ever quarter, exceeding expectations. Set all-time revenue records in both developed and emerging markets, with double-digit growth across most tracked markets including the U.S., Latin America, Western Europe, Greater China, India, and South Asia.
    		$143.8B16%——
    Products
    Driven by double-digit growth in iPhone, setting a new all-time record. Products gross margin was up 450 basis points sequentially due to favorable mix and leverage.
    		$113.7B16%—40.7% gross margin
    Services
    All-time revenue record, with broad-based double-digit growth in almost every market. Services gross margin was up 120 basis points sequentially due to mix. All-time revenue records for advertising, cloud services, music, and payment services, with December quarter records on the App Store and video.
    		$30B14%—76.5% gross margin
    iPhone
    All-time revenue record, driven by the iPhone 17 family. Reached all-time revenue records in many markets including the U.S., Greater China, Latin America, Western Europe, the Middle East, Australia, South Asia, and a December quarter record in India. Set a new all-time record for upgraders in aggregate and across many countries, including the U.S., China Mainland, Japan, and India.
    Customer satisfaction (U.S.): 99%Top-selling model (U.S., Urban China, U.K., Australia, Japan): Yes
    		$85.3B23%——
    Mac
    Faced a difficult comparison against M4 MacBook Pro, Mac Mini, and iMac launches in the year-ago quarter. Saw growth in several emerging markets, including Brazil, India, Malaysia, and Vietnam. Nearly half of customers purchasing a Mac were new to the product.
    Customer satisfaction (U.S.): 97%
    		$8.4B-7%——
    iPad
    Driven by the M5 powered iPad Pro and A16 powered iPad. Over half of customers purchasing an iPad were new to the product. Reached an all-time high for upgraders.
    Customer satisfaction (U.S.): 98%
    		$8.6B6%——
    Wearables, Home and Accessories
    Experienced constraints on AirPods Pro 3, which impacted overall category growth. Over half of customers purchasing an Apple Watch were new to the product.
    Customer satisfaction (U.S.): 96%
    		$11.5B-2%——
    Greater China
    Driven by iPhone, which had record upgraders and double-digit growth on switchers. iPhone set an all-time revenue record in Greater China. Traffic in stores grew by strong double digits YoY. iPhone was among the top 3 smartphones in urban China. iPad was the top tablet model in urban China. MacBook Air was the top-selling laptop model and Mac Mini was the top-selling desktop model in December quarter.
    		—38%——
    India
    Set a quarterly revenue record. Set quarterly revenue records on iPhone, Mac, and iPad, and an all-time revenue record on services. Majority of customers buying iPhone, Mac, iPad, and Watch are new to the product. Strong double-digit growth in the installed base.
    		—double-digit growth——

    Operational metrics

    18
    Company gross margin
    48.2%up 100 bps sequentially
    Q1 FY26

    Above the high end of guidance, driven by favorable mix and leverage.

    Operating expenses
    $18.4Bup 19% year-over-year
    Q1 FY26

    Within the provided range, driven by increased investment in R&D.

    Net income
    $42.1B
    Q1 FY26

    All-time record.

    Diluted earnings per share
    $2.84up 19% year-over-year
    Q1 FY26

    All-time record.

    Active devices installed base
    more than 2.5 billionall-time high
    Q1 FY26

    Across all product categories and geographic segments.

    App Store users
    more than 850 million
    weekly average last year

    Weekly average users on the App Store.

    Developer earnings on App Store
    more than $550 billion
    since 2008

    Total earnings for developers on the App Store platform.

    Cash and marketable securities
    $145B
    end of Q1 FY26

    Total cash and marketable securities.

    Total debt
    $91B
    end of Q1 FY26

    Includes $2.2 billion of debt maturities and a $6 billion decrease in commercial paper.

    Net cash
    $54B
    end of Q1 FY26

    Calculated as cash and marketable securities minus total debt.

    Capital returned to shareholders
    nearly $32B
    Q1 FY26

    Includes dividends and share repurchases.

    Dividends and equivalents
    $3.9B
    Q1 FY26

    Part of capital returned to shareholders.

    Open market share repurchases
    $25B
    Q1 FY26

    Part of capital returned to shareholders.

    Cash dividend per share
    $0.26
    Q2 FY26

    Declared by Board of Directors.

    Tariff impact
    $1.4B
    Q1 FY26

    Landed roughly in the outlined range.

    Snowflake Mac deployment
    over 9,000
    current

    Mac devices deployed company-wide, establishing Mac as a primary laptop across all business units.

    AstraZeneca iPad Pro rollout
    over 5,000
    current

    M5 powered iPad Pros being rolled out to pharmaceutical sales team to take advantage of AI capabilities.

    Coppel iPad fleet
    over 10,000
    current

    Growing fleet of iPad devices, with MacBook Air recently added.

    Industry KPIs

    6
    MetricValueDetails
    Capital return FCF$53.9B$B
    Gross margin drivers48.2%%
    Market share commentarygained share
    Component supply constraintsconstrained
    Installed base refresh runwaymore than 2.5 billionunits
    Revenue mix by end market segment—

    Product announcements

    11
    ProductTypeDetails
    iPhone 17 Pro and 17 Pro Maxlaunch
    iPhone Airlaunch
    iPhone 17launch
    M5 powered 14-inch MacBook Prolaunch
    Apple Creator Studiolaunch
    Apple Watch Ultra 3 and Apple Watch Series 11launch
    AirPods Pro 3launch
    Apple Intelligencemilestone
    Personalized Siriroadmap
    Digital ID in Walletexpansion
    Additional ads in App Store searchexpansion

    Deals & partnerships

    1
    GoogleAI collaboration

    Collaborating to develop the next generation of Apple foundation models to power future Apple Intelligence features, including a more personalized Siri.

    Capital programs

    6
    Investment in vital industries (advanced manufacturing, silicon engineering, AI)underway$600B
    Start: last year

    Commitment to invest in vital industries like advanced manufacturing, silicon engineering, and artificial intelligence in the U.S.

    Servers for Apple Intelligence manufacturing facilitycompleted

    Shipping servers to power Apple Intelligence from a new manufacturing facility in Houston.

    Cover glass manufacturing with Corningunderway

    Benefit: 100% of cover glass for iPhone and Apple Watch

    Working with Corning in Kentucky to make 100% of cover glass for iPhone and Apple Watch through the advanced manufacturing program.

    Advanced chip packaging and test facility with Micronunderway

    Working with Micron, which broke ground on a new advanced chip packaging and test facility.

    End-to-end silicon supply chain developmentunderway

    Benefit: 20 billion U.S. chips

    Continuing to advance the development of an end-to-end silicon supply chain across the country, sourcing 20 billion U.S. chips in 2025.

    Apple Manufacturing Academy in Detroitunderway
    Start: six months ago

    Training American businesses and innovators on smart manufacturing and AI techniques, driving productivity, efficiency, and quality in supply chains.

    Risks & headwinds

    4
    iPhone supply constraintsMarch quarter (Q2 FY26)

    constrained iPhone supply

    Mitigation: Company is in 'supply chase mode' to meet high demand, but it's difficult to predict when supply and demand will balance. Constraints are driven by advanced node capacity (3-nanometer).

    Memory pricing inflationbeyond Q2 FY26

    market pricing for memory increasing significantly

    Mitigation: Memory impact on Q2 gross margin is comprehended in guidance. Company will look at a range of options to deal with increasing memory prices.

    Difficult Mac comparisonQ1 FY26

    down 7% year-over-year

    Mitigation: Against strong M4 MacBook Pro, Mac Mini, and iMac launches in the year-ago quarter. Despite this, Mac saw growth in several emerging markets.

    Wearables, Home and Accessories constraintsQ1 FY26

    down 2% year-over-year

    Mitigation: Experienced constraints on AirPods Pro 3. The overall category would have grown without these constraints.

    Q&A highlights

    9

    How will memory inflation impact Apple's gross margins, and what is the comfort level in securing components for shipments given supply constraints?

    iPhone demand exceeded expectations, leading to lean channel inventory and current supply constraints for advanced nodes (3-nanometer). Memory had minimal impact on Q1 gross margin but is expected to have a bit more impact on Q2, which is comprehended in the guidance. Memory pricing is increasing significantly, and Apple is exploring a range of options to address it.

    “From a memory point of view, to answer your question, memory had a minimal impact on the Q1, so the December quarter gross margin. We do expect it to be a bit more of an impact to the Q2 gross margin and that was comprehended in the outlook of 48% to 49% that Kevan gave earlier.”

    asked by Amit Daryanani · answered by Timothy Cook

    2 min read6 chapters

    Detailed Narrative

    01

    iPhone Performance and Supply Constraints

    iPhone revenue reached an all-time record of $85.3 billion, growing 23% year-over-year, driven by strong demand for the iPhone 17 family. This led to very lean channel inventory exiting the December quarter, and the company is currently in a 'supply chase mode.' Supply constraints are primarily due to the availability of advanced nodes (specifically 3-nanometer) used for SoCs, limiting flexibility in the supply chain to meet the unexpectedly high demand.

    02

    Services Growth and Engagement

    Services achieved an all-time revenue record of $30 billion, up 14% year-over-year, with broad-based growth across developed and emerging markets. All-time revenue records were set for advertising, cloud services, music, and payment services. Customer engagement is at an all-time high, with transacting and paid accounts reaching new records, supported by an installed base of over 2.5 billion active devices.

    03

    AI Strategy and Partnerships

    Apple is integrating AI across its operating systems, focusing on personal, private, and integrated experiences. The company announced a collaboration with Google to develop the next generation of Apple foundation models, which will power future Apple Intelligence features, including a more personalized Siri. This strategy emphasizes both on-device and private cloud compute for AI capabilities.

    04

    Geographic Performance Highlights

    Apple set all-time revenue records in the Americas, Europe, Japan, and rest of Asia Pacific. Greater China revenue grew 38% year-over-year, driven by record iPhone sales and strong double-digit growth in upgraders and switchers. India also saw strong double-digit revenue growth, with quarterly records for iPhone, Mac, iPad, and an all-time record for services, highlighting significant growth opportunities in the region.

    05

    Gross Margin Drivers and Outlook

    Company gross margin was 48.2%, above guidance, driven by favorable product mix and leverage from the strong iPhone cycle. Services gross margin was 76.5%, up 120 basis points sequentially. For the March quarter, gross margin is guided between 48% and 49%, reflecting continued favorable mix dynamics, partially offset by seasonal loss of leverage and a bit more impact from increasing memory prices.

    06

    Capital Return and Cash Position

    Apple ended the quarter with $145 billion in cash and marketable securities, and a net cash position of $54 billion. The company returned nearly $32 billion to shareholders, including $3.9 billion in dividends and $25 billion through open market repurchases of 93 million shares. A cash dividend of $0.26 per share has been declared for February 2026.

    AI-generated summary of the company’s earnings call. Not investment advice.