Apple Inc. (AAPL) · Quarterly Report (10-Q) SEC Filing

PART I FINANCIAL INFORMATION 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 EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 Net sales: Products$78,678 $66,613 $272,629 $233,287 Services30,739 27,423 91,728 80,408 Total net sales109,417 94,036 364,357 313,695 Cost of sales: Products47,153 43,620 163,810 147,097 Services7,494 6,698 21,765 19,738 Total cost of sales54,647 50,318 185,575 166,835 Gross margin54,770 43,718 178,782 146,860 Operating expenses: Research and development11,729 8,866 34,035 25,684 Selling, general and administrative7,346 6,650 22,315 20,553 Total operating expenses19,075 15,516 56,350 46,237 Operating income35,695 28,202 122,432 100,623 Other income/(expense), net572 (171)670 (698) Income before provision for income taxes36,267 28,031 123,102 99,925 Provision for income taxes6,478 4,597 21,638 15,381 Net income$29,789 $23,434 $101,464 $84,544 Earnings per share: Basic$2.03 $1.57 $6.91 $5.64 Diluted$2.02 $1.57 $6.88 $5.62 Shares used in computing earnings per share: Basic14,656,110 14,902,886 14,692,515 14,992,898 Diluted14,714,676 14,948,179 14,750,302 15,051,726 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2026 Form 10-Q | 1 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In millions) Three Months EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 Net income$29,789 $23,434 $101,464 $84,544 Other comprehensive income/(loss): Change in foreign currency translation, net of tax(24)449 (116)(86) Change in unrealized gains/losses on derivative instruments, net of tax: Change in fair value of derivative instruments356 (523)729 810 Adjustment for net (gains)/losses realized and included in net income67 (571)348 (415) Total change in unrealized gains/losses on derivative instruments423 (1,094)1,077 395 Change in unrealized gains/losses on marketable debt securities, net of tax: Change in fair value of marketable debt securities441 640 57 90 Adjustment for net (gains)/losses realized and included in net income27 (1)45 404 Total change in unrealized gains/losses on marketable debt securities468 639 102 494 Total other comprehensive income/(loss)867 (6)1,063 803 Total comprehensive income$30,656 $23,428 $102,527 $85,347 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 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) June 27, 2026September 27, 2025 ASSETS: Current assets: Cash and cash equivalents$39,544 $35,934 Marketable securities22,855 18,763 Accounts receivable, net31,398 39,777 Vendor non-trade receivables27,509 33,180 Inventories11,092 5,718 Other current assets17,420 14,585 Total current assets149,818 147,957 Non-current assets: Marketable securities84,118 77,723 Property, plant and equipment, net51,431 49,834 Intangible assets, net20,342 11,093 Other non-current assets77,557 72,634 Total non-current assets233,448 211,284 Total assets$383,266 $359,241 LIABILITIES AND SHAREHOLDERS EQUITY: Current liabilities: Accounts payable$64,525 $69,860 Other current liabilities62,259 66,387 Deferred revenue9,538 9,055 Commercial paper1,997 7,979 Term debt11,007 12,350 Total current liabilities149,326 165,631 Non-current liabilities: Term debt71,340 78,328 Other non-current liabilities55,080 41,549 Total non-current liabilities126,420 119,877 Total liabilities275,746 285,508 Commitments and contingencies Shareholders equity: Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 14,608,963 and 14,773,260 shares issued and outstanding, respectively 100,702 93,568 Retained earnings/(Accumulated deficit)11,326 (14,264) Accumulated other comprehensive loss(4,508)(5,571) Total shareholders equity107,520 73,733 Total liabilities and shareholders equity$383,266 $359,241 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2026 Form 10-Q | 3 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (Unaudited) (In millions, except per-share amounts) Three Months EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 Total shareholders equity, beginning balances$106,491 $66,796 $73,733 $56,950 Common stock and additional paid-in capital: Beginning balances99,507 88,711 93,568 83,276 Common stock issued 878 825 Common stock withheld related to net share settlement of equity awards(2,396)(2,163)(4,704)(4,260) Share-based compensation3,591 3,258 10,960 9,965 Ending balances100,702 89,806 100,702 89,806 Retained earnings/(Accumulated deficit): Beginning balances12,359 (15,552)(14,264)(19,154) Net income29,789 23,434 101,464 84,544 Dividends and dividend equivalents declared(3,998)(3,912)(11,733)(11,525) Common stock withheld related to net share settlement of equity awards(875)(411)(1,899)(1,598) Common stock repurchased(25,949)(21,166)(62,242)(69,874) Ending balances11,326 (17,607)11,326 (17,607) Accumulated other comprehensive loss: Beginning balances(5,375)(6,363)(5,571)(7,172) Other comprehensive income/(loss)867 (6)1,063 803 Ending balances(4,508)(6,369)(4,508)(6,369) Total shareholders equity, ending balances$107,520 $65,830 $107,520 $65,830 Dividends and dividend equivalents declared per share or RSU$0.27 $0.26 $0.79 $0.76 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2026 Form 10-Q | 4 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Nine Months Ended June 27, 2026June 28, 2025 Cash, cash equivalents, and restricted cash and cash equivalents, beginning balances $35,934 $29,943 Operating activities: Net income101,464 84,544 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization9,973 8,571 Share-based compensation expense10,523 9,680 Other(2,037)(1,748) Changes in operating assets and liabilities: Accounts receivable, net8,316 5,685 Vendor non-trade receivables5,671 13,555 Inventories(5,461)1,223 Other current and non-current assets(16,266)(6,116) Accounts payable(5,203)(18,479) Other current and non-current liabilities10,016 (15,161) Cash generated by operating activities116,996 81,754 Investing activities: Purchases of marketable securities(48,752)(17,591) Proceeds from maturities of marketable securities26,504 35,036 Proceeds from sales of marketable securities12,016 10,785 Payments for acquisition of property, plant and equipment(6,799)(9,473) (1,780)(975) Cash generated by/(used in) investing activities(18,811)17,782 Financing activities: Payments for taxes related to net share settlement of equity awards(6,462)(5,719) Payments for dividends and dividend equivalents(11,778)(11,559) Repurchases of common stock(62,094)(70,579) Proceeds from issuance of term debt, net 4,481 Repayments of term debt(8,146)(9,682) Repayments of commercial paper, net(5,911)(65) Other(184)(87) Cash used in financing activities(94,575)(93,210) Increase in cash, cash equivalents, and restricted cash and cash equivalents3,610 6,326 Cash, cash equivalents, and restricted cash and cash equivalents, ending balances $39,544 $36,269 Supplemental cash flow disclosure: Cash paid for income taxes, net$26,555 $37,332 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 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. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period s presentation. 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- and nine-month periods ended June 27, 2026 and June 28, 2025 (in millions): Three Months EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 iPhone $54,252 $44,582 $196,515 $160,561 Mac 10,352 8,046 27,137 24,982 iPad 6,191 6,581 21,700 21,071 Wearables, Home and Accessories7,883 7,404 27,277 26,673 Services30,739 27,423 91,728 80,408 Total net sales$109,417 $94,036 $364,357 $313,695 Portion of total net sales that was included in deferred revenue as of the beginning of the period $4,086 $4,015 $7,260 $6,958 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- and nine-month periods ended June 27, 2026 and June 28, 2025, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales. As of June 27, 2026 and September 27, 2025, the Company had total deferred revenue of $14.9 billion and $13.7 billion, respectively. As of June 27, 2026, the Company expects 64% of total deferred revenue to be realized in less than a year, 23% within one-to-two years, 11% within two-to-three years and 2% in greater than three years. Apple Inc. | Q3 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- and nine-month periods ended June 27, 2026 and June 28, 2025 (net income in millions and shares in thousands): Three Months EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 Numerator: Net income$29,789 $23,434 $101,464 $84,544 Denominator: Weighted-average basic shares outstanding14,656,110 14,902,886 14,692,515 14,992,898 Effect of dilutive share-based awards 58,566 45,293 57,787 58,828 Weighted-average diluted shares14,714,676 14,948,179 14,750,302 15,051,726 Basic earnings per share$2.03 $1.57 $6.91 $5.64 Diluted earnings per share$2.02 $1.57 $6.88 $5.62 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 June 27, 2026 and September 27, 2025 (in millions): June 27, 2026 Adjusted CostUnrealized GainsUnrealized LossesFair ValueCash and Cash EquivalentsCurrent Marketable SecuritiesNon-Current Marketable Securities Cash$26,777 $ $ $26,777 $26,777 $ $ Level 1: Money market funds7,840 7,840 7,840 Mutual funds 873 222 (1)1,094 1,094 Subtotal8,713 222 (1)8,934 7,840 1,094 Level 2 (1): U.S. Treasury securities20,398 11 (253)20,156 735 4,034 15,387 U.S. agency securities6,176 (100)6,076 988 2,898 2,190 Non-U.S. government securities5,207 71 (349)4,929 299 4,630 Certificates of deposit and time deposits3,025 3,025 2,521 504 Commercial paper3,828 3,828 683 3,145 Corporate debt securities49,679 121 (709)49,091 10,808 38,283 24,828 65 (1,192)23,701 73 23,628 Subtotal113,141 268 (2,603)110,806 4,927 21,761 84,118 Total $148,631 $490 $(2,604)$146,517 $39,544 $22,855 $84,118 Adjusted CostUnrealized GainsUnrealized LossesFair ValueCash and Cash EquivalentsCurrent Marketable SecuritiesNon-Current Marketable Securities Cash$28,267 $ $ $28,267 $28,267 $ $ Level 1: Money market funds5,272 5,272 5,272 Mutual funds 679 177 (2)854 854 Subtotal5,951 177 (2)6,126 5,272 854 Level 2 (1): U.S. Treasury securities16,074 56 (282)15,848 1,190 3,712 10,946 U.S. agency securities5,269 (149)5,120 251 2,456 2,413 Non-U.S. government securities6,586 111 (424)6,273 855 5,418 Certificates of deposit and time deposits917 917 904 13 Commercial paper100 100 50 50 Corporate debt securities47,210 266 (916)46,560 10,623 35,937 Municipal securities207 (2)205 119 86 Mortgage- and asset-backed securities24,130 126 (1,252)23,004 94 22,910 Subtotal100,493 559 (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 June 27, 2026, 81% of the Company s non-current marketable debt securities other than mortgage- and asset-backed securities had maturities between 1 and 5 years, 16% between 5 and 10 years, and 3% greater than 10 years. As of June 27, 2026, 14% of the Company s non-current mortgage- and asset-backed securities had maturities between 1 and 5 years, 21% between 5 and 10 years, and 65% 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 June 27, 2026, 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 16 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. | Q3 2026 Form 10-Q | 8 The notional amounts of the Company s outstanding derivative instruments as of June 27, 2026 and September 27, 2025, were as follows (in millions): June 27, 2026September 27, 2025 Derivative instruments designated as accounting hedges: Foreign exchange contracts$61,313 $62,647 Interest rate contracts$10,625 $12,875 Derivative instruments not designated as accounting hedges: Foreign exchange contracts$64,053 $109,079 As of June 27, 2026 and September 27, 2025, the carrying amount of the Company s current and non-current term debt subject to fair value hedges was $10.4 billion and $12.6 billion, respectively. Accounts Receivable Trade Receivables As of both June 27, 2026 and September 27, 2025, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 18% and 12%, respectively. The Company s third-party cellular network carriers accounted for 27% and 34% of total trade receivables as of June 27, 2026 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 June 27, 2026, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 47% and 22%. As 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 tables show the Company s condensed consolidated financial statement details as of June 27, 2026 and September 27, 2025 (in millions): Inventories June 27, 2026September 27, 2025 Components$7,645 $2,124 Finished goods3,447 3,594 Total inventories$11,092 $5,718 Property, Plant and Equipment, Net June 27, 2026September 27, 2025 Gross property, plant and equipment$128,175 $125,848 Accumulated depreciation (76,744)(76,014) Total property, plant and equipment, net$51,431 $49,834 Apple Inc. | Q3 2026 Form 10-Q | 9 Intangible Assets, Net June 27, 2026September 27, 2025 Gross intangible assets$38,220 $24,950 Accumulated amortization(12,803)(11,649) Total intangible assets, net25,417 13,301 Less: Current portion of intangible assets, net(5,075)(2,208) Non-current portion of intangible assets, net$20,342 $11,093 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 June 27, 2026 and September 27, 2025, the Company had $2.0 billion and $8.0 billion of commercial paper outstanding, respectively. The following table provides a summary of cash flows associated with commercial paper for the nine months ended June 27, 2026 and June 28, 2025 (in millions): Nine Months Ended June 27, 2026June 28, 2025 Maturities 90 days or less: Repayments of commercial paper, net$(2,123)$(5,690) Maturities greater than 90 days: Proceeds from commercial paper 5,625 Repayments of commercial paper(3,788) Proceeds from/(Repayments of) commercial paper, net(3,788)5,625 Total repayments of commercial paper, net$(5,911)$(65) Term Debt As of June 27, 2026 and September 27, 2025, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $82.3 billion and $90.7 billion, respectively (collectively the Notes ). As of June 27, 2026 and September 27, 2025, the fair value of the Company s Notes, based on Level 2 inputs, was $71.2 billion and $80.4 billion, respectively. Note 7 Shareholders Equity Share Repurchase Program During the nine months ended June 27, 2026, the Company repurchased 215 million shares of its common stock for $61.8 billion. The Company s share repurchase programs do not obligate the Company to acquire a minimum amount of shares. Under the programs, 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 ). Apple Inc. | Q3 2026 Form 10-Q | 10 Note 8 Share-Based Compensation Restricted Stock Units A summary of the Company s restricted stock unit ( RSU ) activity and related information for the nine months ended June 27, 2026, is as follows: Number of RSUs (in thousands) Weighted-Average Grant-Date Fair Value Per RSU Balance as of September 27, 2025151,574 $189.75 RSUs granted72,400 $258.16 RSUs vested(70,594)$184.72 RSUs forfeited(9,418)$213.67 Balance as of June 27, 2026143,962 $225.06 The total vesting-date fair value of RSUs was $8.9 billion and $7.0 billion for the three months ended June 27, 2026 and June 28, 2025, respectively, and was $18.4 billion and $16.3 billion for the nine months ended June 27, 2026 and June 28, 2025, respectively. 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- and nine-month periods ended June 27, 2026 and June 28, 2025 (in millions): Three Months EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 Share-based compensation expense$3,401 $3,168 $10,523 $9,680 Income tax benefit related to share-based compensation expense$(1,122)$(795)$(3,217)$(2,870) As of June 27, 2026, the total unrecognized compensation cost related to outstanding RSUs was $26.7 billion, which the Company expects to recognize over a weighted-average period of 2.7 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 June 27, 2026, are as follows (in millions): 2026 (remaining three months)$2,053 20277,652 20286,406 20295,421 20305,481 Thereafter615 Total$27,628 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. | Q3 2026 Form 10-Q | 11 Note 10 Segment Information The following tables show information by reportable segment for the three- and nine-month periods ended June 27, 2026 and June 28, 2025 (in millions): Three Months Ended June 27, 2026 AmericasEuropeGreater China JapanRest of Asia PacificCorporateTotal Net sales$45,781 $29,395 $18,816 $6,554 $8,871 $ $109,417 Cost of sales(21,507)(14,732)(10,771)(3,310)(4,327) (54,647) Research and development (11,729)(11,729) Selling and marketing(2,573)(1,220)(639)(240)(362) (5,034) General and administrative (2,312)(2,312) Operating income/(loss)$21,701 $13,443 $7,406 $3,004 $4,182 $(14,041)$35,695 Three Months Ended June 28, 2025 AmericasEuropeGreater ChinaJapanRest of Asia PacificCorporateTotal Net sales$41,198 $24,014 $15,369 $5,782 $7,673 $ $94,036 Cost of sales(22,174)(12,379)(8,970)(2,695)(4,100) (50,318) Research and development (8,866)(8,866) Selling and marketing(2,513)(1,134)(577)(215)(330) (4,769) General and administrative (1,881)(1,881) Operating income/(loss)$16,511 $10,501 $5,822 $2,872 $3,243 $(10,747)$28,202 Nine Months Ended June 27, 2026 AmericasEuropeGreater China JapanRest of Asia PacificCorporateTotal Net sales$149,403 $95,596 $64,839 $24,368 $30,151 $ $364,357 Cost of sales(76,470)(47,549)(34,434)(12,088)(15,034) (185,575) Research and development (34,035)(34,035) Selling and marketing(7,906)(3,762)(2,018)(824)(1,122) (15,632) General and administrative (6,683)(6,683) Operating income/(loss)$65,027 $44,285 $28,387 $11,456 $13,995 $(40,718)$122,432 Nine Months Ended June 28, 2025 AmericasEuropeGreater China JapanRest of Asia PacificCorporateTotal Net sales$134,161 $82,329 $49,884 $22,067 $25,254 $ $313,695 Cost of sales(71,763)(43,447)(27,523)(10,698)(13,404) (166,835) Research and development (25,684)(25,684) Selling and marketing(7,604)(3,458)(1,753)(749)(1,037) (14,601) General and administrative (5,952)(5,952) Operating income/(loss)$54,794 $35,424 $20,608 $10,620 $10,813 $(31,636)$100,623 Apple Inc. | Q3 2026 Form 10-Q | 12 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations This Item and other sections of this Quarterly Report on Form 10-Q ( Form 10-Q ) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. 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 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. Forward-looking statements are not guarantees of future performance and the Company s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those 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. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. Unless otherwise stated, all information presented herein is based on the Company s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. The following discussion should be read in conjunction with the 2025 Form 10-K filed with the U.S. Securities and Exchange Commission ( SEC ) and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q. Available Information 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 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. Further, the Company s references to website URLs are intended to be inactive textual references only. Business Seasonality and Product Introductions The Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday demand. Additionally, new product and service introductions can significantly impact net sales, cost of sales and operating expenses. The timing of product introductions can also impact the Company s net sales to its indirect distribution channels as these channels are filled with new inventory following a product launch, and channel inventory of an older product often declines as the launch of a newer product approaches. Net sales can also be affected when consumers and distributors anticipate a product introduction. 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 Macroeconomic conditions, including inflation, interest rates, component pricing and currency fluctuations, have directly and indirectly impacted, and could in the future materially impact, the Company s results of operations and financial condition. 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 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. Apple Inc. | Q3 2026 Form 10-Q | 13 Tariffs and Other Measures Beginning in the second quarter of 2025, new tariffs were announced on imports to the U.S., 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. On January 14, 2026, initial results were published of the previously announced U.S. Department of Commerce investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into imports of semiconductors, semiconductor manufacturing equipment, and their derivative products, including downstream products that contain semiconductors. The announcement of the initial results of the investigation did not impose any additional tariffs affecting the Company s products. Separately, on February 20, 2026, the U.S. 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 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. 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- and nine-month periods ended June 27, 2026 and June 28, 2025 (dollars in millions): Three Months EndedNine Months Ended June 27, 2026June 28, 2025ChangeJune 27, 2026June 28, 2025Change Americas$45,781 $41,198 11%$149,403 $134,161 11% Europe29,395 24,014 22%95,596 82,329 16% Greater China18,816 15,369 22%64,839 49,884 30% Japan6,554 5,782 13%24,368 22,067 10% Rest of Asia Pacific8,871 7,673 16%30,151 25,254 19% Total net sales$109,417 $94,036 16%$364,357 $313,695 16% Americas 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 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 first nine months of 2026. Greater China 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 third quarter and first nine months of 2026. Apple Inc. | Q3 2026 Form 10-Q | 14 Japan 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 third quarter and first nine months of 2026. Rest of Asia Pacific 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 third quarter of 2026. Products and Services Performance 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 EndedNine Months Ended June 27, 2026June 28, 2025ChangeJune 27, 2026June 28, 2025Change iPhone$54,252 $44,582 22%$196,515 $160,561 22% Mac10,352 8,046 29%27,137 24,982 9% iPad6,191 6,581 (6)%21,700 21,071 3% Wearables, Home and Accessories7,883 7,404 6%27,277 26,673 2% Services30,739 27,423 12%91,728 80,408 14% Total net sales$109,417 $94,036 16%$364,357 $313,695 16% iPhone 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 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 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 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 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. Apple Inc. | Q3 2026 Form 10-Q | 15 Gross Margin 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 EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 Gross margin: Products$31,525 $22,993 $108,819 $86,190 Services23,245 20,725 69,963 60,670 Total gross margin$54,770 $43,718 $178,782 $146,860 Gross margin percentage: Products40.1%34.5%39.9%36.9% Services75.6%75.6%76.3%75.5% Total gross margin percentage50.1%46.5%49.1%46.8% Products Gross Margin 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 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. Apple Inc. | Q3 2026 Form 10-Q | 16 Operating Expenses 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 EndedNine Months Ended June 27, 2026June 28, 2025ChangeJune 27, 2026June 28, 2025Change Research and development$11,729 $8,866 32%$34,035 $25,684 33% Percentage of total net sales11%9%9%8% Selling, general and administrative$7,346 $6,650 10%$22,315 $20,553 9% Percentage of total net sales7%7%6%7% Total operating expenses$19,075 $15,516 23%$56,350 $46,237 22% Percentage of total net sales17%17%15%15% Research and Development 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 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 nine-month periods ended June 27, 2026 and June 28, 2025, were as follows (dollars in millions): Three Months EndedNine Months Ended June 27, 2026June 28, 2025June 27, 2026June 28, 2025 Provision for income taxes$6,478 $4,597 $21,638 $15,381 Effective tax rate17.9%16.4%17.6%15.4% Statutory federal income tax rate21%21%21%21% 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 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. Apple Inc. | Q3 2026 Form 10-Q | 17 Liquidity and Capital Resources 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 2025 Form 10-K, except for manufacturing purchase obligations, other purchase obligations, and deemed repatriation tax payable. Manufacturing Purchase Obligations The Company utilizes several outsourcing partners to manufacture subassemblies for the Company s products and to perform final assembly and testing of finished products. The Company also obtains individual components for its products from a wide variety of individual suppliers. 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 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 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 authorized share repurchase programs. The programs do not obligate the Company to acquire a minimum amount of shares. 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 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 Internal-Use Software In September 2025, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update ( ASU ) No. 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ( ASU 2025-06 ), which modernizes the accounting for internal-use software. ASU 2025-06 removes all references to software development stages and requires capitalization of software costs when management has committed to the software project and it is probable the software will be completed and perform its intended use. ASU 2025-06 will be effective for the Company in its first quarter of 2029, and early adoption is permitted. The Company is currently evaluating the timing and method of its adoption of ASU 2025-06. Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU No. 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ( ASU 2024-03 ) and in January 2025, the FASB issued ASU No. 2025-01, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03. ASU 2024-03 will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense captions in the Consolidated Statements of Operations, as well as qualitatively describe remaining amounts included in those captions. ASU 2024-03 will also require the Company to disclose both the amount and the Company s definition of selling expenses. The Company will adopt ASU 2024-03 in its fourth quarter of 2028 using a prospective transition method. Apple Inc. | Q3 2026 Form 10-Q | 18 Income Taxes In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ( ASU 2023-09 ), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt ASU 2023-09 in its fourth quarter of 2026 using a prospective transition method. Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with GAAP and the Company s discussion and analysis of its financial condition and operating results require the Company s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the 2025 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company s condensed consolidated financial statements. There have been no material changes to the Company s critical accounting estimates since the 2025 Form 10-K. Item 3. Quantitative and Qualitative Disclosures About Market Risk 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. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Based on an evaluation under the supervision and with the participation of the Company s management, the Company s principal executive officer and principal financial officer have concluded that the Company s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of June 27, 2026 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting There were no changes in the Company s internal control over financial reporting during the third quarter of 2026, which were identified in connection with management s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company s internal control over financial reporting. Apple Inc. | Q3 2026 Form 10-Q | 19 PART II OTHER INFORMATION Item 1. Legal Proceedings Digital Markets Act Investigations On March 25, 2024, the European Commission ( Commission ) announced that it had opened a formal noncompliance investigation against the Company under Article 5(4) of the EU Digital Markets Act ( DMA ) ( Article 5(4) Investigation ). The Article 5(4) Investigation relates to how developers may communicate and promote offers to end users for apps distributed through the App Store , as well as how developers may conclude contracts with those end users. On June 24, 2024, the Commission announced that it had opened an additional formal investigation against the Company regarding whether the Company s new contractual requirements for third-party app developers and app marketplaces may violate the DMA ( Article 6(4) Investigation ). On April 23, 2025, the Commission fined the Company 500 million in the Article 5(4) Investigation and issued a cease and desist order requiring the Company to remove technical and commercial restrictions that prevent developers from steering users to alternative distribution channels outside the App Store. The Company has appealed the Commission s Article 5(4) decision. Also on April 23, 2025, the Commission issued preliminary findings in the Article 6(4) Investigation. If the Commission makes a final determination in the Article 6(4) Investigation that there has been a violation, it can issue a cease and desist order and may impose fines up to 10% of the Company s annual worldwide net sales. The Commission may also seek to impose additional fines if it deems that the Company has violated a cease and desist order. The Company believes that it complies with the DMA and has continued to make changes to its compliance plan in response to feedback and engagement with the Commission. Department of Justice Lawsuit On March 21, 2024, the U.S. Department of Justice ( DOJ ) and a number of state and district attorneys general filed a civil antitrust lawsuit in the U.S. District Court for the District of New Jersey against the Company alleging monopolization or attempted monopolization in the markets for performance smartphones and smartphones in violation of U.S. antitrust laws. The DOJ is seeking equitable relief to redress the alleged anticompetitive behavior. In addition, various civil litigation matters have been filed in state and federal courts in the U.S. alleging similar violations of U.S. antitrust laws and seeking monetary damages and other nonmonetary relief. The Company believes it has substantial defenses and intends to vigorously defend itself. Epic Games Epic Games, Inc. filed a lawsuit in the U.S. District Court for the Northern District of California ( California District Court ) against the Company alleging violations of federal and state antitrust laws and California s unfair competition law based upon the Company s operation of its App Store. The California District Court found that certain provisions of the Company s App Review Guidelines violate California s unfair competition law and issued an injunction (the 2021 Injunction ) enjoining the Company from prohibiting developers from including in their apps buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than the Company s in-app purchase system. On April 30, 2025, the California District Court found the Company to be in violation of the 2021 Injunction and enjoined the Company from imposing any commission or any fee on purchases that consumers make outside an app; restricting, conditioning, limiting, or prohibiting how developers guide consumers to purchases outside an app; or otherwise interfering with a consumer s choice to proceed in or out of an app (the 2025 Injunction ). The Company appealed the California District Court s April 2025 decision to the U.S. Court of Appeals for the Ninth Circuit ( Ninth Circuit Court ). On December 11, 2025, the Ninth Circuit Court issued an order upholding the 2025 Injunction in part and modifying certain aspects to allow the Company to require parity in size, form and placement between the Company s in-app purchase and any links for consumers to make purchases outside an app. The Ninth Circuit Court also held that the Company can charge some commission on link-out purchases, and remanded to the California District Court to further amend or modify the 2025 Injunction, consistent with the Ninth Circuit Court s order. On May 21, 2026, the Company filed a petition seeking Supreme Court review of the Ninth Circuit Court s opinion. On June 30, 2026, the Supreme Court granted the Company s petition to review the applicable legal standard for civil contempt. The Company is seeking a stay of the California District Court proceedings pending the Supreme Court s decision on the question under review. Other Legal Proceedings The Company is subject to other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. The Company settled certain matters during the third quarter of 2026 that did not individually or in the aggregate have a material impact on the Company s financial condition or operating results. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management s expectations, the Company s financial condition and operating results for that reporting period could be materially adversely affected. Apple Inc. | Q3 2026 Form 10-Q | 20 Item 1A. Risk Factors The Company s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the 2025 Form 10-K and Part II, Item 1A of the Form 10-Q for the quarter ended March 28, 2026 (the second quarter 2026 Form 10-Q ), in each case under the heading Risk Factors. Except for the risk factors set forth below and those disclosed in Part II, Item 1A of the second quarter 2026 Form 10-Q, which are incorporated by reference herein, there have been no material changes to the Company s risk factors since the 2025 Form 10-K. Future operating results depend upon the Company s ability to obtain components and computing resources in sufficient quantities and on commercially reasonable terms. The Company currently obtains certain components from single or limited sources, which exposes it to significant supply and pricing risks. In addition, many components, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations that can materially adversely affect the Company s business, results of operations, financial condition and stock price. For example, 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), which adversely affects the Company s ability to obtain sufficient quantities of components and products on commercially reasonable terms, or at all. The Company expects these trends to intensify, which may materially adversely 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. Additionally, the Company s new products often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers yields have matured or their manufacturing capacities have increased. The Company may not be able to extend or renew agreements for the supply of components on similar terms, or at all, and may not be successful in obtaining sufficient quantities from its suppliers in a timely manner, or in identifying and obtaining sufficient quantities from an alternative source. In addition, component suppliers may fail, be subject to consolidation within a particular industry, or decide to concentrate on the production of common components instead of components customized to meet the Company s requirements, further limiting the Company s ability to obtain sufficient quantities of components on commercially reasonable terms, or at all. The Company s business, including its artificial intelligence and machine learning offerings, also depends on access to sufficient computing resources. Demand for cloud computing and artificial intelligence infrastructure has increased substantially across the technology industry, resulting in constrained supply, extended lead times, and increasing costs. In addition to its own data center infrastructure, the Company relies on third-party cloud service providers to meet these compute needs, and the Company may be unable to secure sufficient capacity on commercially reasonable terms, or at all, to meet customer demand. If the Company is unable to obtain adequate compute capacity in a timely manner or at commercially reasonable rates, this can limit the functionality and availability of its products and services, delay the deployment of new features or offerings, or cause the Company to incur significantly higher costs to operate its business, any of which could materially adversely affect the Company s revenue, costs, gross margin, results of operations, and financial condition. In addition, the Company may over- or under-estimate requirements, either of which could result in higher-than-expected costs for the Company or an inability to fully satisfy customer demand. Therefore, the Company remains subject to significant risks of supply shortages and price increases that can materially adversely affect its business, results of operations, financial condition and stock price. The Company s future performance depends in part on support from third-party software developers. The Company believes decisions by customers to purchase its hardware products depend in part on the availability of third-party software applications and services. Third-party developers may discontinue the development and maintenance of software applications and services for the Company s products. If third-party software applications and services cease to be developed and maintained for the Company s products, customers may choose not to buy the Company s products, materially adversely impacting the Company s business, results of operations, financial condition and stock price. The Company believes that third-party developer support depends on the perceived benefits of creating software and services for the Company s products compared to competitors platforms, such as Android for smartphones and tablets, Windows for personal computers and tablets, and PlayStation, Nintendo and Xbox for gaming platforms. This analysis may be based on factors such as the market position of the Company and its products, the anticipated revenue that may be generated, expected future growth of product sales, and the costs of developing such applications and services. Apple Inc. | Q3 2026 Form 10-Q | 21 The Company s minority market share in the global smartphone, personal computer, tablet and wearables markets can make developers less inclined to develop or upgrade software for the Company s products and more inclined to devote their resources to developing and upgrading software for competitors products with larger market share. When developers focus their efforts on these competing platforms, the availability and quality of applications for the Company s devices can suffer. The Company relies on the continued availability and development of compelling and innovative software applications for its products. The Company s products and operating systems are subject to rapid technological change, and when third-party developers are unable to or choose not to keep up with this pace of change, their applications can fail to take advantage of these changes to deliver improved customer experiences, can operate incorrectly, and can result in dissatisfied customers and lower customer demand for the Company s products. The Company distributes third-party applications through the App Store. Where applicable, the Company may retain a commission from sales of applications and sales of digital services or goods initiated within an application. If third-party developers use alternative methods of distribution and payment for their apps and digital content, including direct-to-consumer distribution models, the Company may earn a lower commission on such sales, or may not earn a commission at all, which can materially adversely affect the Company s revenue, gross margin, results of operations, financial condition and stock price. The technology industry, including, in some instances, the Company, is subject to intense media, political and regulatory scrutiny, which exposes the Company to increasing regulation, government investigations, legal actions and penalties. From time to time, the Company has made changes to its business, including actions taken in response to litigation, competition, market conditions and legal and regulatory requirements. The Company expects to make further business changes in the future. For example, in the U.S., the Company has implemented changes to how developers communicate with consumers within apps on the U.S. storefront of the iOS and iPadOS App Store regarding alternative purchasing mechanisms. The Company is also currently subject to a court order in the U.S. preventing it from imposing any commission or fee on certain purchases that consumers make. The Ninth Circuit Court has instructed the California District Court to further amend or modify its injunction to allow the Company to charge a commission. If the Company is ultimately unsuccessful in defending its commission structure or if similar restrictions are imposed or expanded in other jurisdictions, and as a result the Company s commission is narrowed or eliminated, the Company s business, results of operations, and financial condition could be materially and adversely affected. Globally, several jurisdictions have adopted, or may in the future adopt, competition-related laws and regulations imposing wide-ranging obligations on technology companies and significant limitations on businesses, including the Company. For example, the Company has implemented changes to iOS, iPadOS, the App Store and Safari in the EU as it seeks to comply with the DMA, including new business terms and alternative fee structures for iOS and iPadOS apps, alternative methods of distribution for iOS and iPadOS apps, alternative payment processing for apps across the Company s operating systems, and additional tools and application programming interfaces for developers. In addition, the DMA imposes interoperability obligations on the Company requiring it to make certain of its technologies and features available to third-party products and services for free, which increases security and privacy risks, requires significant engineering resources, and can adversely affect the functionality, competitiveness, and user experience of the Company s products. Interoperability and other requirements have in the past, and may in the future, cause the Company to not launch or maintain products, services and features, such as Siri AI, in certain jurisdictions. Any of these outcomes can have a negative impact on the Company s competitive advantage and materially adversely affect its business, results of operations, financial condition and stock price. The Company has also continued to make changes to its DMA compliance plan in response to feedback and engagement with the Commission. Although the Company s DMA compliance plan is intended to address the DMA s obligations, it has been challenged by the Commission and may be challenged further by private litigants. The DMA provides for significant fines and penalties for noncompliance. While the changes introduced by the Company in the EU are intended to reduce new privacy and security risks that the DMA poses to EU users, many risks will remain. Changes to the Company s business in response to the DMA or other laws and regulations in the EU or in other jurisdictions, including the U.S., could materially adversely affect the Company s business, reputation, results of operations, financial condition and stock price. The Company is also currently subject to antitrust investigations and litigation in various jurisdictions around the world, which can result in legal proceedings and claims against the Company that could, individually or in the aggregate, have a material adverse impact on the Company s business, results of operations, financial condition and stock price. For example, the Company is subject to civil antitrust lawsuits in the U.S. alleging monopolization or attempted monopolization in the markets for performance smartphones and smartphones generally in violation of U.S. antitrust laws. In addition, the Company is the subject of investigations in Europe and other jurisdictions relating to App Store terms and conditions. If such investigations or litigation are resolved against the Company, the Company can be exposed to significant fines and may be required to make further changes to its business practices, all of which could materially adversely affect the Company s business, reputation, results of operations, financial condition and stock price. Apple Inc. | Q3 2026 Form 10-Q | 22 Further, the Company has commercial relationships with other companies in the technology industry that are or may become subject to investigations and litigation that, if resolved against those other companies, could materially adversely affect the Company s commercial relationships with those business partners and materially adversely affect the Company s business, results of operations, financial condition and stock price. For example, the Company earns revenue from licensing arrangements with Google LLC ( Google ) and other companies to offer their search services on the Company s platforms and applications, and certain of these arrangements are currently subject to government investigations and legal proceedings. On August 5, 2024, Google was found to have violated U.S. antitrust laws. In connection with this finding, on September 2, 2025, the U.S. District Court for the District of Columbia ( D.C. District Court ) ordered certain remedies. The court s order is subject to further proceedings before the D.C. District Court, which may result in changes to the interpretation or application of the remedies ordered by the court, as well as new or changed remedies being ordered. The court s order was appealed by both the DOJ and Google. A reversal of the order on appeal could result in imposition of certain remedies initially proposed by the DOJ, such as those prohibiting Google from offering the Company commercial terms for search distribution. If implemented, these remedies could materially adversely affect the Company s ability to earn revenue from such licensing arrangements. The Company s business, results of operations, financial condition and stock price can be materially adversely affected, individually or in the aggregate, by the outcomes of such investigations, litigation or changes to laws and regulations in the future. Changes to the Company s business practices to comply with new laws and regulations or in connection with legal proceedings can negatively impact the reputation of the Company s products for privacy and security. Such changes in business practices can also otherwise adversely affect the experience for users of the Company s products and services, and result in harm to the Company s reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, lost sales, and lower profit margins. The Company s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding the collection, use, protection and transfer of personal data. The Company is subject to an increasing number of federal, state and international laws relating to the collection, use, retention, protection and transfer of various types of personal data. In many cases, these laws apply not only to third-party transactions, but also restrict transfers of personal data among the Company and its international subsidiaries. Several jurisdictions have passed laws in this area, and additional jurisdictions are considering imposing additional restrictions or have laws that are pending. For example, China has regulatory requirements relating to data processing and localization that govern the Company s ability to collect, use, and transfer data in China, and could limit the Company s ability to transfer data outside of China. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing requirements causes the Company to incur substantial costs and has required and may in the future require the Company to change its business practices, including changes to the design of the Company s products and services and limiting the Company s ability to offer a product, service or feature to customers. Such changes in business practices can also otherwise adversely affect the experience for users of the Company s products and services, and result in harm to the Company s reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, lower revenue, and lower profit margins. Noncompliance could result in suspension or revocation of business licenses, significant penalties and legal liability. The Company makes statements about its use and disclosure of personal data through its privacy policy, information provided on its website, press statements and other privacy notices provided to customers. Any failure or perceived failure by the Company to comply with these public statements or with federal, state or international privacy or data protection laws and regulations could result in inquiries, proceedings and penalties from governmental entities or others. Such a failure or perceived failure could also result in reputational impacts, ongoing audit requirements and significant legal liability. The risks of inadvertent disclosure of personal data can increase with the introduction of new and complex technologies, such as artificial intelligence features, further exacerbating such risks. In addition to the risks generally relating to the collection, use, retention, protection and transfer of personal data, the Company is also subject to specific obligations relating to the collection and processing of data associated with minors, as well as information considered sensitive under applicable laws, such as health, biometric, financial and payment card data. Health, biometric, financial and payment card data are subject to additional privacy, security and breach notification requirements, and the Company is subject to audit by governmental authorities regarding the Company s compliance with these obligations. If the Company fails to adequately comply with these rules and requirements, the Company can be subject to litigation or government investigations, can be liable for associated investigatory expenses, and can incur significant fees or fines. The Company is also subject to new and changing laws, regulations and other legal obligations regarding online safety, including enhanced protections for minors and mandatory age verification requirements. These obligations can increase regulatory risks by requiring complex compliance measures and significant modifications to the Company s products, services and operations, and may lead to operational disruptions, heightened privacy and data security risks, and increased costs, all of which can have a material adverse impact on the Company s business, results of operations, financial condition and stock price. Failure to comply with such changing laws, regulations and other legal obligations can also result in significant penalties and fines, and legal liability. Apple Inc. | Q3 2026 Form 10-Q | 23 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Purchases of Equity Securities by the Issuer and Affiliated Purchasers Share repurchase activity during the three months ended June 27, 2026, was as follows (in millions, except number of shares, which are reflected in thousands, and per-share amounts): PeriodsTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) March 29, 2026 to May 2, 2026: Open market and privately negotiated purchases $ May 3, 2026 to May 30, 2026: May 2026 ASRs26,468 (2) (2) 26,468 (2) Open market and privately negotiated purchases26,920 $297.18 26,920 May 31, 2026 to June 27, 2026: Open market and privately negotiated purchases26,223 $296.18 26,223 Total79,611 $138,004 (1)On May 1, 2025, the Company announced a program to repurchase up to $100 billion of the Company s common stock. As of June 27, 2026, remaining availability under the May 2025 program was $38.0 billion. On April 30, 2026, the Company announced 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. Under the programs, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. (2)In May 2026, the Company entered into new accelerated share repurchase agreements ( ASRs ). Under the terms of the ASRs, financial institutions committed to deliver shares of the Company s common stock during the purchase periods in exchange for up-front payments totaling $10.0 billion. The total number of shares ultimately delivered under the ASRs, and therefore the average repurchase price paid per share, is determined based on the volume-weighted average price of the Company s common stock during the ASRs purchase periods, which end in the fourth quarter of 2026. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Apple Inc. | Q3 2026 Form 10-Q | 24 Item 5. Other Information Insider Trading Arrangements On May 5, 2026, Jennifer Newstead, the Company s Senior Vice President and General Counsel, entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The plan provides for the sale, subject to certain price limits, of up to 24,912 shares of common stock, as well as up to 90% of shares vesting between June 15, 2026 and March 15, 2027, pursuant to certain equity awards granted to Ms. Newstead, excluding any shares withheld by the Company to satisfy income tax withholding and remittance obligations. Ms. Newstead s plan will expire on May 6, 2027, subject to early termination in accordance with the terms of the plan. On May 28, 2026, Tim Cook, the Company s Chief Executive Officer, entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The plan provides for the sale, subject to certain price limits, of up to 16,250 shares of common stock, as well as shares vesting during the duration of the plan pursuant to certain equity awards granted to Mr. Cook, excluding any shares withheld by the Company to satisfy income tax withholding and remittance obligations, and for the gifting of up to 37,104 shares. Mr. Cook s plan will expire on October 30, 2026, subject to early termination in accordance with the terms of the plan.