Apple Inc. Q4 FY2026 earnings call

• Product Launches and Innovation:

  • Launched the all-new iPhone Duo (foldable) and iPhone 18 Pro/Max, marking significant leaps in camera, battery, and performance.
  • Introduced touch capability to Mac with the new MacBook Pro and launched the iPad Mini with OLED display.
  • Rolled out Siri AI, a private, on-device and cloud-hybrid assistant, expanding to multiple languages.
  • Updated Apple Watch with advanced health sensing and AirPods 5 with open-ear noise cancellation.

• Market Performance:

  • Achieved record revenue of $114.5 billion in the September quarter (up 12%) and $478.8 billion for the full fiscal year (up 15%).
  • Set September quarter records in Americas, Europe, Greater China, and Rest of Asia Pacific.
  • Greater China revenue grew 21% sequentially, driven by strong iPhone and Mac demand.
  • India set an all-time September quarter revenue record.

• Services Growth:

  • Installed base reached over 2.5 billion active devices.
  • Paid subscriptions exceeded 1.5 billion, growing double digits.
  • Records achieved in video, cloud services, payments, and advertising.

• Supply Chain and Manufacturing:

  • Facing supply constraints on iPhone, Mac, and iPad due to high demand and component availability.
  • Increased manufacturing purchase obligations by $33 billion from June to September.
  • Expanding U.S. manufacturing partnerships, supporting over 450,000 jobs.

• Enterprise and Education:

  • Secured major education deal in Philippines (170,000 MacBook Neos).
  • Expanded enterprise use cases including Duke Health (surgery), American Airlines (fleet management), Gap Inc. (AI loss prevention), and Christie’s (local AI models).

• iPhone: Revenue of $57.6 billion, up 17% year-over-year. This represents a September quarter and fiscal year record. It accounted for approximately 50.3% of total company revenue.
• Services: Revenue of $31.6 billion, up 10% year-over-year, setting an all-time record. This accounted for approximately 27.6% of total company revenue.
• Mac: Revenue of $10.8 billion, up 24% year-over-year. This accounted for approximately 9.4% of total company revenue.
• Wearables, Home and Accessories: Revenue of $8.3 billion, down 8% year-over-year. This accounted for approximately 7.2% of total company revenue.
• iPad: Revenue of $6.2 billion, down 10% year-over-year. This accounted for approximately 5.4% of total company revenue.

• December Quarter Total Revenue: Expected to grow between 7% and 10% year-over-year, reflecting constrained supply but expected to be the best quarter for revenue in company history.
• December Quarter Services Revenue: Expected to grow between 8% and 9% year-over-year, facing headwinds from foreign exchange and third-party licensing.
• Gross Margin: Expected between 45% and 46%, impacted by higher memory costs and Siri AI ramp costs.
• Operating Expenses: Expected between $20.4 billion and $20.8 billion.
• Other Income and Expense (OI&E): Expected around $300 million.
• Tax Rate: Expected to be around 17%.
• Dividend: Board declared a cash dividend of $0.27 per share.

• Supply Chain Constraints: Significant constraints on iPhone, Mac, and iPad due to high demand and limited flexibility in the supply chain, particularly regarding advanced SoC nodes and memory availability.
• Memory Cost Inflation: Unprecedented increases in memory pricing are driving sequential margin declines; costs are expected to remain high into the December quarter.
• Tariff Impacts: Current gross margins included a ~1 percentage point benefit from tariff refunds; without these, margins would have declined sequentially.
• Foreign Exchange Headwinds: Sequential FX headwinds of nearly 2 percentage points in the September quarter, with additional expected in December.
• Regulatory and Legal Risks: Ongoing court rulings impacting App Store link-out transactions in the U.S. and potential regulatory changes affecting services monetization.
• Macro Economic Conditions: General risks related to global macroeconomic outlook and tariff policies.

Q: Michael Ng asked why the standard iPhone 18 model was excluded from the September lineup and about iCloud+ strategic importance. / A: John Ternus stated they do not comment on future roadmaps but highlighted the current strong lineup including iPhone 17 and Air. Regarding iCloud+, he noted it hit record revenue, now bundles TV/Arcade in 100+ countries, and will offer expanded server-side capacity for AI features like Siri AI as usage limits are introduced.

Q: Erik Woodring asked about Apple's role in consumer-agentic AI, risks to services, and durability of services growth amid regulatory pressures. / A: John Ternus emphasized Siri AI is request-based now but built on an orchestrator architecture for future expansion, prioritizing privacy. Kevan Parekh explained that while FX and mobile gaming headwinds impact near-term growth, the installed base and emerging markets (like India's Apple Pay launch) provide a strong foundation for long-term resilience.

Q: Amit Daryanani asked if the customer relationship will shift from device to agent and requested details on December gross margin drivers (memory vs. mix vs. AI costs). / A: John Ternus affirmed the iPhone remains the 'intelligent personal hub' due to its secure access to personal data. Kevan Parekh clarified that the expected sequential margin decline is primarily driven by higher memory costs, with Siri AI cloud costs recognized through services cost of sales and deferred hardware revenue adjustments.

Q: Wamsi Mohan asked about memory procurement strategy amidst price inflation and Siri AI token consumption mix (on-device vs. cloud). / A: Sabih Khan noted increased purchase obligations ($33B rise) to improve supply. Kevan Parekh explained they manage costs via inventory carry, non-memory offsets, and recent price hikes. He added that Siri AI query mix is early-stage; on-device is efficient, but server-side inference costs will impact services margins as adoption grows.

Q: Samik Chatterjee asked about iPhone Duo supply-demand balance and whether overall supply constraints are worsening for Dec quarter. / A: Sabih Khan confirmed iPhone Duo is currently constrained with no clear timeline for balance. He explained that while advanced node constraints are easing with 2nm transition, December constraints on Mac and iPad are driven by memory availability due to demand exceeding expectations.