Apple Inc. (AAPL) 10-Q 2026: AI Summary

Summary

Full summary

The Print

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Apple reported Q3 2026 net income of $29.8B ($2.02 diluted EPS) on total net sales of $109.4B, up 16.4% from $94.0B in the prior-year quarter.

Total net sales increased 16.4% YoY to $109.4B for the three months ended June 27, 2026, from $94.0B in the prior-year period. Management attributed the increase across segments primarily to higher net sales of iPhone, Services and Mac, and in Greater China primarily to higher net sales of iPhone. Total gross margin percentage rose to 50.1% from 46.5%, which management attributed primarily to a different mix of products and tariff refunds, partially offset by higher costs, including memory.

Total net sales rose 16.4% YoY to $109.4B, with iPhone net sales up 22% to $54.3B and Services up 12% to $30.7B.
Total gross margin percentage expanded to 50.1% from 46.5%, and operating income increased 26.6% YoY to $35.7B.
Diluted EPS of $2.02 compared with $1.57 in the prior-year quarter, while weighted-average diluted shares declined to 14,714,676 thousand from 14,948,179 thousand.

Results That Matter

Total net sales
Current period
$109.4B
Prior period
$94.0B
Change
+16.4%
Management attributed the increase across segments primarily to higher net sales of iPhone, Services and Mac, and in Greater China primarily to higher net sales of iPhone.
Gross margin
Current period
$54.8B
Prior period
$43.7B
Change
+25.3%
Products gross margin and gross margin percentage increased primarily due to a different mix of products and tariff refunds, partially offset by higher costs, including memory.
Operating income
Current period
$35.7B
Prior period
$28.2B
Change
+26.6%
Operating income increased as total net sales growth and gross margin expansion exceeded the 23% increase in total operating expenses.
Net income
Current period
$29.8B
Prior period
$23.4B
Change
+27.1%
Net income increased alongside higher operating income and other income/(expense), net of $572M versus $(171)M in the prior-year quarter.
Diluted earnings per share
Current period
$2.0
Prior period
$1.6
Change
+28.7%
Diluted EPS increased with net income, while weighted-average diluted shares declined to 14,714,676 thousand from 14,948,179 thousand.

Financial highlights: current period, prior period, change, and investor takeaway per metric
Metric	Current Period	Prior Period	Change	Investor Takeaway
Total net sales	$109.4B	$94.0B	+16.4%	Management attributed the increase across segments primarily to higher net sales of iPhone, Services and Mac, and in Greater China primarily to higher net sales of iPhone.
Gross margin	$54.8B	$43.7B	+25.3%	Products gross margin and gross margin percentage increased primarily due to a different mix of products and tariff refunds, partially offset by higher costs, including memory.
Operating income	$35.7B	$28.2B	+26.6%	Operating income increased as total net sales growth and gross margin expansion exceeded the 23% increase in total operating expenses.
Net income	$29.8B	$23.4B	+27.1%	Net income increased alongside higher operating income and other income/(expense), net of $572M versus $(171)M in the prior-year quarter.
Diluted earnings per share	$2.0	$1.6	+28.7%	Diluted EPS increased with net income, while weighted-average diluted shares declined to 14,714,676 thousand from 14,948,179 thousand.

Earnings Quality & Cash Conversion

The filing reports net income of $29,789M for the three months ended June 27, 2026, with no adjusted or non-GAAP earnings total defined. Products gross margin increased primarily due to a different mix of products and tariff refunds, partially offset by higher costs, including memory; the filing states the Company has recognized any tariff refunds received as a reduction of products cost of sales.

Red flag

Inventories increased to $11,092M as of June 27, 2026 from $5,718M as of September 27, 2025, with components rising to $7,645M from $2,124M.

Red flag

Accounts receivable, net decreased to $31,398M as of June 27, 2026 from $39,777M as of September 27, 2025, while total net sales for the nine months increased 16.2% YoY.

Value Drivers & Capital Allocation

“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.”
— Filing statement

Return on equity was 27.7% (prior 35.6%) (period net income / period-end equity, not annualized); return on assets 7.8% (period net income / period-end assets, not annualized).

Forward Signals

cautious

No quantitative financial guidance is provided in the filing. Management states it 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.

Known trends

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), and expects these trends to intensify.
The Company believes, in general, gross margins will be subject to volatility and downward pressure.
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.

Subsequent events

Not disclosed—the filing does not identify material events occurring after June 27, 2026.

“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.”
— Apple Inc. (MD&A, Macroeconomic Conditions)

“As a result, the Company believes, in general, gross margins will be subject to volatility and downward pressure.”
— Apple Inc. (MD&A, Gross Margin)

Risks

3 source-verified filing excerpts. 1 item withheld because the evidence could not be matched. Selected excerpts are not a complete risk inventory.

Filing excerpt 1

EvidenceThe 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).

Filing excerpt 2

EvidenceThe 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.

Filing excerpt 3

EvidenceIn 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.

Segments

Segment	Revenue	Operating Income	Revenue Change	Commentary
Americas	$45.8B	$21.7B	+11.1%	47% operating margin — Management attributed the increase primarily to higher net sales of iPhone, Services and Mac.
Europe	$29.4B	$13.4B	+22.4%	46% operating margin — Management attributed the increase primarily to higher net sales of iPhone, Services and Mac, and noted 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	$18.8B	$7.4B	+22.4%	39% operating margin — Management attributed the increase primarily to higher net sales of iPhone, and noted the strength in the renminbi relative to the U.S. dollar had a favorable year-over-year impact during the third quarter and first nine months of 2026; iPhone revenue represented a moderately higher proportion of net sales in Greater China.
Rest of Asia Pacific	$8.9B	$4.2B	+15.6%	47% operating margin — Management attributed the increase primarily to higher net sales of iPhone, Services and Mac, and noted the strength in foreign currencies relative to the U.S. dollar had a net favorable year-over-year impact during the third quarter of 2026.
Japan	$6.6B	$3.0B	+13.4%	46% operating margin — Management attributed the increase to higher net sales of iPhone, and noted the weakness in the yen relative to the U.S. dollar had an unfavorable year-over-year impact during the third quarter and first nine months of 2026.

Balance Sheet & Liquidity

Leverage: Identified debt as of 2026-06-27: reported debt balance of unestablished maturity scope of $71.3B. The concept behind this balance does not establish which maturities it covers. Total debt, net debt and debt-to-equity are therefore not stated.

Liquidity: 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. As of June 27, 2026, the Company had manufacturing purchase obligations of $57.0 billion, with $56.2 billion payable within 12 months, and other purchase obligations of $29.3 billion, with $9.2 billion payable within 12 months.

Working capital: Current assets $149.8B vs. current liabilities $149.3B (current ratio 1.00x). Prior reported balance sheet as of 2025-09-27: $148.0B vs. $165.6B (0.89x).

Maturities & covenants

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.
As of June 27, 2026 and September 27, 2025, the Company had $2.0 billion and $8.0 billion of commercial paper outstanding, respectively.
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.

Notable Footnotes

Item	Impact
Revenue disaggregation and deferred revenue	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.
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.
Unconditional purchase obligations	Future payments under unconditional purchase obligations with a remaining term in excess of one year as of June 27, 2026 total $27,628M.
Contingencies	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.

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AI-generated. Informational only, not investment advice. May be incomplete or contain errors. The authoritative source is always the original SEC filing.