Apple NASDAQ: AAPL used its fiscal second-quarter 2026 earnings call to report double-digit growth, record March-quarter revenue, and provide more detail on supply constraints and rising memory costs, while also highlighting a major leadership transition set for later this year.
Leadership transition: Tim Cook to become executive chairman; John Ternus named next CEO
CEO Tim Cook opened the call by discussing what he described as the “transition we recently announced,” noting that he had just marked his 28th anniversary at Apple and 15 years as CEO. Cook said the timing was right because the business has been “performing extremely well,” with the first half of the fiscal year “very strong, growing double digits year-over-year,” and because Apple has “the right leader ready to step into the role.”
Cook said he trusts Senior Vice President of Hardware Engineering John Ternus “more to lead Apple into the future than” anyone else and added that he will move into the role of Executive Chairman on September 1st. Ternus, who joined for brief remarks, said he and CFO Kevan Parekh intend to continue the company’s “thoughtfulness, deliberateness, and discipline” in financial decision-making when he transitions into the CEO role in September.
March-quarter results: revenue up 17% and EPS up 22%
Cook said Apple delivered $111.2 billion in revenue, up 17% year-over-year, and called it a March quarter record that came in “above the high end of our guidance range despite supply constraints.” He said iPhone revenue grew 22% year-over-year and services set an all-time revenue record.
Parekh echoed the results and added that foreign exchange was “about a two-and-a-half percentage point tailwind” to the quarter’s growth rate. He also said Apple faced supply constraints on iPhone and, “to a lesser extent,” on Mac, and that if investors “remove the favorable benefit from foreign exchange and add back the unfavorable impact from supply constraints,” Apple “would have had a higher growth rate for total company revenue.”
Parekh reported:
- Total revenue: $111.2 billion (+17% YoY)
- Products revenue: $80.2 billion (+17% YoY)
- Services revenue: $31.0 billion (+16% YoY)
- Gross margin: 49.3% (above guidance; up 110 bps sequentially)
- Operating expenses: $18.9 billion (+24% YoY), slightly above guidance due to a “one-time expense in SG&A”
- Net income: $29.6 billion
- Diluted EPS: $2.01 (+22% YoY)
- Operating cash flow: $28.7 billion
Parekh said Apple’s install base of over 2.5 billion active devices reached an all-time high across all major product categories and geographic segments.
Segment performance: iPhone strength, MacBook Neo demand, services records
iPhone: Cook said iPhone revenue was $57 billion, up 22% year-over-year, and a March quarter record “despite supply constraints.” He highlighted the launch of iPhone 17e and said the iPhone 17 family is “now the most popular lineup in our history when looking at the launch through the March quarter,” adding that, according to IDC, Apple gained market share during the quarter. Parekh said iPhone grew double digits in most markets tracked, and cited a 451 Research measure showing 99% customer satisfaction for the iPhone 17 family in the U.S.
Mac: Mac revenue was $8.4 billion, up 6% year-over-year, with Cook and Parekh both pointing to “supply constraints” due to demand. Cook highlighted the debut of MacBook Neo, positioning it as expanding Mac to more customers through a “breakthrough price.” In Q&A, Cook said Apple “undercalled the level of enthusiasm” for MacBook Neo and is currently supply constrained on it. He also said demand for Mac mini and Mac Studio as platforms for AI and “agentic tools” exceeded expectations. Parekh said Apple set a March quarter record for customers new to Mac, driving an all-time record Mac install base.
iPad: iPad revenue was $6.9 billion, up 8% year-over-year. Parekh said over half of iPad buyers during the quarter were new to the product, and iPad revenue grew double digits in emerging markets including India, Mexico, and Thailand.
Wearables, home, and accessories: Revenue was $7.9 billion, up 5% year-over-year. Parekh said the wearables install base reached an all-time high and that over half of customers purchasing an Apple Watch were new to the product.
Services: Services revenue reached a record $31 billion, up 16% year-over-year. Cook pointed to Apple TV programming and sports offerings, while Parekh said both transacting and paid accounts hit all-time highs. On profitability, Parekh said services gross margin was 76.7%, up 20 bps sequentially, and that the quarter’s improvement was “primarily driven by mix,” while noting the services portfolio spans different business models and profitability profiles.
Supply constraints, memory costs, and tariffs: what management said
Cook told analysts the March-quarter constraints were “primarily on iPhone and to a lesser extent on the Mac,” driven mainly by “the availability of the advanced nodes our SOCs are produced on.” Looking to the June quarter, Cook said “the majority of our supply constraints will be on several Mac models,” specifically calling out Mac mini, Mac Studio, and MacBook Neo, and said it may take “several months to reach supply-demand balance” on Mac mini and Mac Studio.
On margins, Cook addressed the impact of memory costs. He said the December quarter had “minimal impact,” the March quarter saw “higher memory costs” partially offset by benefits from carry-in inventory, and that for the June quarter Apple expects “significantly higher memory costs,” again partly offset by carry-in inventory. Beyond June, Cook said Apple believes memory costs “will drive an increasing impact” on the business and that the company will “look at a range of options,” without providing more detail.
Parekh attributed the sequential decline in products gross margin to “seasonal loss of leverage and higher memory costs.” Discussing the overall company gross margin, he cited favorable mix and “lower tariff-related costs” as positives, partly offset by seasonal loss of leverage and higher memory costs. Cook added that the March-quarter gross margin “did include the impact of tariff-related costs,” but tariffs were lower versus the December quarter due to lower sequential product volume and due to “the full quarter benefit from a reduction in the IEEPA tariff rates” as well as a “reduced global tariff rate under Section 122.” Cook said Apple is following established processes to apply for tariff refunds and plans to reinvest any amount received “back into U.S. innovation and advanced manufacturing” as new investments in addition to prior commitments.
Capital returns and guidance: buyback authorization expanded; June-quarter outlook issued
Apple ended the quarter with $147 billion in cash and marketable securities and $85 billion in total debt, resulting in $62 billion in net cash, according to Parekh. During the quarter, Apple returned $15 billion to shareholders, including $3.8 billion in dividends and equivalents and $11 billion in open market repurchases of 42 million shares.
Parekh also announced a shift in how Apple frames its capital structure, saying the company is “no longer providing net cash neutral as a formal target” and will evaluate cash and debt independently. At the same time, he emphasized continued commitment to returning excess cash to shareholders, noting Apple has returned “over $1 trillion” since the start of its capital return program.
Apple’s board authorized an additional $100 billion for share repurchases and approved a 4% dividend increase to $0.27 per share, payable May 14, 2026 to shareholders of record as of May 11, 2026.
For the June quarter, Parekh said Apple expects:
- Total company revenue growth: 14% to 17% year-over-year (reflecting constrained supply)
- Services revenue growth: similar to March-quarter growth rate after removing FX tailwind
- Gross margin: 47.5% to 48.5%
- Operating expenses: $18.8 billion to $19.1 billion
- Other income/expense (OINE): about $250 million (excluding mark-to-market impacts)
- Tax rate: about 17%
On geographic performance, Cook highlighted strength in Greater China, saying first-half growth there was 33% and March-quarter revenue was up 28%, which he called a quarterly revenue record for the region. He also reiterated Apple’s long-term focus on India, calling it a “huge opportunity” where Apple still has a “modest share,” and said many customers across Apple’s categories in India are new to those products, supporting install base growth.
About Apple NASDAQ: AAPL
Apple Inc NASDAQ: AAPL is a multinational technology company headquartered in Cupertino, California, founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. The company designs, develops and sells consumer electronics, software and services. Over its history Apple has evolved from personal computers to a broad portfolio that spans mobile devices, wearables, home entertainment and digital services.
Apple's principal hardware products include the iPhone smartphone, iPad tablet, Mac personal computers, Apple Watch wearable devices and a range of accessories such as AirPods and HomePod.
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