UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~July 1,~~December 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-36743

Apple Inc.

(Exact name of Registrant as specified in its charter)


California						94-2404110
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Apple Park Way
Cupertino, California						95014
(Address of principal executive offices)						(Zip Code)

(408) 996-1010

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value per share	AAPL	The Nasdaq Stock Market LLC
~~1.375% Notes due 2024~~	—	~~The Nasdaq Stock Market LLC~~
0.000% Notes due 2025	—	The Nasdaq Stock Market LLC
0.875% Notes due 2025	—	The Nasdaq Stock Market LLC
1.625% Notes due 2026	—	The Nasdaq Stock Market LLC
2.000% Notes due 2027	—	The Nasdaq Stock Market LLC
1.375% Notes due 2029	—	The Nasdaq Stock Market LLC
3.050% Notes due 2029	—	The Nasdaq Stock Market LLC
0.500% Notes due 2031	—	The Nasdaq Stock Market LLC
3.600% Notes due 2042	—	The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

~~15,634,232,000~~15,441,881,000 shares of common stock were issued and outstanding as of ~~July 21, 2023~~January 19, 2024.

Apple Inc.

Form 10-Q

For the Fiscal Quarter Ended ~~July 1,~~December 30, 2023

TABLE OF CONTENTS

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~~per-share amounts)


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Net sales:
Net sales:
Net sales:	Net sales:
Products	Products	$	60,584	$	63,355	$	230,901	$	245,241
Products
Products
Services	Services	21,213		19,604		62,886		58,941
Services
Services
Total net sales
Total net sales
Total net sales	Total net sales	81,797		82,959		293,787		304,182

Cost of sales:	Cost of sales:

Cost of sales:

Cost of sales:
Products
Products
Products	Products	39,136		41,485		146,696		155,084
Services	Services	6,248		5,589		18,370		16,411
Services
Services
Total cost of sales	Total cost of sales	45,384		47,074		165,066		171,495
Total cost of sales
Total cost of sales
Gross margin
Gross margin
Gross margin	Gross margin	36,413		35,885		128,721		132,687

Operating expenses:	Operating expenses:

Operating expenses:

Operating expenses:
Research and development
Research and development
Research and development	Research and development	7,442		6,797		22,608		19,490
Selling, general and administrative	Selling, general and administrative	5,973		6,012		18,781		18,654
Selling, general and administrative
Selling, general and administrative
Total operating expenses
Total operating expenses
Total operating expenses	Total operating expenses	13,415		12,809		41,389		38,144

Operating income	Operating income	22,998		23,076		87,332		94,543

Operating income

Operating income
Other income/(expense), net
Other income/(expense), net
Other income/(expense), net	Other income/(expense), net	(265)		(10)		(594)		(97)
Income before provision for income taxes	Income before provision for income taxes	22,733		23,066		86,738		94,446
Income before provision for income taxes
Income before provision for income taxes
Provision for income taxes	Provision for income taxes	2,852		3,624		12,699		15,364
Provision for income taxes
Provision for income taxes
Net income
Net income
Net income	Net income	$	19,881	$	19,442	$	74,039	$	79,082

Earnings per share:	Earnings per share:

Earnings per share:

Earnings per share:
Basic	Basic	$	1.27	$	1.20	$	4.69	$	4.86
Basic
Basic
Diluted
Diluted
Diluted	Diluted	$	1.26	$	1.20	$	4.67	$	4.82

Shares used in computing earnings per share:	Shares used in computing earnings per share:

Shares used in computing earnings per share:

Shares used in computing earnings per share:
Basic
Basic
Basic	Basic	15,697,614		16,162,945		15,792,497		16,277,824
Diluted	Diluted	15,775,021		16,262,203		15,859,263		16,394,937
Diluted
Diluted

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 1

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In millions)


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Net income
Net income
Net income	Net income	$	19,881	$	19,442	$	74,039	$	79,082
Other comprehensive income/(loss):	Other comprehensive income/(loss):
Other comprehensive income/(loss):
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax
Change in foreign currency translation, net of tax
Change in foreign currency translation, net of tax	Change in foreign currency translation, net of tax	(385)		(721)		(494)		(1,102)

Change in unrealized gains/losses on derivative instruments, net of tax:	Change in unrealized gains/losses on derivative instruments, net of tax:

Change in unrealized gains/losses on derivative instruments, net of tax:

Change in unrealized gains/losses on derivative instruments, net of tax:
Change in fair value of derivative instruments
Change in fair value of derivative instruments
Change in fair value of derivative instruments	Change in fair value of derivative instruments	509		852		(492)		1,548
Adjustment for net (gains)/losses realized and included in net income	Adjustment for net (gains)/losses realized and included in net income	103		121		(1,854)		(87)
Adjustment for net (gains)/losses realized and included in net income
Adjustment for net (gains)/losses realized and included in net income
Total change in unrealized gains/losses on derivative instruments
Total change in unrealized gains/losses on derivative instruments
Total change in unrealized gains/losses on derivative instruments	Total change in unrealized gains/losses on derivative instruments	612		973		(2,346)		1,461

Change in unrealized gains/losses on marketable debt securities, net of tax:	Change in unrealized gains/losses on marketable debt securities, net of tax:

Change in unrealized gains/losses on marketable debt securities, net of tax:

Change in unrealized gains/losses on marketable debt securities, net of tax:
Change in fair value of marketable debt securities
Change in fair value of marketable debt securities
Change in fair value of marketable debt securities	Change in fair value of marketable debt securities	(340)		(3,150)		1,963		(9,959)
Adjustment for net (gains)/losses realized and included in net income	Adjustment for net (gains)/losses realized and included in net income	58		95		185		140
Adjustment for net (gains)/losses realized and included in net income
Adjustment for net (gains)/losses realized and included in net income
Total change in unrealized gains/losses on marketable debt securities
Total change in unrealized gains/losses on marketable debt securities
Total change in unrealized gains/losses on marketable debt securities	Total change in unrealized gains/losses on marketable debt securities	(282)		(3,055)		2,148		(9,819)

Total other comprehensive income/(loss)	Total other comprehensive income/(loss)	(55)		(2,803)		(692)		(9,460)

Total other comprehensive income/(loss)

Total other comprehensive income/(loss)
Total comprehensive income	Total comprehensive income	$	19,826	$	16,639	$	73,347	$	69,622
Total comprehensive income
Total comprehensive income

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | ~~Q3 2023~~Q1 2024 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)

July 1,
2023

September 24,
2022

December 30,
2023

September 30,
2023

ASSETS:

Current assets:

Cash and cash equivalents

28,408

23,646

Cash and cash equivalents

Marketable securities

34,074

24,658

Accounts receivable, net

19,549

28,184

Vendor non-trade receivables

Inventories

7,351

4,946

Vendor non-trade receivables

19,637

32,748

Other current assets

13,640

21,223

Total current assets

122,659

135,405

Non-current assets:

Marketable securities

104,061

120,805

Property, plant and equipment, net

43,550

42,117

Other non-current assets

64,768

54,428

Total non-current assets

212,379

217,350

Total assets

335,038

352,755

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Current liabilities:

Accounts payable

46,699

64,115

Other current liabilities

58,897

60,845

Deferred revenue

8,158

7,912

Commercial paper

3,993

9,982

Term debt

7,216

11,128

Total current liabilities

124,963

153,982

Non-current liabilities:

Term debt

98,071

98,959

Other non-current liabilities

51,730

49,142

Total non-current liabilities

149,801

148,101

Total liabilities

274,764

302,083

Commitments and contingencies

Shareholders’ equity:

Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,647,868 and 15,943,425 shares issued and outstanding, respectively

70,667

64,849

Shareholders’ equity:

Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,460,223 and 15,550,061 shares issued and outstanding, respectively

Retained earnings/(Accumulated deficit)

1,408

(3,068)

Accumulated other comprehensive income/(loss)

(11,801)

(11,109)

Accumulated other comprehensive loss

Total shareholders’ equity

60,274

50,672

Total liabilities and shareholders’ equity

335,038

352,755

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 3

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(In millions, except ~~per share~~per-share amounts)


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Total shareholders’ equity, beginning balances
Total shareholders’ equity, beginning balances
Total shareholders’ equity, beginning balances	Total shareholders’ equity, beginning balances	$	62,158	$	67,399	$	50,672	$	63,090

Common stock and additional paid-in capital:	Common stock and additional paid-in capital:

Common stock and additional paid-in capital:

Common stock and additional paid-in capital:
Beginning balances	Beginning balances	69,568		61,181		64,849		57,365
Common stock issued		—		—		690		593
Beginning balances
Beginning balances

Common stock withheld related to net share settlement of equity awards

Common stock withheld related to net share settlement of equity awards

Common stock withheld related to net share settlement of equity awards	Common stock withheld related to net share settlement of equity awards	(1,595)		(1,371)		(3,310)		(2,783)
Share-based compensation	Share-based compensation	2,694		2,305		8,438		6,940
Share-based compensation
Share-based compensation
Ending balances
Ending balances
Ending balances	Ending balances	70,667		62,115		70,667		62,115

Retained earnings/(Accumulated deficit):	Retained earnings/(Accumulated deficit):

Retained earnings/(Accumulated deficit):

Retained earnings/(Accumulated deficit):
Beginning balances
Beginning balances
Beginning balances	Beginning balances	4,336		12,712		(3,068)		5,562
Net income	Net income	19,881		19,442		74,039		79,082
Net income
Net income
Dividends and dividend equivalents declared
Dividends and dividend equivalents declared
Dividends and dividend equivalents declared	Dividends and dividend equivalents declared	(3,811)		(3,760)		(11,207)		(11,058)
Common stock withheld related to net share settlement of equity awards	Common stock withheld related to net share settlement of equity awards	(858)		(1,403)		(1,988)		(3,323)
Common stock withheld related to net share settlement of equity awards
Common stock withheld related to net share settlement of equity awards
Common stock repurchased	Common stock repurchased	(18,140)		(21,702)		(56,368)		(64,974)
Common stock repurchased
Common stock repurchased
Ending balances
Ending balances
Ending balances	Ending balances	1,408		5,289		1,408		5,289

Accumulated other comprehensive income/(loss):	Accumulated other comprehensive income/(loss):

Accumulated other comprehensive income/(loss):

Accumulated other comprehensive income/(loss):
Beginning balances
Beginning balances
Beginning balances	Beginning balances	(11,746)		(6,494)		(11,109)		163
Other comprehensive income/(loss)	Other comprehensive income/(loss)	(55)		(2,803)		(692)		(9,460)
Other comprehensive income/(loss)
Other comprehensive income/(loss)
Ending balances
Ending balances
Ending balances	Ending balances	(11,801)		(9,297)		(11,801)		(9,297)

Total shareholders’ equity, ending balances	Total shareholders’ equity, ending balances	$	60,274	$	58,107	$	60,274	$	58,107

Total shareholders’ equity, ending balances

Total shareholders’ equity, ending balances

Dividends and dividend equivalents declared per share or RSU	Dividends and dividend equivalents declared per share or RSU	$	0.24	$	0.23	$	0.70	$	0.67

Dividends and dividend equivalents declared per share or RSU

Dividends and dividend equivalents declared per share or RSU

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 4

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

Nine Months Ended

July 1,
2023

June 25,
2022

Three Months Ended

December 30,
2023

December 31,
2022

Cash, cash equivalents and restricted cash, beginning balances

24,977

35,929

Operating activities:

Net income

74,039

79,082

Adjustments to reconcile net income to cash generated by operating activities:

Depreciation and amortization

8,866

8,239

Share-based compensation expense

8,208

6,760

Other

(1,651)

2,695

Other

Changes in operating assets and liabilities:

Accounts receivable, net

7,609

4,561

Accounts receivable, net

Vendor non-trade receivables

Inventories

(2,570)

1,049

Vendor non-trade receivables

13,111

4,789

Other current and non-current assets

(4,863)

(3,289)

Accounts payable

(16,790)

(6,108)

Other current and non-current liabilities

2,986

246

Cash generated by operating activities

88,945

98,024

Investing activities:

Purchases of marketable securities

(20,956)

(70,178)

Proceeds from maturities of marketable securities

27,857

24,203

Proceeds from sales of marketable securities

3,959

33,609

Payments for acquisition of property, plant and equipment

(8,796)

(7,419)

Other

(753)

(1,352)

Other

Cash generated by/(used in) investing activities

1,311

(21,137)

Financing activities:

Payments for taxes related to net share settlement of equity awards

(5,119)

(5,915)

Payments for dividends and dividend equivalents

(11,267)

(11,138)

Repurchases of common stock

(56,547)

(64,974)

Proceeds from issuance of term debt, net

5,228

—

Repayments of term debt

(11,151)

(6,750)

Proceeds from/(Repayments of) commercial paper, net

(5,971)

4,970

Repayments of term debt

Repayments of commercial paper, net

Other

(508)

(148)

Cash used in financing activities

(85,335)

(83,955)

Increase/(Decrease) in cash, cash equivalents and restricted cash

4,921

(7,068)

Increase/(Decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, ending balances

29,898

28,861

Supplemental cash flow disclosure:

Cash paid for income taxes, net

7,020

12,251

Cash paid for interest

2,590

1,910

Cash paid for income taxes, net

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | ~~Q3 2023~~Q1 2024 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”). ~~Intercompany accounts and transactions have been eliminated.~~ 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 ~~management to make estimates and assumptions that affect~~ the ~~amounts reported. Actual results could differ materially from those~~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 ~~24, 2022.~~30, 2023 (the “2023 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, which occurred in the first fiscal quarter of 2023. The Company’s fiscal years 2024 and 2023 span 52 and ~~2022 span~~ 53 ~~and 52~~ weeks, respectively. 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.

~~Earnings Per Share~~

The following table shows the computation of basic and diluted earnings per share for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (net income in millions and shares in thousands):

Three Months Ended Nine Months Ended
July 1,
2023 June 25,
2022 July 1,
2023 June 25,
2022
Numerator:
Net income $ 19,881 $ 19,442 $ 74,039 $ 79,082
Denominator:
Weighted-average basic shares outstanding 15,697,614 16,162,945 15,792,497 16,277,824
Effect of dilutive securities 77,407 99,258 66,766 117,113
Weighted-average diluted shares 15,775,021 16,262,203 15,859,263 16,394,937
Basic earnings per share $ 1.27 $ 1.20 $ 4.69 $ 4.86
Diluted earnings per share $ 1.26 $ 1.20 $ 4.67 $ 4.82

Approximately 32 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the nine months ended July 1, 2023 because their effect would have been antidilutive.

~~Apple Inc. | Q3 2023 Form 10-Q | 6~~

Note 2 – Revenue

Net sales disaggregated by significant products and services for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 were as follows (in millions):


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
iPhone®
iPhone®
iPhone®	iPhone®	$	39,669	$	40,665	$	156,778	$	162,863
Mac®	Mac®	6,840		7,382		21,743		28,669
Mac®
Mac®
iPad®
iPad®
iPad®	iPad®	5,791		7,224		21,857		22,118
Wearables, Home and Accessories	Wearables, Home and Accessories	8,284		8,084		30,523		31,591
Wearables, Home and Accessories
Wearables, Home and Accessories
Services
Services
Services	Services	21,213		19,604		62,886		58,941
Total net sales	Total net sales	$	81,797	$	82,959	$	293,787	$	304,182
Total net sales
Total net sales

Total net sales include ~~$3.3~~$3.5 billion of revenue recognized in the three months ended July 1, 2023 that was included in deferred revenue as of April 1, 2023, $3.1 billion of revenue recognized in the three months ended June 25, 2022 that was included in deferred revenue as of March 26, 2022, $7.0 billion of revenue recognized in the nine months ended July 1,December 30, 2023 that was included in deferred revenue as of September ~~24, 2022,~~30, 2023 and ~~$6.3~~$3.4 billion of revenue recognized in the ~~nine~~three months ended ~~June 25,~~December 31, 2022 that was included in deferred revenue as of September ~~25, 2021.~~24, 2022.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 10, “Segment Information and Geographic Data” for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of ~~July 1,~~December 30, 2023 and September ~~24, 2022,~~30, 2023, the Company had total deferred revenue of ~~$12.2~~$12.5 billion and ~~$12.4~~$12.1 billion, respectively. As of ~~July 1,~~December 30, 2023, the Company expects ~~67%~~66% of total deferred revenue to be realized in less than a year, 26% within one-to-two years, 6%7% within two-to-three years and 1% in greater than three years.

Apple Inc. | Q1 2024 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 months ended December 30, 2023 and December 31, 2022 (net income in millions and shares in thousands):


	Three Months Ended
	December 30, 2023		December 31, 2022
Numerator:
Net income	$	33,916	$	29,998

Denominator:
Weighted-average basic shares outstanding	15,509,763		15,892,723
Effect of dilutive share-based awards	66,878		62,995
Weighted-average diluted shares	15,576,641		15,955,718

Basic earnings per share	$	2.19	$	1.89
Diluted earnings per share	$	2.18	$	1.88

Approximately 89 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the three months ended December 31, 2022 because their effect would have been antidilutive.

Note 34 – 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 ~~July 1,~~December 30, 2023 and September ~~24, 2022~~30, 2023 (in millions):


		July 1, 2023
		Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities
	December 30, 2023																			December 30, 2023
	Adjusted Cost															Adjusted Cost	Unrealized Gains	Unrealized Losses	Fair Value	Cash and Cash Equivalents	Current Marketable Securities	Non-Current Marketable Securities
Cash	Cash	$	25,337	$	—	$	—	$	25,337	$	25,337	$	—	$	—
Level 1 (1):
Level 1:
Money market funds
Money market funds
Money market funds	Money market funds	1,108		—		—		1,108		1,108		—		—
Mutual funds	Mutual funds	366		15		(19)		362		—		362		—
Subtotal	Subtotal	1,474		15		(19)		1,470		1,108		362		—
Level 2 (2):
Level 2 (1):
U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities	U.S. Treasury securities	22,274		—		(1,354)		20,920		—		8,076		12,844
U.S. agency securities	U.S. agency securities	5,709		—		(594)		5,115		3		272		4,840
Non-U.S. government securities	Non-U.S. government securities	17,588		19		(927)		16,680		—		11,262		5,418
Certificates of deposit and time deposits	Certificates of deposit and time deposits	2,315		—		—		2,315		1,960		355		—
Commercial paper	Commercial paper	364		—		—		364		—		364		—
Corporate debt securities	Corporate debt securities	79,621		22		(6,079)		73,564		—		13,005		60,559
Municipal securities	Municipal securities	713		—		(23)		690		—		213		477
Mortgage- and asset-backed securities	Mortgage- and asset-backed securities	22,383		4		(2,299)		20,088		—		165		19,923
Subtotal	Subtotal	150,967		45		(11,276)		139,736		1,963		33,712		104,061
Total (3)		$	177,778	$	60	$	(11,295)	$	166,543	$	28,408	$	34,074	$	104,061
Total (2)

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 7


		September 24, 2022
		Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities
	September 30, 2023																			September 30, 2023
	Adjusted Cost															Adjusted Cost	Unrealized Gains	Unrealized Losses	Fair Value	Cash and Cash Equivalents	Current Marketable Securities	Non-Current Marketable Securities
Cash	Cash	$	18,546	$	—	$	—	$	18,546	$	18,546	$	—	$	—
Level 1 (1):
Level 1:
Money market funds	Money market funds	2,929		—		—		2,929		2,929		—		—
Mutual funds		274		—		(47)		227		—		227		—
Money market funds
Money market funds
Mutual funds and equity securities
Subtotal	Subtotal	3,203		—		(47)		3,156		2,929		227		—
Level 2 (2):
Level 2 (1):
U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities	U.S. Treasury securities	25,134		—		(1,725)		23,409		338		5,091		17,980
U.S. agency securities	U.S. agency securities	5,823		—		(655)		5,168		—		240		4,928
Non-U.S. government securities	Non-U.S. government securities	16,948		2		(1,201)		15,749		—		8,806		6,943
Certificates of deposit and time deposits	Certificates of deposit and time deposits	2,067		—		—		2,067		1,805		262		—
Commercial paper	Commercial paper	718		—		—		718		28		690		—
Corporate debt securities	Corporate debt securities	87,148		9		(7,707)		79,450		—		9,023		70,427
Municipal securities	Municipal securities	921		—		(35)		886		—		266		620
Mortgage- and asset-backed securities	Mortgage- and asset-backed securities	22,553		—		(2,593)		19,960		—		53		19,907
Subtotal	Subtotal	161,312		11		(13,916)		147,407		2,171		24,431		120,805
Total (3)		$	183,061	$	11	$	(13,963)	$	169,109	$	23,646	$	24,658	$	120,805
Total (2)

(1)The valuation techniques used to measure the fair values of the Company’s Level ~~1 fair value estimates~~2 financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices ~~in active markets for identical assets~~ or ~~liabilities.~~

~~(2)Level 2 fair value estimates are based on observable~~model-driven valuations using significant inputs ~~other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical~~derived from or ~~similar assets or liabilities in inactive markets, or other inputs that are observable or can be~~ corroborated by observable market ~~data for substantially the full term of the assets or liabilities.~~data.

~~(3)~~(2)As of ~~July 1,~~December 30, 2023 and September ~~24, 2022,~~30, 2023, total marketable securities included ~~$14.1~~$13.9 billion and ~~$12.7~~$13.8 billion, respectively, that were restricted from general use, related to the ~~State Aid Decision (refer~~European Commission decision finding that Ireland granted state aid to ~~Note 5, “Income Taxes”)~~the Company, and other agreements.

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of ~~July 1,~~December 30, 2023 (in millions):


Due after 1 year through 5 years	$	~~76,267~~72,994
Due after 5 years through 10 years	~~11,148~~9,368
Due after 10 years	~~16,646~~17,113
Total fair value	$	~~104,061~~99,475

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 ~~currency~~ exchange rates, the Company may ~~enter into forward contracts, option contracts~~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 ~~currency~~ exchange rates, the Company may ~~enter into forward contracts,~~use forwards, cross-currency swaps or other instruments. The Company designates these instruments as either cash flow or fair value hedges. As of ~~July 1,~~December 30, 2023, 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 19 years.

~~Apple Inc. | Q3 2023 Form 10-Q | 8~~

The Company may also ~~enter into~~use derivative instruments that are not designated as accounting hedges to protect gross margins from certain fluctuations in foreign ~~currency~~ exchange rates, as well as to offset a portion of the foreign currency ~~exchange~~ gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.

Apple Inc. | Q1 2024 Form 10-Q | 8

Interest Rate Risk

To protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may ~~enter into~~use interest rate swaps, options or other instruments. The Company designates these instruments as either cash flow or fair value hedges.

The notional amounts of the Company’s outstanding derivative instruments as of ~~July 1,~~December 30, 2023 and September ~~24, 2022~~30, 2023 were as follows (in millions):

July 1,
2023 September 24,
2022
Derivative instruments designated as accounting hedges:
Foreign exchange contracts $ 45,425 $ 102,670
Interest rate contracts $ 19,375 $ 20,125
Derivative instruments not designated as accounting hedges:
Foreign exchange contracts $ 90,977 $ 185,381

~~The gross fair values of the Company’s derivative assets and liabilities as of September 24, 2022 were as follows (in millions):~~

September 24, 2022
Fair Value of
Derivatives Designated
as Accounting Hedges Fair Value of
Derivatives Not Designated
as Accounting Hedges Total
Fair Value
Derivative assets (1):
Foreign exchange contracts $ 4,317 $ 2,819 $ 7,136
Derivative liabilities (2):
Foreign exchange contracts $ 2,205 $ 2,547 $ 4,752
Interest rate contracts $ 1,367 $ — $ 1,367

~~(1)Derivative assets are measured using Level 2 fair value inputs and are included in other current assets and other non-current assets in the Condensed Consolidated Balance Sheet.~~

~~(2)Derivative liabilities are measured using Level 2 fair value inputs and are included in other current liabilities and other non-current liabilities in the Condensed Consolidated Balance Sheet.~~

The derivative assets above represent the Company’s gross credit exposure if all counterparties failed to perform. To mitigate credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair values of certain derivatives fluctuate from contractually established thresholds. To further limit credit risk, the Company generally enters into master netting arrangements with the respective counterparties to the Company’s derivative contracts, under which the Company is allowed to settle transactions with a single net amount payable by one party to the other. As of September 24, 2022, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $7.8 billion, resulting in a net derivative asset of $412 million.


	December 30, 2023		September 30, 2023
Derivative instruments designated as accounting hedges:
Foreign exchange contracts	$	66,735	$	74,730
Interest rate contracts	$	19,375	$	19,375

Derivative instruments not designated as accounting hedges:
Foreign exchange contracts	$	102,108	$	104,777

The carrying amounts of the Company’s hedged items in fair value hedges as of ~~July 1,~~December 30, 2023 and September ~~24, 2022~~30, 2023 were as follows (in millions):

July 1,
2023 September 24,
2022
Hedged assets/(liabilities):
Current and non-current marketable securities $ 14,863 $ 13,378
Current and non-current term debt $ (17,986) $ (18,739)

~~Apple Inc. | Q3 2023 Form 10-Q | 9~~


	December 30, 2023		September 30, 2023
Hedged assets/(liabilities):
Current and non-current marketable securities	$	15,102	$	14,433
Current and non-current term debt	$	(18,661)	$	(18,247)

Accounts Receivable

Trade Receivables

The ~~Company has considerable trade receivables outstanding with its~~Company’s third-party cellular network carriers, wholesalers, retailers, resellers, small and mid-sized businesses and education, enterprise and government customers. The Company generally does not require collateral from its customers; however, the Company will require collateral or third-party credit support in certain instances to limit credit risk. In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure. These credit-financing arrangements are directly between the third-party financing company and the end customer. As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.

~~As ofSeptember 24, 2022, the Company had one customer that represented 10% or more of total trade receivables, which accounted for~~ ~~10%. The Company’s~~ cellular network carriers accounted for ~~44%~~34% and 41% of total trade receivables as of December 30, 2023 and September ~~24, 2022.~~30, 2023, 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 ~~July 1,~~December 30, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for ~~54%~~50% and ~~14%~~20%. As of September ~~24, 2022,~~30, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for ~~54%~~48% and ~~13%~~23%.

Note 45 – Condensed Consolidated Financial Statement Details

The following ~~tables show~~table shows the Company’s condensed consolidated financial statement details as of ~~July 1,~~December 30, 2023 and September ~~24, 2022~~30, 2023 (in millions):

~~Inventories~~

July 1,
2023 September 24,
2022
Components $ 3,788 $ 1,637
Finished goods 3,563 3,309
Total inventories $ 7,351 $ 4,946

Property, Plant and Equipment, Net

July 1,
2023 September 24,
2022
Gross property, plant and equipment $ 114,337 $ 114,457
Accumulated depreciation and amortization (70,787) (72,340)
Total property, plant and equipment, net $ 43,550 $ 42,117

~~Other Income/(Expense), Net~~

~~The following table shows the detail of other income/(expense), net for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (in millions):~~

Three Months Ended Nine Months Ended
July 1,
2023 June 25,
2022 July 1,
2023 June 25,
2022
Interest and dividend income $ 980 $ 722 $ 2,766 $ 2,072
Interest expense (998) (719) (2,931) (2,104)
Other expense, net (247) (13) (429) (65)
Total other income/(expense), net $ (265) $ (10) $ (594) $ (97)


	December 30, 2023		September 30, 2023
Gross property, plant and equipment	$	116,176	$	114,599
Accumulated depreciation	(72,510)		(70,884)
Total property, plant and equipment, net	$	43,666	$	43,715

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 109

~~Note 5 – Income Taxes~~

~~European Commission State Aid Decision~~

On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”). The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward. The Company and Ireland appealed the State Aid Decision to the General Court of the Court of Justice of the European Union (the “General Court”). On July 15, 2020, the General Court annulled the State Aid Decision. On September 25, 2020, the European Commission appealed the General Court’s decision to the European Court of Justice (the “ECJ”) and a hearing was held on May 23, 2023. A decision from the ECJ is expected in calendar year 2024. The Company believes it would be eligible to claim a U.S. foreign tax credit for a portion of any incremental Irish corporate income taxes potentially due related to the State Aid Decision.

Note 6 – Debt

Commercial Paper

The Company issues unsecured short-term promissory notes ~~(“Commercial Paper”)~~ 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 ~~July 1,~~December 30, 2023 and September ~~24, 2022,~~30, 2023, the Company had ~~$4.0~~$2.0 billion and ~~$10.0~~$6.0 billion of ~~Commercial Paper~~commercial paper outstanding, respectively. The following table provides a summary of cash flows associated with the issuance and maturities of ~~Commercial Paper~~commercial paper for the ~~nine~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 (in millions):

Nine Months Ended
July 1,
2023 June 25,
2022
Maturities 90 days or less:
Proceeds from/(Repayments of) commercial paper, net $ (3,326) $ 4,383
Maturities greater than 90 days:
Proceeds from commercial paper — 5,731
Repayments of commercial paper (2,645) (5,144)
Proceeds from/(Repayments of) commercial paper, net (2,645) 587
Total proceeds from/(repayments of) commercial paper, net $ (5,971) $ 4,970


	Three Months Ended
	December 30, 2023		December 31, 2022
Maturities 90 days or less:
Repayments of commercial paper, net	$	(3,984)	$	(5,569)

Maturities greater than 90 days:

Repayments of commercial paper	—		(2,645)


Total repayments of commercial paper, net	$	(3,984)	$	(8,214)

Term Debt

As of ~~July 1,~~December 30, 2023 and September ~~24, 2022,~~30, 2023, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of ~~$105.3~~$106.0 billion and ~~$110.1~~$105.1 billion, respectively (collectively the “Notes”). As of ~~July 1,~~December 30, 2023 and September ~~24, 2022,~~30, 2023, the fair value of the Company’s Notes, based on Level 2 inputs, was $~~95.3~~96.7 billion and ~~$98.8~~$90.8 billion, respectively.

Note 7 – Shareholders’ Equity

Share Repurchase Program

During the ~~nine~~three months ended ~~July 1,~~December 30, 2023, the Company repurchased ~~365~~118 million shares of its common stock for ~~$56.1 billion, excluding excise tax due under the Inflation Reduction Act of 2022.~~$20.5 billion. The Company’s share repurchase ~~programs do~~program does not obligate the Company to acquire a minimum amount of shares. Under the ~~programs,~~program, 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.~~amended (the “Exchange Act”).

~~Apple Inc. | Q3 2023 Form 10-Q | 11~~

Note 8 – ~~Benefit Plans~~Share-Based Compensation

Restricted Stock Units

A summary of the Company’s RSU activity and related information for the ~~nine~~three months ended ~~July 1,~~December 30, 2023 is as follows:


		Number of RSUs (in thousands)	Weighted-Average Grant Date Fair Value Per RSU		Aggregate Fair Value (in millions)
Balance as of September 24, 2022		201,501	$	109.48
	Number of RSUs (in thousands)						Number of RSUs (in thousands)	Weighted-Average Grant Date Fair Value Per RSU	Aggregate Fair Value (in millions)
Balance as of September 30, 2023
RSUs granted
RSUs granted
RSUs granted	RSUs granted	86,896	$	150.23
RSUs vested	RSUs vested	(96,681)	$	95.97
RSUs vested
RSUs vested
RSUs canceled	RSUs canceled	(7,000)	$	126.48
Balance as of July 1, 2023		184,716	$	135.08	$	35,829
RSUs canceled
RSUs canceled
Balance as of December 30, 2023
Balance as of December 30, 2023
Balance as of December 30, 2023

The fair value as of the respective vesting dates of RSUs was ~~$7.0~~$7.7 billion and ~~$14.9~~$6.8 billion for the ~~three-~~three months ended December 30, 2023 and ~~nine-month periods ended July 1, 2023, respectively, and was $7.8 billion and $17.3 billion for the three- and nine-month periods ended June 25,~~December 31, 2022, respectively.

Apple Inc. | Q1 2024 Form 10-Q | 10

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~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 (in millions):


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Share-based compensation expense
Share-based compensation expense
Share-based compensation expense	Share-based compensation expense	$	2,617	$	2,243	$	8,208	$	6,760
Income tax benefit related to share-based compensation expense	Income tax benefit related to share-based compensation expense	$	(993)	$	(1,231)	$	(2,791)	$	(3,416)
Income tax benefit related to share-based compensation expense
Income tax benefit related to share-based compensation expense

As of ~~July 1,~~December 30, 2023, the total unrecognized compensation cost related to outstanding RSUs ~~and stock options~~ was ~~$20.9~~$27.4 billion, which the Company expects to recognize over a weighted-average period of ~~2.7~~2.9 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 noncancelable unconditional purchase obligations with a remaining term in excess of one year as of July 1, 2023, are as follows (in millions):

2023 (remaining three months) $ 1,260
2024 3,417
2025 1,990
2026 3,079
2027 1,013
Thereafter 8,198
Total $ 18,957

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 2023 Form 10-Q | 12~~

Note 10 – Segment Information and Geographic Data

The following table shows information by reportable segment for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 (in millions):


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Americas:
Americas:
Americas:	Americas:
Net sales	Net sales	$	35,383	$	37,472	$	122,445	$	129,850
Net sales
Net sales
Operating income
Operating income
Operating income	Operating income	$	13,117	$	13,914	$	44,908	$	48,778

Europe:	Europe:

Europe:

Europe:
Net sales	Net sales	$	20,205	$	19,287	$	71,831	$	72,323
Net sales
Net sales
Operating income
Operating income
Operating income	Operating income	$	7,995	$	7,124	$	27,380	$	27,174

Greater China:	Greater China:

Greater China:

Greater China:
Net sales	Net sales	$	15,758	$	14,604	$	57,475	$	58,730
Net sales
Net sales
Operating income
Operating income
Operating income	Operating income	$	6,207	$	5,760	$	24,175	$	25,055

Japan:	Japan:

Japan:

Japan:
Net sales	Net sales	$	4,821	$	5,446	$	18,752	$	20,277
Net sales
Net sales
Operating income
Operating income
Operating income	Operating income	$	2,443	$	2,418	$	9,073	$	9,263

Rest of Asia Pacific:	Rest of Asia Pacific:

Rest of Asia Pacific:

Rest of Asia Pacific:
Net sales
Net sales
Net sales	Net sales	$	5,630	$	6,150	$	23,284	$	23,002
Operating income	Operating income	$	2,328	$	2,367	$	9,447	$	9,185
Operating income
Operating income

Apple Inc. | Q1 2024 Form 10-Q | 11

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 is as follows (in millions):


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Segment operating income
Segment operating income
Segment operating income	Segment operating income	$	32,090	$	31,583	$	114,983	$	119,455
Research and development expense	Research and development expense	(7,442)		(6,797)		(22,608)		(19,490)
Research and development expense
Research and development expense
Other corporate expenses, net
Other corporate expenses, net
Other corporate expenses, net	Other corporate expenses, net	(1,650)		(1,710)		(5,043)		(5,422)
Total operating income	Total operating income	$	22,998	$	23,076	$	87,332	$	94,543
Total operating income
Total operating income

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 1312

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This ~~section~~Item and other ~~parts~~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 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 ~~Company’s Annual Report on~~2023 Form 10-K ~~for the fiscal year ended September 24, 2022 (the “2022 Form 10-K”)~~ 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. ~~Each of the terms the “Company” and “Apple” as used herein refers collectively to Apple Inc. and its wholly owned subsidiaries, unless otherwise stated.~~

The following discussion should be read in conjunction with the ~~2022~~2023 Form 10-K filed with the U.S. Securities and Exchange Commission (the “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 environmental, social and governance matters, 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.

Fiscal Period

Quarterly Highlights

~~Weakness in foreign currencies relative~~The Company’s first quarter of 2024 included 13 weeks, compared to 14 weeks during the ~~U.S. dollar had an unfavorable impact on the~~first quarter of 2023.

The Company’s total net sales ~~which decreased 1%~~increased 2% or ~~$1.2~~$2.4 billion during the ~~third~~first quarter of ~~2023~~2024 compared to the same quarter in ~~2022. The year-over-year~~2023, driven primarily by higher net sales ~~decrease consisted primarily~~ of iPhone and Services, partially offset by lower net sales of iPad and ~~iPhone, partially offset by higher net sales of Services.~~Wearables, Home and Accessories.

During the ~~third~~first quarter of ~~2023,~~2024, the Company announced ~~the following new products:~~

•~~15-inch~~an updated MacBook ~~Air~~®~~, powered by the M2 chip;~~

•~~Mac Studio™, powered by the M2 Max chip and the new M2 Ultra chip;~~

•~~Mac~~ Pro® 14-in., ~~powered by the new M2 Ultra chip;~~MacBook Pro 16-in. and

•~~Apple Vision Pro™, the Company’s first spatial computer featuring its new visionOS™, expected to be available in early calendar year 2024.~~

~~The Company also announced iOS 17, macOS~~ iMac®.~~Sonoma, iPadOS~~® ~~17, tvOS~~® ~~17 and watchOS~~® ~~10, updates to its operating systems that are expected to be available in the fall of 2023.~~

~~Apple Inc. | Q3 2023 Form 10-Q | 14~~

The Company repurchased ~~$18.0~~$20.5 billion of its common stock and paid dividends and dividend equivalents of $3.8 billion during the ~~third~~first quarter of ~~2023.~~2024.

Macroeconomic Conditions

Macroeconomic conditions, including inflation, changes in interest rates, and currency fluctuations, have directly and indirectly impacted, and could in the future materially impact, the Company’s results of operations and financial condition.

Apple Inc. | Q1 2024 Form 10-Q | 13

Segment Operating Performance

The following table shows net sales by reportable segment for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 (dollars in millions):


		Three Months Ended						Nine Months Ended
		July 1, 2023		June 25, 2022		Change		July 1, 2023		June 25, 2022		Change
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Net sales by reportable segment:
Net sales by reportable segment:
Net sales by reportable segment:	Net sales by reportable segment:
Americas	Americas	$	35,383	$	37,472	(6)	%	$	122,445	$	129,850	(6)	%
Americas
Americas
Europe
Europe
Europe	Europe	20,205		19,287		5	%	71,831		72,323		(1)	%
Greater China	Greater China	15,758		14,604		8	%	57,475		58,730		(2)	%
Greater China
Greater China
Japan
Japan
Japan	Japan	4,821		5,446		(11)	%	18,752		20,277		(8)	%
Rest of Asia Pacific	Rest of Asia Pacific	5,630		6,150		(8)	%	23,284		23,002		1	%
Rest of Asia Pacific
Rest of Asia Pacific
Total net sales	Total net sales	$	81,797	$	82,959	(1)	%	$	293,787	$	304,182	(3)	%
Total net sales
Total net sales

Americas

Americas net sales ~~decreased~~increased 2% or $1.2 billion during the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 compared to the same ~~periods~~quarter in ~~2022~~2023 due primarily to higher net sales of Services and iPhone, partially offset by lower net sales of ~~iPhone and Mac, partially offset by higher net sales of Services.~~

~~Europe~~

iPad. The ~~weakness~~strength in foreign currencies relative to the U.S. dollar had a net ~~unfavorable~~favorable year-over-year impact on Americas net sales during the first quarter of 2024.

Europe

Europe net sales increased 10% or $2.7 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher net sales of iPhone. 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 ~~third quarter and~~ first ~~nine months of 2023. During the third~~ quarter of ~~2023, the Europe~~2024.

Greater China

Greater China net sales ~~increase consisted primarily of higher net sales of iPhone. During~~decreased 13% or $3.1 billion during the first ~~nine months~~quarter of 2024 compared to the same quarter in 2023 ~~the Europe net sales decrease consisted~~due primarily ofto lower net sales of ~~Mac, partially offset by higher net sales of iPhone.~~

~~Greater China~~

iPhone, iPad and Wearables, Home and Accessories. The weakness in the renminbi relative to the U.S. dollar had an unfavorable year-over-year impact on Greater China net sales during the ~~third quarter and~~ first ~~nine months of 2023. During the third~~ quarter of ~~2023, the Greater China~~2024.

Japan

Japan net sales ~~increase consisted~~increased 15% or $1.0 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily ofto higher net sales of iPhone. ~~During the first nine months of 2023, the Greater China net sales decrease consisted primarily of lower net sales of iPhone.~~

~~Japan~~

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 2023. During the third~~ quarter of 2023, the Japan net sales decrease consisted primarily of lower net sales of iPhone. During the first nine months of 2023, the Japan net sales decrease consisted primarily of lower net sales of iPhone, Services and Wearables, Home and Accessories.2024.

Rest of Asia Pacific

~~The weakness in foreign currencies relative to the U.S. dollar had a net unfavorable year-over-year impact on~~ Rest of Asia Pacific net sales increased 7% or $627 million during the ~~third quarter and~~ first ~~nine months of 2023. During the third~~ quarter of 2024 compared to the same quarter in 2023 ~~the Rest of Asia Pacific net sales decrease consisted~~due primarily ~~of lower net sales of iPhone and iPad. During the first nine months of 2023, the Rest of Asia Pacific net sales increase consisted primarily of~~to higher net sales of iPhone, partially offset by lower net sales of ~~Mac.~~Wearables, Home and Accessories.

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 1514

Products and Services Performance

The following table shows net sales by category for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 (dollars in millions):


		Three Months Ended						Nine Months Ended
		July 1, 2023		June 25, 2022		Change		July 1, 2023		June 25, 2022		Change
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Net sales by category:
Net sales by category:
Net sales by category:	Net sales by category:
iPhone	iPhone	$	39,669	$	40,665	(2)	%	$	156,778	$	162,863	(4)	%
iPhone
iPhone
Mac
Mac
Mac	Mac	6,840		7,382		(7)	%	21,743		28,669		(24)	%
iPad	iPad	5,791		7,224		(20)	%	21,857		22,118		(1)	%
iPad
iPad
Wearables, Home and Accessories
Wearables, Home and Accessories
Wearables, Home and Accessories	Wearables, Home and Accessories	8,284		8,084		2	%	30,523		31,591		(3)	%
Services	Services	21,213		19,604		8	%	62,886		58,941		7	%
Services
Services
Total net sales	Total net sales	$	81,797	$	82,959	(1)	%	$	293,787	$	304,182	(3)	%
Total net sales
Total net sales

iPhone

iPhone net sales ~~decreased~~increased 6% or $3.9 billion during the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 compared to the same ~~periods~~quarter in ~~2022~~2023 due primarily to ~~lower~~higher net sales ~~from certain iPhone~~of Pro models, partially offset by ~~higher net sales of iPhone 14 Pro models.~~

~~Mac~~

~~Mac net sales decreased during the third quarter and first nine months of 2023 compared to the same periods in 2022 due primarily to~~ lower net sales of ~~laptops.~~other models.

~~iPad~~Mac

~~iPad net sales decreased during the third quarter of 2023 compared to the third quarter of 2022 due primarily to lower net sales across most iPad models. Year-over-year iPad~~Mac net sales were relatively flat during the first ~~nine months~~quarter of 2024 compared to the same quarter in 2023.

iPad

iPad net sales decreased 25% or $2.4 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to lower net sales of iPad Pro, iPad 9th generation and iPad Air.

Wearables, Home and Accessories

~~Wearables, Home and Accessories net sales increased during the third quarter of 2023 compared to the third quarter of 2022 due primarily to higher net sales of Wearables, which includes AirPods~~®~~, Apple Watch~~® ~~and Beats~~® ~~products, partially offset by lower net sales of accessories. Year-over-year~~ Wearables, Home and Accessories net sales decreased 11% or $1.5 billion during the first ~~nine months~~quarter of 2024 compared to the same quarter in 2023 due primarily to lower net sales of Wearables and ~~accessories.~~Accessories.

Services

Services net sales increased 11% or $2.4 billion during the ~~third~~first quarter of ~~2023~~2024 compared to the ~~third~~same quarter ~~of 2022~~in 2023 due primarily to higher net sales from advertising, video and cloud ~~services and the App Store~~®~~. Year-over-year Services net sales increased during the first nine months of 2023 due primarily to higher net sales from cloud services, advertising and music.~~services.

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 1615

Gross Margin

Products and Services gross margin and gross margin percentage for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 were as follows (dollars in millions):


		Three Months Ended				Nine Months Ended
		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Gross margin:
Gross margin:
Gross margin:	Gross margin:
Products	Products	$	21,448	$	21,870	$	84,205	$	90,157
Products
Products
Services
Services
Services	Services	14,965		14,015		44,516		42,530
Total gross margin	Total gross margin	$	36,413	$	35,885	$	128,721	$	132,687
Total gross margin
Total gross margin


Gross margin percentage:	Gross margin percentage:
Gross margin percentage:
Gross margin percentage:
Products
Products
Products	Products	35.4	%	34.5	%	36.5	%	36.8	%
Services	Services	70.5	%	71.5	%	70.8	%	72.2	%
Services
Services
Total gross margin percentage	Total gross margin percentage	44.5	%	43.3	%	43.8	%	43.6	%
Total gross margin percentage
Total gross margin percentage

Products Gross Margin

Products gross margin ~~decreased~~increased during the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 compared to the same ~~periods~~quarter in ~~2022 due primarily to the weakness in foreign currencies relative to the U.S. dollar and lower Products volume, partially offset by cost savings and a different Products mix.~~

~~Products gross margin percentage increased during the third quarter of~~ 2023 ~~compared to the third quarter of 2022~~ due primarily to cost savings and a different Products mix, partially offset by the weakness in foreign currencies relative to the U.S. dollar and ~~decreased leverage. Year-over-year~~ lower Products volume.

Products gross margin percentage ~~decreased~~increased during the first ~~nine months~~quarter of 2024 compared to the same quarter in 2023 due primarily to ~~the weakness in foreign currencies relative to the U.S. dollar and decreased leverage, partially offset by~~ cost savings and a different Products ~~mix.~~

~~Services Gross Margin~~

~~Services gross margin increased during the third quarter and first nine months of 2023 compared to the same periods in 2022 due primarily to higher Services net sales,~~mix, partially offset by the weakness in foreign currencies relative to the U.S. ~~dollar and higher~~ dollar.

Services ~~costs.~~Gross Margin

Services gross margin ~~percentage decreased~~increased during the ~~third~~first quarter of ~~2023~~2024 compared to the ~~third~~same quarter ~~of 2022 due primarily to higher Services costs, partially offset by improved leverage. Year-over-year Services gross margin percentage decreased during the first nine months of~~in 2023 due primarily to higher Services ~~costs~~net sales and a different Services mix.

Services gross margin percentage increased during the ~~weakness in foreign currencies relative~~first quarter of 2024 compared to the ~~U.S. dollar, partially offset by improved leverage.~~same quarter in 2023 due primarily to a different Services mix.

The Company’s future gross margins can be impacted by a variety of factors, as discussed in Part I, Item 1A of the ~~2022~~2023 Form 10-K 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 2023~~Q1 2024 Form 10-Q | 1716

Operating Expenses

Operating expenses for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 were as follows (dollars in millions):


		Three Months Ended						Nine Months Ended
		July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Research and development
Research and development
Research and development	Research and development	$	7,442		$	6,797		$	22,608		$	19,490
Percentage of total net sales	Percentage of total net sales	9		%	8		%	8		%	6		%
Percentage of total net sales
Percentage of total net sales
Selling, general and administrative
Selling, general and administrative
Selling, general and administrative	Selling, general and administrative	$	5,973		$	6,012		$	18,781		$	18,654
Percentage of total net sales	Percentage of total net sales	7		%	7		%	6		%	6		%
Percentage of total net sales
Percentage of total net sales
Total operating expenses
Total operating expenses
Total operating expenses	Total operating expenses	$	13,415		$	12,809		$	41,389		$	38,144
Percentage of total net sales	Percentage of total net sales	16		%	15		%	14		%	13		%
Percentage of total net sales
Percentage of total net sales

Research and Development

~~The growth in research~~Research and development (“R&D”) expense was relatively flat during the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 compared to the same ~~periods~~quarter in ~~2022 was driven primarily by increases in headcount-related expenses.~~2023.

Selling, General and Administrative

Selling, general and administrative expense ~~was relatively flat~~increased 3% or $179 million during the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 compared to the same ~~periods~~quarter in ~~2022.~~2023.

Provision for Income Taxes

Provision for income taxes, effective tax rate and statutory federal income tax rate for the ~~three- and nine-month periods~~three months ended ~~July 1,~~December 30, 2023 and ~~June 25,~~December 31, 2022 were as follows (dollars in millions):


		Three Months Ended						Nine Months Ended
		July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		December 30, 2023
		December 30, 2023
		December 30, 2023
Provision for income taxes
Provision for income taxes
Provision for income taxes	Provision for income taxes	$	2,852		$	3,624		$	12,699		$	15,364
Effective tax rate	Effective tax rate	12.5		%	15.7		%	14.6		%	16.3		%
Effective tax rate
Effective tax rate
Statutory federal income tax rate	Statutory federal income tax rate	21		%	21		%	21		%	21		%
Statutory federal income tax rate
Statutory federal income tax rate

The Company’s effective tax rate for the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, ~~including the favorable impact of changes in unrecognized tax benefits,~~ tax benefits from share-based compensation, and the impact of the U.S. federal R&D credit, partially offset by state income taxes.

The Company’s effective tax rate for the ~~third~~first quarter of ~~2023~~2024 was lower compared to the third quarter of 2022 due primarily to a lower effective tax rate on foreign earnings, including the favorable impact of changes in unrecognized tax benefits, partially offset by lower tax benefits from share-based compensation. The Company’s effective tax rate for the first nine months of 2023 was lowerrelatively flat compared to the same ~~period~~quarter in 2022 due primarily to a lower effective tax rate on foreign earnings and the impact of U.S. foreign tax credit regulations issued by the U.S. Department of the Treasury in 2022, partially offset by lower tax benefits from share-based compensation.2023.

~~Apple Inc. | Q3 2023 Form 10-Q | 18~~

Liquidity and Capital Resources

The Company believes its balances of cash, cash equivalents and unrestricted 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 ~~2022~~2023 Form 10-K, except for manufacturing purchase obligations.

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. ~~Outsourcing partners acquire components and build product based on demand information supplied by the Company, which typically covers periods up to 150 days.~~ As of ~~July 1,~~December 30, 2023, the Company had manufacturing purchase obligations of ~~$38.4~~$38.0 billion, with ~~$38.1~~$37.9 billion payable within 12 months. ~~The Company’s manufacturing purchase obligations are primarily noncancelable.~~

Apple Inc. | Q1 2024 Form 10-Q | 17

Capital Return Program

In addition to its contractual cash requirements, the Company ~~had~~has an authorized share repurchase ~~programs as of July 1, 2023.~~program. The ~~programs do~~program does not obligate the Company to acquire a minimum amount of shares. As of ~~July 1,~~December 30, 2023, the Company’s quarterly cash dividend was $0.24 per share. The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.

Recent Accounting Pronouncements

Income Taxes

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“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. ASU 2023-09 allows for adoption using either a prospective or retrospective transition method.

Segment Reporting

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which will require the Company to disclose segment expenses that are significant and regularly provided to the Company’s chief operating decision maker (“CODM”). In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. The Company will adopt ASU 2023-07 in its fourth quarter of 2025 using a retrospective transition method.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with ~~U.S. generally accepted accounting principles~~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~~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 ~~2022~~2023 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 ~~2022~~2023 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~~three months of ~~2023.~~2024. 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 ~~2022~~2023 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 ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”)~~ were effective as of ~~July 1,~~December 30, 2023 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~~first quarter of ~~2023,~~2024, 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 2023~~Q1 2024 Form 10-Q | 1918

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Epic Games

Epic Games, Inc. (“Epic”) filed a lawsuit in the U.S. District Court for the Northern District of California (the “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.~~Store®. On September 10, 2021, the District Court ruled in favor of the Company with respect to nine out of the ten counts included in Epic’s claim. The District Court found that certain provisions of the Company’s App Store Review Guidelines violate California’s unfair competition law and issued an injunction enjoining the Company from prohibiting developers from including in their apps external links that direct customers to purchasing mechanisms other than Apple in-app purchasing. The injunction applies to apps on the U.S. storefront of the iOS and iPadOS® App Store. On April 24, 2023, the U.S. Court of Appeals for the Ninth Circuit (the “Circuit Court”) affirmed the District Court’s ruling. On June 7, 2023, the Company and Epic filed petitions with the Circuit Court requesting further review of the decision. On June 30, 2023, the Circuit Court denied both petitions. On July 17, 2023, the Circuit Court granted Apple’s motion to stay enforcement of the injunction pending appeal to the U.S. Supreme Court (the “Supreme Court”). On January 16, 2024, the Supreme Court denied both the Company’s and Epic’s petitions and the stay terminated. The Supreme Court’s denial of Epic’s petition confirms the District Court’s ruling in favor of the Company with respect to all of the antitrust claims. Following termination of the stay, the Company implemented a plan to comply with the injunction and filed a statement of compliance with the District Court. On January 31, 2024, Epic ~~has~~filed a notice with the District Court indicating its intent to dispute the Company’s compliance plan.

Masimo

Masimo Corporation and Cercacor Laboratories, Inc. (together, “Masimo”) filed a complaint before the U.S. International Trade Commission (the “ITC”) alleging infringement by the Company of five patents relating to the functionality of the blood oxygen feature in Apple Watch® Series 6 and 7. In its complaint, Masimo sought a permanent exclusion order prohibiting importation to the U.S. of certain Apple Watch models that include blood oxygen sensing functionality. On October 26, 2023, the ITC entered a limited exclusion order (the “Order”) prohibiting importation and sales in the U.S. of Apple Watch models with blood oxygen sensing functionality, which includes Apple Watch Series 9 and Apple Watch Ultra™ 2. The Company subsequently proposed a redesign of Apple Watch Series 9 and Apple Watch Ultra 2 to the U.S. Customs and Border Protection (the “CBP”) and appealed the ~~Circuit Court’s stay~~Order. On January 12, 2024, the CBP found that the Company’s proposed redesign of Apple Watch Series 9 and Apple Watch Ultra 2 falls outside the scope of the ~~injunction. If~~Order, permitting the ~~U.S. Supreme Court reverses~~Company to import and sell the ~~Circuit Court’s stay of~~models in the ~~injunction or declines Apple’s petition, the injunction will take effect.~~U.S.

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~~first quarter of ~~2023~~2024 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.

Item 1A. Risk Factors

The Company’s business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the ~~2022~~2023 Form 10-K under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, the Company’s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. ~~There~~Except as set forth below, there have been no material changes to the Company’s risk factors since the ~~2022~~2023 Form 10-K.

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 App Store, 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.

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 2019

In January 2024, the Company announced changes to iOS, the App Store and Safari® in the European Union to comply with the Digital Markets Act (the “DMA”), including new business terms and alternative fee structures for iOS apps, alternative methods of distribution for iOS apps, alternative payment processing for apps across the Company’s operating systems, and additional tools and application programming interfaces (“APIs”) for developers. Although the Company’s compliance plan is intended to address the DMA’s obligations, it is still subject to potential challenge by the European Commission or private litigants. In addition, other jurisdictions may seek to require the Company to make changes to its business. While the changes introduced by the Company in the European Union are intended to reduce new privacy and security risks the DMA poses to European Union users, many risks will remain.

The Company is also currently subject to antitrust investigations 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 materially adverse impact on the Company’s business, results of operations and financial condition. For example, the Company is the subject of investigations in Europe and other jurisdictions relating to App Store terms and conditions. If such investigations result in adverse findings against the Company, the Company could be exposed to significant fines and may be required to make further changes to its App Store business, all of which could materially adversely affect the Company’s business, results of operations and financial condition.

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 and financial condition. For example, the Company earns revenue from licensing arrangements with 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.

There can be no assurance the Company’s business will not 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 other legal proceedings can negatively impact the reputation of the Company’s products for privacy and security and 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, and lost sales.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ~~and Issuer Purchases of Equity Securities~~

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Share repurchase activity during the three months ended ~~July 1,~~December 30, 2023 was as follows (in millions, except number of shares, which are reflected in thousands, and ~~per share~~per-share amounts):

Periods

Total Number
of Shares Purchased

Average Price
Paid Per Share

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs

Approximate Dollar Value of

Shares That May Yet Be Purchased

Under the Plans or Programs (1)

Periods

Total Number
of Shares Purchased

Average Price
Paid Per Share

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs

Approximate Dollar Value of

Shares That May Yet Be Purchased

Under the Plans or Programs (1)

April 2, 2023 to May 6, 2023:

October 1, 2023 to November 4, 2023:

August 2023 ASRs

Open market and privately negotiated purchases

38,121

165.46

38,121

May 7, 2023 to June 3, 2023:

November 5, 2023 to December 2, 2023:

Open market and privately negotiated purchases

21,876

174.91

21,876

June 4, 2023 to July 1, 2023:

December 3, 2023 to December 30, 2023:

Open market and privately negotiated purchases

42,676

184.34

42,676

Total

102,673

94,569

Total

(1)~~On April 28, 2022,~~As of December 30, 2023, the Company was authorized by the Board of Directors ~~authorized the~~to purchase ~~of an additional~~up to $90 billion of the Company’s common stock under a share repurchase ~~program. As of July 1, 2023, remaining availability under the April 2022 authorization was $4.6 billion. On~~program announced on May 4, 2023, ~~the Board~~ of ~~Directors authorized an additional~~which $36.4 billion had been utilized. The program ~~to repurchase up to $90 billion of the Company’s common stock. The programs do~~does not obligate the Company to acquire a minimum amount of shares. Under the ~~programs,~~program, 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 August 2023, the Company entered into accelerated share repurchase agreements (“ASRs”) to purchase up to a total of $5.0 billion of the Company’s common stock. In October 2023, the purchase periods for these ASRs ended and an additional 6 million shares were delivered and retired. In total, 29 million shares were delivered under these ASRs at an average repurchase price of $174.93 per share.

Apple Inc. | Q1 2024 Form 10-Q | 20

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~Insider Trading Arrangements

~~Apple Inc. | Q3~~On November 11, 2023 ~~Form 10-Q | 21~~

and November 27, 2023, respectively, Luca Maestri, the Company’s Senior Vice President and Chief Financial Officer, and Katherine L. Adams, the Company’s Senior Vice President and General Counsel, each entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The plans provide for the sale of all shares vested during the duration of the plans pursuant to certain equity awards granted to Mr. Maestri and Ms. Adams, respectively, excluding any shares withheld by the Company to satisfy income tax withholding and remittance obligations. Mr. Maestri’s plan will expire on December 31, 2024, and Ms. Adams’s plan will expire on November 1, 2024, subject to early termination for certain specified events set forth in the plans.

Item 6. Exhibits

Incorporated by Reference

Exhibit
Number
Exhibit Description Form Exhibit Filing Date/
Period End Date
4.1
Officer’s C ertificate of the Registrant, dated as of May 10, 2023, including forms of global notes representing the 4.421% Notes due 2026, 4.000% Notes due 2028, 4.150% Notes due 2030, 4.300% Notes due 2033 and 4.850% Notes due 2053.
8-K 4.1 5/10/23
31.1*
Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
31.2*
Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
32.1**
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
101* Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.
104* Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing Date/
Period End Date

31.1*

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.

31.2*

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.

32.1**

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.

101*

Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

104*

Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

* Filed herewith.

** Furnished herewith.

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 2221

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: ~~August 3, 2023~~February 1, 2024	Apple Inc.

	By:	/s/ Luca Maestri
		Luca Maestri
		Senior Vice President, Chief Financial Officer

Apple Inc. | ~~Q3 2023~~Q1 2024 Form 10-Q | 2322


		Page
Part I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1413
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1918
Item 4.	Controls and Procedures	1918
Part II
Item 1.	Legal Proceedings	2019
Item 1A.	Risk Factors	2019
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds ~~and Issuer Purchases of Equity Securities~~	2120
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	2221


	September 24, 2022
	Fair Value of Derivatives Designated as Accounting Hedges		Fair Value of Derivatives Not Designated as Accounting Hedges		Total Fair Value
Derivative assets (1):
Foreign exchange contracts	$	4,317	$	2,819	$	7,136


Derivative liabilities (2):
Foreign exchange contracts	$	2,205	$	2,547	$	4,752
Interest rate contracts	$	1,367	$	—	$	1,367


	July 1, 2023		September 24, 2022
Components	$	3,788	$	1,637
Finished goods	3,563		3,309
Total inventories	$	7,351	$	4,946


2023 (remaining three months)	$	1,260
2024	3,417
2025	1,990
2026	3,079
2027	1,013
Thereafter	8,198
Total	$	18,957