Apple (AAPL) 30 Apr 202020 Q2 Earnings call transcript

Good day everyone. Welcome to the Apple Incorporated Second Quarter Fiscal Year 2020 Earnings Conference Call. Today’s call is being recorded.

At this time for opening remarks and introductions, I would like to turn the call over to Mr. Tejas Gala, Senior Manager, Corporate Finance and Investor Relations. ahead. go Please

afternoon Good you joining for Thank and us. you. thank

open is Speaking Luca Cook, we’ll questions Apple’s and today analysts. Maestri. call from he that, CFO, Tim by CEO, first to followed will After the be

impact allocation you’ll including expenses, note discussion COVID-XX during results expense, other of statements, without income today Please revenue, the regarding capital forward-looking our limitation of and hear those Company’s the and consist gross the some outlook business of operations. including of that potential future information business will margin, on taxes, operating and

from Actual forecast. results or trends could differ materially our

For today, more reports in on to with release. press along filed and risk periodic Apple’s and XX-K factors X-K Form XX-Q the associated information, discussed please refer Form the filed SEC most the recently Form the with

obligation Apple dates. respective any update of or forward-looking as speaks information, to assumes no which their statements

now turn introductory I’d to like remarks. call over for Tim to the

for and hope everyone. I joining afternoon, today. Good Tejas. well. Thanks Thanks, us safe staying you’re

reports environment $XX.X for Wearables, say Today in store. during record ever that most all-time a was phenomenal Accessories. It powered Apple Services, and our quarterly proud we’ve global by Amid quarterly billion also for we’re online Retail an quarter. Apple challenging to growth record a Home in for and in which the our revenue, revenue operated the record business, grew Apple

inspired long capacity on of tells Apple’s instinct is and more and how in we to ahead an business, the important a It customers’ others be always This of January. to products I to been when forge as our think just numbers, unmatched creative, also the feel terms our speaks in bit pull durability that I the since dive a want about may enduring contending to term an lives. think back. great responded, importance into to we to we deeply Apple’s speak before do, what story Apple COVID-XX. And has with have But for have something been to

a was succeeded introducing energetic did the for in that to And anticipated be in Apple. work. in prolific meeting terms and in to and they horizon, the occasion only going to teams needs, in pandemic the but growing our new COVID-XX customers’ our Before meeting period not the on which rose we strike, our QX we business was the broader powerful of also and obligations products, communities live when

folks operations to and ensuring logistics in they the worldwide in masks our every every our of look to of frontline Let’s across the network workers, were for greatest donated our more Company the unturned were the XX million sourcing generation quickly same that customers’ supply places no hands, latest chain of need medical business. into and manufactured of get region around stone At partners, part also time world. than leaving they’re devices

shields, face While test, frontlines. Pro, Keyboard, to teams on suppliers Air and launch iPhone these distribute X very of working were we personnel preparing MacBook and more ship well been our which and the nurses million to million our alike, of they product consumers were and by also reviewers Magic to received a have SE, new new iPad all the the week than to design, than and X.X more doctors, with medical manufacture continue every

which quarter strategy, our into speaks dig achieved center. front teams a of were a putting COVID-XX Services the Luca teams in In our will durability where and which growth, these real strong Services also to and minute,

sources information active special from vertical. Apple News, we through reliable users, reached trusted XXX As elevated million a COVID-XX monthly

of during with volume many entertain as Messages set let Apple devices April reality. give to through Oprah users and on for TV to stay services customers families. inform, relied and in new and financial for for without skip and like connected We daily all-time a worked Card quarter We Gaga to light FaceTime this incurring interest March from payments on everyone Apple Lady in back records their hardship new

creativity our with software, the ever CDC. as in and online website excitement our In worked great same with our time deliver the put later and Worldwide speed first quarter, and symptom we creativity with also at prepare to same all that this the Developers together teams Conference worked to checking app they COVID-XX partnership

and X As agencies security a million installed this user to technology tracing, and central nearly to are joint of we the health enable And spread X the the times just received Bluetooth has of tool the million effort app web with month, virus accelerate design. Google unique the has to been contact use today, the reduce visits. launching help with and of to governments over privacy

these tally response world significant, Americans chain. for programmatic crisis. experiencing ongoing match donations with you strategy insecurity paired consider back most. it’s for food things get of new these citizens a to corporate response efforts result support around source are great the to where X donations, to a global a We’ve efforts When major a as our the well needed We and the as fund broader to made employee and to contributions as the whole Apple’s diverse, X for up pride global of

by part extends to help appropriate. closures. despite employees, stay they instrumental retail course employees, our modifying business This we’re to can an communities Apple’s and compensating customers we of what of doing normally our by their our our them to their store safe and and and our extension also well are where operations We’re families, face

adaptability global a evolve the resilience chain. our gratified quarter been circumstances have where During hour, by supply and we the by of

been felt the to operations was typical at and suppliers in we back have team, our safely end some levels work partners manufacturing returning While March. toward production February, and supply of constraints temporary

world to of and gathering are the each new around ways products connected At our other. learn, this taken for have shuttered have Teachers importance and a on evidence stay significant with distance, of relying of technology that seen of time social plans delayed and socializing, places, and customers. renewed students we school our teach,

are distance, thousands of deploying of Rico, the the XXX,XXX ever. orders in to strong educational iPad Glasgow, XXX,XXX keep school Angeles Ontario, major of deployment Canada; systems process Puerto tens to of largest iPads our and including New to a working We Scotland at city York to and learning going City, in Los a

X them Since entertained we’ve at to seen the pro And demand we XX-days levels. usage reaction made downloads early enthusiasts folks students, Pro software stay Pro and available to X and overwhelming, everyone. been unprecedented record inspired for for Final March, and And for keeping do for driving it, These Logic free we a Cut has all professionals. as home. creative help app us from are and

protective enables reduces for a keep And and Health rooms, Geisinger even Watch and Health, when Care use new and to patients exposure. which Health exposure and making on Many NYU features medical Stanford are on them teams This of isolation professionals communicate treat without some the as to and with doctors to are FDA Apple patients With watch communication personal conferences safely health from greater teams. helps iPad and to necessary. distance and minimize equipment. for remote ECG guidance to a their apps monitoring, recordings measurements System, such used entering close hospitals and the between example, care patient facilitate provider iPhone being usage, non-invasive on and the for using care ECG of patient increasingly and healthcare contact remote and on reducing support hospitalized Langone is patients app need Watch telemedicine Apple video other to

could the do what you and has step it. when we we I don't way how Now, touched of or customers may have been you we have this pandemic, this all think when ways the been this a back Apple, quarter I've tally been not but our can quarter recall COVID-XX and absent it where up, consider the all prouder I work, do

quarter The As the toward the outset, very performance record said revenue weeks the underneath three performance second we at I first product of was revenue we headed quarter. the our a during of as strong point, had us products within of on guidance billion business quarter, in $XX we very achieved were were and March of in different of was withdraw five February. during our that product to revenue for for the Apple’s at caused In phases $XX.X Based COVID-XX the confident expectations. and China, as of was with our products iPhone still the supply of next demand expectations. weeks our demand started impacting that At China. This our temporarily our well line as China end high five quarter, affected, billion. outside

pressure downward social as many virus demand, of of the the weeks and place Wearables. globally in channel for measures retail and the spread we the Greater world, of sales XXth, China points closure worldwide, During on were around of particularly distancing stores March outside including all put iPhone the saw our three and partner quarter, last on

quarter. near and visibility of we be guidance term, will the the lack not the coming issuing Given in uncertainly for

we term degree Over of high though, the strength have the in our long business. enduring of a confidence

Our supply chain and profoundly resilient. is global durable

ability have caused shown meet COVID-XX. manage by and consistent those supply the We temporary like challenges to

an to all-new a including incredible achieved across products at the of that innovative deliver unmatched continued broad have value. capacity cross-section new categories We to multiple technological appeal iPhone customers, which SE,

complexities worldwide of good teams dedication our to with humor unmatched and tackled the this have Our moment creativity, customers.

brand business everything real having there just way. out about how company periodically a to are whose figure to For in upsides is a do innovation, in new

is and installed is reflection our Services a our growing in and enduring investment is growing of business base. succeeding. long-running Our large strategy This

fiscal in expect We goal of to doubling Services our XXXX. revenue XXXX meet longstanding our

term. with pipeline strain, run product cash for We Apple have always the robust period a this unmatched our entered financial position best and ever. We long

apart. that’s we five-year moving managed moments strategy the billion speed doubling including $XXX our are moments United to the ourselves and Major in our that here today. investing the It’s by investments, difficult full always down these ahead. set in States next of economy And innovation. commitment contribute generation through in forward We’ve to

while can for sure keep this creating, book, be will help as we everything confidence many during how And this that to it good time. will continue to can customers can’t and ending we in and Apple can response as have our can the a do one. so, the are chapters normal global sharing, that we do challenging so connecting learning, to life remain say

With things Luca. that, I’ll to hand off

everyone. you, Tim. Good afternoon, Thank

be than times. partners we proud teams has financial resilient our the a these and last our been of not throughout to more around role in quarter we business of were our expecting Apple we local different you challenging our But, communities supporting been the could the chain, January. value has and at end very during and talked how It world, when performance

for impact basis XXX a of points X% from $XX X%. despite the was So, was quarter Products from ago, the circumstances foreign headwind COVID-XX from the extreme billion, billion, revenue down of year a a revenue $XX.X the up and exchange.

was performance three world weeks point-of-sale and lockdowns during particularly closures our January, the and impacted product around COVID-XX sales. After the due strong quarter a affected when very increase our of to the last spreading

performance we on stronger year However, reported was our ago. channel iPhone our a reduced inventory we than results basis, did as more a than demand

in and all Importantly, segments our an reached of major installed product base active geographic all-time all of devices our high categories.

very many of and our We Services a different of $XX.X on revenue record provide more we a revenue all-time countries all-time later. followed of with Services strong this categories set XX%. most year-over-year in billion with in new track. growth I’ll details trend records

mix. of due margin gross leverage. pronounced seasonal mentioned decreasing by leverage points mix and the to XXX XX.X%, drop cost circumstances basis I normal impact unfavorable sequentially earlier. shift with savings offset was loss XX.X%, margin COVID-XX under gross Products Services than and was sequentially towards was Company more due the of loss This to flat

up Services sequentially, gross was basis by mix. favorable margin XXX points driven XX.X%,

was due guidance reported lower for than tax items. our discreet rate XX.X%. to XX.X% the This quarter Our onetime was

earnings ago. flow year Net over $XX.X billion, an per billion $X.XX, improvement Operating billion strong was X%. with of at up income was very and $X.X share $XX.X cash a

me into our each more revenue detail categories. get of for Let

during affected iPhone demand iPhone quarter. revenue declined X% by at both some impact and billion, $XX supply the COVID-XX point the year-over-year of as were of

supply adaptability ability and people some from circumstances its during we’ve to shortages On February, our supply suffered global as temporary pleased get but to well as allow. chain, extremely work with the side, been of we back resilience safely the when supply

production restore a operations manufacturing product exited of effort and quarter supply the team in Our lines. partners for forth we our most to and put an extraordinary good position quickly,

more of very demand weeks, in impact broadly the quarter, the became after On the three then strong weeks five for first China closures next demand more of when the saw world for we the lockdowns the in last countries. weeks, five and widespread COVID-XX affect point-of-sale many and around side,

an of end speaks slight point-of-sale of reached iPhones base products quarter, of of to the the in high. quality a towards the This ecosystem. cycle closures, see to replacement active While did has we our elongation our which the our all-time strength we widespread our installed and attribute

U.S., survey indicates the for XX, fact, the XX% consumers of XX In latest iPhone XX satisfaction customer and in Pro combined. Research from of XXX Pro iPhone Max

revenue Services. all-time App cloud search to performance across strong also App with our records We for an record quarter in record Music, of March all-time billion set Video, Turning Store, Store and Apple a ad set the we $XX.X the revenue business. board with And AppleCare. services,

Our services, continue contributing and News growth. to Apple content Arcade, users, and TV Card Apple Services new features Plus, Apple add to while Apple Plus overall

way ‘XX during we’re to our Services on revenue well mentioned, our fiscal Tim our XXXX. As doubling accomplishing of goal

customer both demand Store grew strong purchases revenue subscriptions. double App robust thanks to and in-app for by digits,

across a grew increased high. multiple and all-time business subscription year-over-year, third-party new categories over reaching XX% Our

also Music and quarter and well. services, set perform party three record first AppleCare March all up subscription Our both Apple for subscriptions services were revenue set of record. very a Paid continued strong double-digits. these cloud services all-time to

our growth over million have XXX segments. high our ever reach On number during all before and confident our million. the double a basis, is subscriptions accounts paid across With ecosystem we a on end We grow our in the to March will paid quarter. geographic accounts grew a the have in paid both services subscriptions all-time highest on number the over This XXX sequential subscriptions engagement our this increased we’re stores million XXX by now increased year experienced. calendar content momentum, the of strongly, reached sequential from platform, In XXXX. continues ago. of new target we up the XX paid million digits transacting of of and digital particular, of paid Customer

billion, of with Wearables, five segments. March $X.X revenue geographic a quarter digit Accessories Home XX% up new established double and record all year-over-year strong with across performance

now XXX this front the product for Our in by Wearables we’re is and a excited very business company, us opportunities Fortune size the many category. of of

example, Apple the the its XX% customers For as the were Watch Watch to purchasing reach product. to new quarter world of over Apple around continues expand during the

$X.X about Mac billion; was talk revenue iPad. to like I’d Next, was iPad $X.X and Mac revenue billion.

really class Air with performance of the Towards brand first we reality Pro lower with scanner launched exciting and new augmented the a end a LiDAR quarter, applications; a improved in at iPad that MacBook some includes price. significantly

the customer We’re for interest products. strong very with pleased both

active half were both the customer around the iPads XXX most measured of XX% And Mac. all-time reached XX% customers purchasing recent of Importantly, new that high. iPad and the and iPad Macs and Mac to for Research new around world base for for during consumers the surveys at from quarter and product satisfaction installed a the

including business to customers topics We’ve also they making and enterprise working have been and this the Mac like as remotely. provide to in video to transition businesses customers realigned remote In environments. and market transition focused new relevant created everywhere security. the content We’ve to on timely an our teams work and series our of assist support iPad enterprise learning deployments navigate own on-demand retail

customers benefiting Some and as Business of our and home, easily have devices to quickly Manager offering Mac to secure and zero-touch employees allow deployment. able IBM to largest SAP from from up pivot employees been set to Apple their such

remotely. remote just York with of few worked work entire to deployments projects Peloton so team new a teams for fleet instance, hours. overnight, of their Macs examples countless New an seen we’ve And implemented of deploy in could our

Lidl, and Carrefour offer like around grocery as Woolworths, are centers Leading traffic. Apple organizations In food world, the customers serve customers our payments. Trader seen can grocers foot fulfillment their adopt stores Joe’s, become and delivery contactless and essential sectors, better Lawson’s, so as shift apps safely. services, financial to Sainsbury’s, shoppers And we’ve for online such to orders, use remote organizations Pay leveraging reduce for to technology

company one daily corporate who to by use and mobile devices as banking, their way employees In top priority, a and to where securities protect information is of part client are iOS jobs. safety phones providing

of devices As of their tens iOS purchasing America workforce. example, for thousands Bank of additional is an

Let me our now turn position. cash to

issue conditions. I First, to note highly unusual not an has during us been for market that liquidity these want financial

sheet, an free marketable plus flow to billion $X.X quarter, generation. cash open March $XX of securities, including We deep in cash $XX extraordinarily shareholders as returned end during billion million was cash very We and dividends to in $XXX result, a Apple quarter quarter. shares, the net billion and $XX.X balance capital unmatched have and strong access at repurchases billion through We with market of of billion equivalents. markets, XX.X the total the debt ended And billion. $XXX the

we as the like the referred seeing, move includes on that to quarter, beginning forward-looking provide of are at the ahead what Tejas to Finally, of June I’d types information we color into the some which call.

given not the in mentioned, we Tim the As and coming quarter. certainty be guidance for lack of the issuing near visibility term, will

might on in what how facing. seen we and April, we’re would tailwinds think some play and things I provide have headwinds on based insight to like additional out, we However,

From to a standpoint, U.S. has the year-over-year by the on expect recently a negatively billion exchange more than dollar world. basis. a impacted result, $X.X against foreign as currencies And appreciated most revenue be our we around

chain back, and supply up running. is global Our

new in during received are all SE these including launched. typical products newly a Air, recently even position, We circumstances. Pro, MacBook extreme our products, customer have supply iPhone launched and ramp outstanding with These usual associated response, iPad

worsen March the relative June quarter; performance year-over-year and expect expect to revenue iPad the we and the improve quarter in iPhone to Mac, in on quarter. On year-over-year we revenue performance a to Wearables, the June

trends. distinct two seeing are we Services, On

we throughout June very Music, performance quarter. Store, with in engaging Video, App cloud services, ecosystem services the will our believe strong and the actively recent the continue and are customers First, digital and

our economic have App business been Advertising, lockdowns and repair reduced Store search of to the of both with businesses and reopen. Second, been warranty the traffic. by being obviously services comprised which weakness will ads, Apple agreements are is level like AppleCare world, which level of due affected by to is on and when overall uncertainty News activity, economic around reduced store our of due of impacted. and customer the AppleCare the impacted comprised overall advertising third-party customers, our agreements, has and closures product ads

products, of the loss For include gross foreign seasonal on and sequential within business. our headwinds the margin, mix exchange, product leverage

have impact year-over-year. and impact exchange XX points sequentially XXX Foreign a basis basis points will

product the provided Regarding revenue include keep mix towards in cost mind mix, Sequential tailwinds shift the we the commentary at savings level. services. and

regard capital allocation, to With remains our approach unchanged.

continue We invest to shareholders. our returning also to future our while confidently in value

in developing cities exciting services pipeline while expanding are midst over economy our most the the around billion We to U.S. our products and of contributing five-year country a in $XXX and of period. footprint over ever many the

in value continue maintaining we that also reaching We great position target there a cash net to stock, and of our believe neutral are is time. our over

testament a to for Board in $XX our and repurchase to today future, authorization the repurchases share billion $XX addition the we business billion the As has current plan. share over into have our confidence under in authorized the remaining

payable XXXX, share also shareholders in our increase X% XXXX. XX, Our cash a record to $X.XX of stock, XX, May on per and a dividend today May Board of declared dividend of of has as common authorized quarterly

done. long Apple importantly, term, are always the as most we’ve managing we and for Finally,

invest we and historically, uncertain have business the in times our philosophy. to During remains continued this

out do and what our teams focused we stay believe on We in our from this wisely, best, the will will product business care investing managing of service and continue stronger. pipeline, come taking and we to

questions. open that, to call the With let’s

Operator, limit questions. have the ask Thank you, may Luca. We question, you to first two that please? yourself

come will Shannon Cross Research. from Yes. Cross, That

Tim, and talked much question, improvement is of I the very well. taking hope in you Thank about my some seeing second half April. for you everyone

maybe So, in more various from a and hearing talk I you’re have your selling wondering then, what the if follow-up. geographic was the you’re and regions what you a in you. basis, segment, Thank you’re on I could just customers. And bit that a seeing

Shannon. Sure,

If start look I’ll -- China. at you with

there were having steep know. saw toward happened in you you China, demand. stores The good the of If a a what as at January. our in in end January, February. we really lockdown decline we February, look We started closed

demand March. toward we until half open mid-February, that And mid-March. took in second begin a And completed point We lockdown February. improvement saw basis today, February, then view, about over further you the stores. on days of in of from the at, we look we opened XX where staggered As an to a we’ve are improvement to as April March in kind of seen if compared

that’s And so, China.

orders you our toward of first And quarter. the the weeks five of last If the rest full the talked reacting five January, in talked great on shelter-in-place and China doing up of the the spent chain began. do for next the the real world, March and you supply the in of went about the The headed about. that weeks we of sort decline were rest we back end we thing force we getting look at work-from-home and believe in sort in sharp already top of the that call. when in through the The were were the world had working to I happened that expectations

decline those three For the end demand. quarter, a sharp the saw weeks at of in we two, period,

part to to to to April a look of started stimulus the programs a not so improve the effect is either new it it probably April, related working Luca or home looking and that across it the and shared, like as end part devices for on taking some second lined step the April believe certain Mac just during geo and If for and longer seen you at forth online products, to at work that’s this an while we’ve into I of go are uptick knowing of in education little or to April, It’s half in by quarter, are board. a across consumer remotely. think, product. on basis it, In at the early think part that this behavior particular customers going our that, a a a we March, a out due of really We just up and now is iPad more. of but certain taking going then due year-over-year is and is getting of

to we’re seeing. answer complex question, but your So, what that’s

talked Thank various the takes cost helpful. I on but you unless operating and line. curious you. OpEx, it, the may given puts That in you. quarter, really Thank your know about was of be about Luca, you’re that COGS spending some didn’t I some you savings mentioned missed discuss I’m and expenses. how thinking you the macro challenges facing.

Yes.

term, innovation So, manage as we Company know development. is services said, long we So, and core the the that Company product of Shannon, the and the of for business, the right? we core the

will So, in pipeline. we to our continue invest

We’re in very we have what store. excited about

so, there. will we manage of of environment the are the aware company continue invest And so, the we Obviously, to SG&A we portion will and tightly.

new We we recently. services in are making launched investments that the new

technology us. obviously, And purchased from technology want to Intel. we activities consider for a develop that core you the because we know, baseband it’s we As

we And will manage to to to business that balance try so, the wisely. we need during difficult to and the fact continue invest circumstances like the

have Thank you, question, please? Shannon. we next Can the

from from That Mohan America. of will Bank be Wamsi

everyone appreciate We of Tim, Apple’s I think appreciative speak I all call on this it. the during all we’re pandemic. that you. Thank for very Yes. contribution

for much that. very Thank you

associated have product and challenges Tim, the a of footprint in are a Apple as these we things introduction such you cadence. have a quarters? But and several I a lot And are from downturns, maintained and a seen really in past unable the over with there investing. product unprecedented do we introduction company to pull times go have when largely back product for given next you cadence not development development, a time during follow-up. And we activities have the of should person, lot think global how about as really

operate. Well, to we’re continuing

tell, you and Air. MacBook the so, And with the ship everything with as else to were and the we Pro on, iPhone SE, the Magic going launch Keyboard, iPad can along able

products lifeblood. continues are our and the new And business so, the

And we’re work-at-home. as to to not even Company, in other getting of so, Everybody’s they’re the productive, areas work. In continuing maybe productive. areas used some people more some the

roles because more depending from know down, mixed, products that are They’re this that environment, we we’ve the what customers important can we are. the we you what upon it’s head have in did our as got. so, these tell And quarter, working But, want even our times. the despite

you, Thank Tim.

doing a financing you’re your lot products a other that there Card know hands I you your or like the or follow-up, do? was that that, the of of little with Apple Thank structure for think in could you things deferred you. maybe both would customers. balance payments plan consider to sheet and maybe iPhones a using I As do like currently get the wondering, But, you will steps be what differently, versus already bundling you consider strength

iPhone. Well, payment as you know, for Card we launched the plan earlier Apple on

on something doing as And that see shortly. well. products you’ll on that working other We’re for

down. across The the that act very-focused point. way trade-in the also a get affordability the fairly as both something to also on and we’re environment, something great for are programs from So, price board wide great entry

freedom. to balance least card. in announce of gives with terms sheet. degrees the card, not But, States, at of In payments, we play programs having a the what that our deferred know, key kind go of using more you United as deciding us And access today. role the nothing But, to in is

question, Thanks, Wamsi. we next the please? Can have

Katy Huberty. Morgan from Stanley’s will That come

and the health you then, Thank team of crisis streams the augmented of a on I But of have do Where areas creativity might term changes and is hope a revenue structural I’m new at this and on staying comments And for safe. company. question. longer to is there Apple? present healthy reality. I you inspiration And the past I’m about opportunities thinking your sure even more health for coming particularly out follow-up. that on question. start Tim, want I back see the whole

of I reminder it’s a closer a me think, are normal things that for they will there today, just work. to obviously. get how remote important are to great our lot than products are things from where And pretty clear

learn can I think remotely. many finding they people that are

I suspect accelerate so, some. And trend that will

working that’s think probably some in some remotely and about I areas in jobs. true also

solutions we And groups. and those I all think so, products of significant for have

On being comments used examples opening the health the area, in I gave Watch. on about some the my ECG

that huge a other was at viewed lot area a bet areas that help We we’re doing of can people. You because that Company way for us opportunity the looking to and we were in a this. that for already

see wide. fairly door was will would us opened opened that. so, say, health And you on wider. I say it that wouldn’t continue I the already

$XX billion bit And but as is share lower of last authorization couple absolute a the Okay. terms, a then, than years. follow-up, repurchase it in the impressive is

So, the And at that, landing $XX the your thinking to environment just all have world. change Does strongest in then, around of current M&A any on balance around opportunities? one process context thought you sheets related of the the billion.

that, me Let Katy. answer

on First buyback. of all, the

repurchases. additional to right? And billion when As just for in it’s same has amount. quarter, is not authorization we’ve So our said, results our how provide received share know, billion at of will you Keep authorization, very you at or of much allocation every in last you general, a to it’s know now. right? years, remained Board, $XX capital actually you the mind that the adequate $XX. that look in as $XX approach update several here, several you total about outstanding changing look do terms run is as at the in an past The the year our see a available is and we last And from we’re now. we addition from during I end the actual talking the years of that rate the authorization over terms still from over in that our remaining is And

our We has really a on changed basis. years. on nothing over been for changed very there. M&A. quite approach active the purchase has several last companies And We’ve regular nothing So,

We’re fill accelerate the on our side, for always product hardware or both ways looking our roadmaps services software the to on portfolio, gaps in side, side. the on

to will we that. So, continue do

on nothing M&A also changed. And so, front, has the

question, Katy. the please? Thanks, we have Can next

Amit from Daryanani come with will That Evercore.

quarter, from March what inventory have hoping the as discussion in inventory like had quarter expectation. building sounds off was I for I that June Thanks for be like well. did are how may taking my about guess, because And the levels you you first it question. performance inventory. in if you it iPhones, channel on two back of channel historical ranges. could then, below the a the talk look embedding channel I

Tim. Amit, it’s

channel If from at of you more It’s it year. than reduce reduction unusual that was iPhone inventory QX. QX, reduction in the we the the during look previous the not

thing. you generally half here back, speaking, look the raise first inventories; year calendar believe today, channel will as we well. a seasonal And the reduce this the calendar inventories. sitting generally during channel year, happen second if we half year, fact, of that I of in the That’s In

So, hopefully, the that answers your position. question. And we a comfortable in way, by ended

target that range. were You could conclude within from a that we

I feel well comfortable Maybe everything you the about, to you little products you and for that? do bit follow-up. Apple’s Company think and from talk helpful. is need to about the Tim, has traditional get perhaps and XX over how That’s just especially really how a think given supply today gone do through about used for maybe last was in they chain some hoping Apple? that could do launch that strategy fall everyone diversity, the the And situated manufacturing base the you months, manufacturing

is global. our know, chain supply you As

And products of that is manufacturing get focus the truly to I which And more assembly. visibility, everywhere. on so, which one our tends focus would on made versus the final element are process,

final well. some assembly final United the assembly have States; we in China We have as in

look shock the durable supply up really that back for chain at quarter, the think, so that it’s resilient. and come I to conclude, that to I at quickly have place you’d least you demonstrates to took this conclude or if it

we’re it just something feel where we said, at not because about, And competitive we That tweaks. looking so, if it’s And always good talk view as I are. we about and confidential information.

And this totally, we at will we -- so, should learned to we and of as look we we what will what look change. see get the out

we please? Thank you, Amit. Can next have question, the

We’ll hear Ong Jeriel from Bank with Deutsche

a Hi, of ask letting me guys. Thanks for couple questions.

behind segment on solid question macro of my weakness the strong Services. the quarter can I The want despite I overall. product see weakness. in it overall despite was focus So, logic being to kind

kind at does the line? you of impact macro do think at Services the sustains the impacts year, As look some or that worldwide of rest the point you

said, We services typically in the I’ve two give into take don’t our about our as we that let But Jeriel, categories. me distinct we business of a trends overall. see lot quarter, look one. specifics June

Our ecosystem is very strong.

engaged. very are customers Our

We the accounts are transacting of number grow continuing accounts. to double digits, paid and

services at business, App And cloud the that music business, of expect we quarter. continue our that we digital have course, of our so, Store, to video services. And our performance the same level during includes March seen the

continue these very all expect strongly. to So, we to grow businesses

impacted the are that economic now, going level right there overall the of the businesses believe we are be to during quarter. Given June environment, demand two

One AppleCare. warranty have and businesses our by And customers the affected our when measures. repair the comprised AppleCare to our retail we obviously customer of reduced partners June of signed during closures. product store affected only because also essentially Both our purchase the our the they is with points agreements them expect of obviously, is social been not but devices. AppleCare quarter. that these business sale, And we stores, and traffic distancing Right? of of during be level do the the

is other the advertising on we by the the is which be weakness think that businesses is of party when Apple to on third we advertising on and reopen sum business The will economic impacted advertising, have App our the uncertainty News, on business, Store, going front. the the overall agreements and which

headwind things So, will June a the quarter that Services during business. are the these two for create

about question second the My are consumers is that. appreciate purchasing I overall making. it. Got the decisions

impacts storage end layer macro expect product have as mix do line? you of your April, you ‘XX? perhaps the So And kind shift for the toward rest through Thanks. increased of through unemployment So the example, on seen that somebody far, certain of products. of might across uptick lower going downtick forward, and maybe have

I from from I affordable seen But over technology, have the factor our what a from are coming or iPhone. appears you’re customers response wanting asking. haven’t it No. with seen most those it that which form a iPhone SE, latest primarily customer smaller to coming strong is Android.

So, those down, has our also of there the line obviously been are as top Pro the talking of two also And principal and in kind -- about seen of incredibly good. the it. all of segments we iPad. the reception buying iPad this versus the that’s launched We’ve somebody midst you’re

so, at And to, you’re at point. I’m what seeing alluding not least this

we the have question, please. Can Thanks, next Jeriel.

Samik Chatterjee. JP That from will be Morgan’s

start for Thanks question I my just you’re on Hi. taking with in China. a If question. can what kind seeing of

driven you and driven the to relative activity. to how going what’ve But, being online that thoughts of this Any is or recovery mentioned much footfall activity, please? on of pickup You stores, by kind is online? seen in the more in that,

We significantly we But orders Where the goes, see. reduced we’ve you strong of effect April. saw seen as Wearables, the in we stores quarter full the I’ll then, And that’s that’s of speak source What demand stores then further lockdowns quarter, in will and in full and question. because in there. Yes. the went underneath the about China Services. and China shelter-in-place China in that think seen if then, February up saw in for and the mainland so we strong results in January, began. as iPad your recovery what the and And we’ve And a -- closed. in and look into saw I kind a far March, recovery reopened,

closed traffic online. obviously I more remarks, record move not your but February, And quarter. included phenomenal online a been, pretty pre it’s that well. lockdown. was was being for actually. for is ex such quarter, to To had And it China, weeks. a to And the stores us my China regions up it -- around is that’s had three quarterly from but store prior to phenomenal mentioned was the China it that’s as and as other traffic, about in was three-week because in partly the where despite that in period closed world. has Retail the however, question during earlier store back also And where then store it the There and

definitely So, to just And to know time do that’s because be that. would a go is there now not far, the people think move. that a permanent that whether hesitate is to about. I out and They I like shift,

previous just SE. iPhone the for I If strong follow seeing you’re can comment your up on about demand

change point? the demand if wondering typically you on, from point, price I’m the comes giving of for the the are any in to expecting see given from other lower mix iPhones terms of price just do you line the relative Just up where what geographic

less. see the it it plays think, in better every to would expect areas doing even geo, I but are in I incomes where median

out. iOS. over switching see plays how of And expect fair I to that people so, some And we’ll number

in package. it’s -- of you It’s, very phones. offer. So, it’s an will, phones think the our I than unbelievable Android affordable top faster if engine And a and fastest the

And value. so, exceptional it’s an

the have we please? next Can you. Thank question,

Certainly.

today be Raymond Caso question last Our from Chris with will James.

it pricing and what if What into lower ecosystem? a flexibility? iPhone and wanted follow at gross to decision to Thank of kind for so, iPhone people XX, Yes. And another I with up with strategy. you. bring tell sits bring total to does it that the on the you within that to point. And bring that imply coupled made does to decision to iPhone SE users us the that with iPhone question the guess, approach your and Is margins? respect price fact this back add where the and I helping

delivering been fundamental has changed always that Chris, product at about price. we’ve good the And all. a not at best strategy

SE As for bring back. you product. It It’s know, we while. a a to it beloved great did an have was

want deal And so, people while that anything other can I the into wouldn’t we than best best making that give we product. the read to

Okay.

March As question price see expected to a follow-up I commodity some commodity think, through the had declines -- on quarter. pricing. is And the follow-up you

year, what and go a this turns for about in margins talk as half? into into the you perhaps could environment, that or second you expect, gross you as a challenge new again, headwind If the whether you through go

Yes.

while declined. saw NAND DRAM slightly other and and the commodities For March, increase pricing we Chris, displays

would we we remain displays level, DRAM NAND and pricing quarter, expect and decline. most to while prices historically commodity June expect low the to other For at this

with press replay Pacific additional pm be you today. questions available XXXXXXX. enter Please additional you, Thank a for Kristin X approximately the XXX-XXX-XXXX. telephone. contact Members can by XXX-XXX-XXXX. Time of a us. Financial can available Thank contact questions weeks today’s be at again analysts via will for webcast replays XXXX-XXX-XXXX A of joining These XXX-XXX-XXXX. code Huguet numbers at with call two confirmation Apple replay apple.com/investor me on Chris. for the Podcasts telephone as and are or will on The

that joining us for you conference. does today. And conclude all Thank today’s