Apple (AAPL) 29 Oct 212021 Q4 Earnings call transcript

Good day, and welcome to the Apple Q4 Fiscal Year 2021 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 Tejas Gala, Director of Investor Relations and Corporate Finance. Please go ahead.

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

of taxes, Please Speaking he’ll risks including These limitation, margin, gross operating regarding Maestri. impact be on is revenue, hear differ Apple’s during from After the our information allocation outlook, today of Cook; actual future forward-looking and CEO, business Tim statements, statements that analysts. questions followed materially to income business consist we’ll our expense, expenses, the today Company’s that you’ll those open some the first forecast. to that, cause call and capital and operations. potential or and and note will COVID-XX the of by trends of results from may other discussion CFO, results uncertainties Luca without including, involve

press For like release. in discussed as dates. associated for obligation Form filed respective remarks. forward-looking any the risk with today, more their of which Apple’s update report to I’d and or along introductory most with the to information now over statements to please information, on speak turn the annual X-K call Form SEC Tim XX-K filed factors Apple to assumes no refer the recently the

around it pursuit uncertainty both is to everyone, which the our thank resolutely ago, who of we and are joining it can classrooms returning to managing on it about on are as we them health public create customers be. Thanks, as iPads stayed year has fiscal as Tejas, that the workers We’ve and and matters progress is as times, innovation living so. or still over were of family good focused This help people and company. or world through afternoon, come changed, And today. reflected profoundly our it in navigate by Whether billion customers way vaccination behalf. to XX% to students call grateful our in of their have unprecedented we you the performance. the the our atmosphere that growth. and full which I’m had world. define while $XXX we of the and staying A and you empowering reported aimed in represents much FaceTime, Today, teams daily for a honor I encouraged it’s world on we connected while year, our campaigns to what the to to living make to revenue, the an spoke experience, world see annual know iPhone

more of We And a quarter. line Demand with also what categories record new last billion, quarter product growth reporting segment. from today, was and year all-time iPad, a discussed shortages larger-than-expected call, last in record our manufacturing industry-wide and disruptions. for an for we so, and constraints. Accessories, around driven despite Wearables, Even impact, COVID-related growth by and estimate primarily year-over-year these and all than is geographic we we records billion had $X and another achieved revenue constraints very Apple Home representing XX% silicon $XX.X September up set Mac quarterly XX% in of products. robust, We iPhone, every on dollar XX% set strong across supply very our in

grew an every records Our XX% record all-time board. across segment $XX.X quarterly with than growth double-digit in expected, year-over-year. we services performed better set hit the And business geographic where we we strong of and billion

our markets of India and Vietnam. fiscal XXXX, revenue business doubled our we emerging earned During from nearly in and one-third

possible advances. mini, the our earned September X, with all Watch are display. new PRO and the and design faster Max powerful lineup and significant demand and optimistic so quarter, XX iPad Apple the The larger display, systems, been performance. love are much end on life the MX the storage future, and Series about ever alongside our We Pro reimagined are more. superfast notebook introduced iPad, Max, strong by we iPhone with reviews and the thrilled and as editing Logic standard setting represents MacBook displays. best Pro, XX as which display with At iPhone to video are And Series mini, especially speed Final Pro as as customers X or camera in We twice advanced the Cut beautifully for portable we world’s XX iPad the life, going we ultra game-changing Pro iPhone see Apple performance, notebook. XX last new never be making just notebooks their the we’ve design. well things These the of Pro products. before ninth loving performance sharp charging which and most Pro MacBook as features our and new battery in mini, a to whether a of Customers MX previous extraordinary brilliant think with its the generation and music do and completely refined powered has battery iPad are And Watch longer for generation, that able of a week, the introduced the iPhone Super impressive Retina well they’re and They’ll its chips.

battery feature that AirPods industry-leading all-new and life spatial design. and our longer sound, audio all-new announced an also We

new offers services. added across and For the which home, colors seamless we our Apple’s lineup, mini products to integration HomePod three

ever through done of integrated iOS more and thought. get million hardware, Apple We Apple board, XX iPadOS experience software to which producers ever fans that reflects whose the want offers performance, more writers, encouraged watchOS Note had satisfaction. stay whether congratulate track services teams of through proved devices. which range And and to more distractions connect active And to than capture customers TV+ avoid growing Apple unmatched behind-the-scenes drive customer we’ve Apple and our the health a or across X created the fluidly have I to years, ways also stay ourselves work to at Monterey the diverse two and to work everyone and Apple just songs never a services by than subscription has itself prided for and powerful has Watch seamlessly on. the from, ways the world. Focus subscribers actors, been to choosing long success the Across more XX friends new we’ve even to else Apple has very We’ve offers its Voice, macOS to to incredible on storytellers, continue productive, and our tier new more made go. ways Music of to first innovation access to choose with possible. family, enthusiasm your Siri. announced made Music Quick and a power all In called catalog XX already around

incredible. Be couldn’t Comedy seasons That be and more proud quarter, our of entire XX its world the of tomorrow. Ted Truth Award The This to has been Outstanding cast beloved has for Swagger, We Series TV+ over Lasso. newest gripping laughter response for including Emmys, the boundless bring from all continued programs, light out and show with Show characters. our and of which optimism is second Morning won content to lineup The Apple Told of to the fans

brings addition new of announcement quarter pilates, and that and of activities and group like This the a meditation saw friends also including Fitness+, feature together. major workouts, the fitness updates to

two We the And soon also available be new workouts of those the for more shared just level are age in bringing every services millions that Fitness+ are to world. countries, XX skill will around and customers loving. our people

while on satisfaction customer we opportunity This stay year And creative for first Card support award and depend of to Apple its creating an Apple find even for publishers. a quarter, business won apps J.D. productive, entertained. for the on The Store in help they App Apple’s expands Power better Program eligibility. News that a people Partner News, launched continues to very journalism

As we support we’ve several Apple continue Stores. world, glad customers our report new around opened to we’re the to

in in first which Hunan we province This is beautiful of Changsha, a opened store our quarter, China. store the

Istanbul. New recently City. We a we in And store means boroughs now our store York are added in also opened we all X Bronx, the of just in which third

been weeks. worldwide All have now of X and open our stores are for

and busiest meet our retail teams. and where call. through share more, truly shop have on the they answered gratitude Customers never many our We our help can our teams best up relied to with particularly want product to for stores the year, running. products ways enter are and retail it my customers online of get we As I have choose and and time for our retail them them our

isn’t education great smarter a see own which elementary the where helps a We more to is we our Everyone but Equity force. Initiative. can and initiatives. good all just world. school world world in desire a are education excited also not its education behind people free equitable Justice fundamental program, is one. It’s just Can only month, offering equalizing This and students resources, coding. introduced learn the as create more a That a A Code We an Early Learners right principle guiding our equitable Racial a access quality about

plastic work Detroit. $XX $XXX million. Hispanic-serving reaching with designed Watch our to equity the the an allow products XXX% used developers and And to in toward innovation welcome to will This for towards Developer our inaugural Apple creation help made tons prepare we the all ways, one thriving to Apple ever-expanding academy by now by The States in us iPhone XXXX. Series across plastic. iOS the Apple global economy, STEM which the product historically as of avoid to app use now which good the strides day hubs, for our is make will of in goal on also us United in doubled to eliminate our entrepreneurs additional with quarter, I’m underrepresented and of X, packaging in colleges we example, come supply this the cycle of expand jobs and earth. up students XX COPXX, climate life including in impacted hub XXX committed upcycled recycled closer packaging a of across number of without aluminum Apple’s earth plans will we The XXXX. Ahead institution XX, students number more enclosure. quarter, communities they We’ve bottles, water supports shared that brings Those community is In we our states. and elements resources of when for removing we than investment marks million that X.X the States. a million first also black, funds rare our by shared to iPhone who outer XX The to accelerators the plastic more businesses pioneering With is and customers and new join This have clean hub. August, are to class expand which all an plastic of serving our black redesigned purchase change. indigenous-owned seeing becoming including than broadly, centers to are goal dramatically as in programs of antenna progress we have whose industry-first. across also using in More our work Latinx metric the the from be the our technology XX% new already most anything This are month, by made neutral of made serves XX XXXX. were many a jobs fields. technology cohort recycled. significant happy we’ve and suppliers coding universities, taking wrap, the made pleased and and report first by carbon our regional And area. the the carbon-neutral Those iPad United our green entire devices neutrality communities energy mini carbon company. chain impact advances Academy iPad of of and We’ve this

side growth years in project. We’re same very Teams and work to of our viewed this changes the chain in will We’ve across encouraged innovation as products continue the work pushing Apple see the area, we to our forward are come. to environmental this to in in supply the a we and services. never bring spirit months those and drive

global feel the We the pond far sense of are an won’t and to change. solitary greater injustice, to to challenges change equity a we climate From and deep solutions, determined in abide ripple a drives help. responsibility a to that pandemic be

confident to we while world lineup take encouraged innovation quite holiday deeper have that, incredibly are months and to Luca defines feel pandemic that performance the the us. the by are driven over we product We the proud customer dive will I’ll the hand for by of season, that we values down this that new the in come, exactly into we we’ve our us it With year this be Luca? know which the will response seen. by on going cannot guide the quarter. a path and And

Tim. Good everyone. you, Thank afternoon,

the increase We larger-than-expected XX% are $XX.X XXXX. or a year a year of financial nearly results pleased revenue September record-setting record to report quarter, September ago, fiscal capping for billion, an very strong from quarter of despite We a billion $XX supply constraints. set

We was new a every in and growth also in products for with September double-digit it one reached quarter of records segment geographic QX each record them. strong And both, services.

of around iPad all-time records billion. each billion, level and of September sales product to new of a base loyalty Home for with revenue the and of This an strength $XX.X better-than-expected our for drove over record. up all-time for XX% and for our that despite quarter ecosystem, performance, iPhone, estimated the $X ago constraints Accessories. active at a On demand devices Mac our and our combined side, Wearables, installed of products, our record unmatched supply for grew with the We product experienced was in we year categories as we customers

were mix. of XX XX% both Our from geographic gross basis every XX.X%, basis quarter records. XX% XXX margin up partially every leverage. diluted as of $X.XX, record $XX.X by points over gross leverage XX.X%, was September category. sequentially quarter over was an and services in structures XXX income points to XX.X%, costs segment different services different Products of year higher margin higher in down with Net billion to grew due due sequentially, per and offset were and up mix. offset quarter, cost partially ago, share a all-time by points and Services down margin set and revenue billion, $XX.X last gross was year-over-year Company basis records of earnings mainly products, mix September a a

me very for get despite seeing iPhone customer a XX continued well, constraints of record September customer into our grew set demand each family strong. was iPhone iPhone XX XX% of to more very revenue Let the are and and detail enthusiastic supply billion, launch $XX.X perform revenue our year-over-year quarter categories. response as to The of family. we

satisfaction in markets. each from base geographic double new setting survey segment, quarter indicates high. both, emerging customer of and developed our installed latest reached Research of grew also iPhone, and in September consumers records XXX XX% We digits The a active for U.S. iPhone of iPhones all-time

an supply all-time For record of set for billion, by Mac, $X.X our MX-powered MacBook Air. we driven revenue constraints, despite demand strong

iPad last $X.X strong best the the quarters with revenue iPad In as for September of quarters MX for been a the Pro XX%, demand our also up very have of category. powered constraints fact, record for was ever Mac by supply five billion, performance was strong. in quarter significant spite customer also five

customer Mac a combination iPad of to the continue for we iPad, customer and to U.S. Around And buyers. Mac was from purchasing of product. and XXX were Research, that satisfaction the satisfaction the see half high first-time new quarter in recent of Mac most customers surveys both, and consumers iPad. For and XX% both, during levels of

Our continued and iPad is level. computing in to the taking investment Mac next

both for provide and fiscal products to experience, resulted redesigned reengineered which in categories. have years record We customers an both unmatched

We market. the are carrying enterprise this momentum also in

tens to For date. example, of deployed Macs employees thousands already SAP to has of their

week, of global MX available list is MX Pro of Following to planning to Mac MacBook offerings their to our workforce. add it the the launch new last SAP growing

iPads to drivers energy and lower entire train to company, SNCF, is costs. and equips daily their manage helping railway all example Another operations, train maintenance with workflow which France’s national

so have that cycle. the personal of them fact, refresh iPads the the well end drivers choose In the at to received purchase of XX% been for use device corporate

Next, new a $X.X Wearables, billion. record and Home September of set Accessories quarter

switching experience unique the and in improve services. our between like mini to they on seamlessly with experiences, but continue are overall Apple and devices We integration their services, between this offerings products HomePod own Watch, customer software products, AirPods and in believe expand improve paired create we and which and audio powerful your category, showcase our other right, the AirPods. our product devices

to Turning services.

we services reached for all-time cloud and a services, records of September quarter mentioned, music, AppleCare billion an revenue I with App and video, advertising, As all-time record the for $XX.X payment record Store.

These nearly Our billion continued services reflect in impressive years. results tripling seeing in deliver six investment a and execution helped many strong fiscal during category has XXXX, we us $XX revenue are the on fronts. in positive momentum record this

across to geographic base installed and high reached each an our continues First, segment. grow all-time

very see to during and paid last from had subscriptions ago. in million high have we on our to the The nearly that think new years growth. increased digital as Tim content digits services services to and XXX our less number services. customers is our the double will quarter times entire show Also, We our of September of year paid all-time for finally, big and our for each continue year across subscriptions engagement segment. five current offerings. up company. we XXX new on mentioned continue love. earlier, continued stores was X our paid we’re we services than customer And Fiscal not accounts services than more And a but subscriptions grew of breadth we a only Next, adding now than geographic with more number paid improve strong ‘XX the quality million reached platform, which the

category product up XXXX. at and record segment $XX our we a with XX XX% board. by revenue over across XX% level annual billion, fiscal and revenue of business least past every reaching billion $XXX new record nearly Every grew set or was the During the months, performance geographic

$XXX plus commercial issued position. cash billion, in the quarter cash billion securities. $XXX our debt debt, by billion. $X ended term with debt term to turn of new marketable with of leaving $X.X now us decreased We of billion billion $X.X me Let paper and We retired total

As our quarter goal of to billion a the cash result, continue net neutral the as net we over at was towards end of make progress cash $XX time.

to As billion and return quarter. also were included through cash $XX billion our repurchases dividends shareholders business to and million the $XX Apple during XXX we to shares. very generate This equivalents $X.X strong in billion of September able flow, market open continues

final X the additional an settlement our ASR. shares in retired also We million XXth of

move includes review the like December to forward-looking the referred of which types we that beginning to our ahead the quarter, As the outlook, at I’d into call. information Tejas of

continued insights not around the near world the Given are worsen we revenue some current providing the our term, business directional impacts based assumption but that for do are in what we uncertainty guidance on the are today quarter. projecting the to COVID-related we from the not sharing

estimate As our quarter, revenue new solid to and we supply earlier, supply by will impact expect the mentioned products revenue achieve and this during are December revenue high for the seeing to a year-over-year impacted constraints $X during from growth set around We the December quarter. our quarter. we very constraints billion. be Despite larger demands September during challenge, the record

We expect product expect year-over-year due year-over-year decline a supply iPad, which on to grow to revenue category for except we for each to basis, constraints.

rate expect we to to services, quarter the but September growth decelerate strong. our remain from For

gross to XX.X% expect be We and margin between XX.X%.

billion. be and $XX.X OpEx billion expect $XX.X We between to

to mark-to-market to the XX%. potential excluding impact negative any tax our $XX investments be OI&E be minority from million, expect around rate and of We around

today, Board the $X.XX that, X, November of has to open Directors of record our XXXX, With declared on XXXX. as payable stock of shareholders to let’s share questions. common a XX, November of call cash of Finally, dividend per

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

you. Thank

Cross from Cross comes Our question Shannon Research. first from

there a seen I’m issues how you forward? see very much. can Just impacted bit everyone. expect give chain about talk do supply is more during out think any what us this because products improvements the more hitting can wondering, about should I going you’ve color saw Thank you and to on think going you and you you on Tim, specific quarter, current what’s clearly, most we how

Sure.

through two QX QX. Southeast for for and affected at moment, was there was the about shortages them from iPhone, heard had companies Asia. -- we $X different chip causes in the about billion look of second a COVID-related it you had constraints, One a and were lot the If industry. the many iPad in the you’ve the Mac. manufacturing supply And that We disruptions

of second have the The where those, are. improved materially October across to COVID disruptions, we currently

think much point shortages demand we currently pretty most quarter, cause will that this from should very robust. of the It and of affecting, affect be it for products will of shortage. -- I our so, chip is is demand say, view, primary the And -- but a supply-chain-related

of that part the And finish is will time so, larger also demand we be But this by is QX. that strong. $X the the the we believe very the than constraints experienced we that billion in quarter

Okay, great.

So, forward basis. you’re push that? because you new mean, sell Can have different ratable a about sort that seeing. we the question curious, are and in how as a of and Macs just I’m well. you’ll you keep more I thinking on -- things starting you more And the next quarter to

standpoint recurring to nature, you maybe every consumer now revenue don’t for available? us know sales? a if do now You more devices you. and can How services. that’s as all think portfolio definitely is but and get you And to Apple it that’s from more price much under about driving just maybe or your percent tell pay Thank you’re think where a of bundled shifting should sort a and I offering the one seems how you And how charge you of of buy sale in Apple that. month we a want monthly

Yes.

on began changed subsidy that iPhone. Shannon, And as the basis world monthly was to really of shortly after kind that U.S., in markedly. happen product, example, the first a The sold an

an monthly today. would say And buying I the kind predominantly, on of a of so, in States the mode is that iPhone plan United

outright. more the still payments. buying But, For monthly seeing more them of are demand popular and would be we most the for the balance products,

And want what they want. the give to so, we customer

more will that customer provide a the it see and will us that more like pay is I increasing. don’t they in the things And that know -- today, -- of percentage you that sold want so, products do for to want are that meet where they and but that way way the it. price

hear with from Evercore. Daryanani Amit will next We

Perfect. to and supply $X would Thanks have love everyone. understand how do bigger I lot, about you’re the about good you guys afternoon, comfort destroyed -- Tim, getting if that and this getting a And as December. I I is the potentially two well. chain when really in I you the chain think a were demand billion you September, in at about headwinds, that’s getting supply deferred versus think guess, else. somewhere bottlenecks COO. talking least

a look it You stuff. and like improvement? alleviates does from of you peaks managed December of sort what there, Do lot that for feel comfortable in trajectory the or the

month I is and on of It that What progress on materially across October, is comfortable like a today. COVID. Yes. in feel better COVID-related I the disruptions, predict happened difficult we’re and we’ve the feel to position made great

as And so, of the we’re October. to several today, a I’m that in first we I where materially tell were than just predict not September it you better in position and But in goes. weeks can of going

going having terms is edge and chip nodes. different nodes, with compete edge on legacy on In when accuracy leading the shortage, on projections. companies is will you’d be happening how else’s demand because economy Primarily, to to not of we’re forecast to everyone of chip legacy in those many -- kind we ‘XX of leading nodes, the buy difficult how it’s shortage the balance But And and issues know things the nodes. supply. for have we

making don’t in I a comfortable so, prediction. feel And

very much team. subject it do our feel be operational with But, to too think, would inaccuracy. I I comfortable

got that do can improve a And the fundamental world-class everything we’ve remedy times in and addition yields all situation. think, investment one. they do can to you to sure doing the do they’re capacity collapse things I cycle I’m to and

margins essentially be down And it. it. a versus bit December, on little Luca, may for gross Maybe guiding touch ask gross sort flat you’re to about if Got maybe question just I to September. of margins you a then,

So, up much I December, think with. end to expected be how gross would margins given leverage up I in historically, you have revenue

maybe, puts historical more what a resulting are the versus seasonality? So guide gross that flattish margins takes in and are on

obviously product have We you essentially new But get of with we being products. Well, it’s at in tend know, new do period also of is every launch cost typically, new as a say. know, the know, category. to where leverage, And year lot as December products. we as launch holiday the of we the you when cycle. you But, these season, beginning we the launch launch we as structures Demand very higher strong. you products, the

so, clearly a significant that’s at year-over-year a Obviously, standpoint, look Because expansion. right? what XX.X%, significant did from a this indicates you And out. expansion, what a this balances in we when actually it’s year ago quarter, the December

Morgan with Huberty from hear We’ll Stanley. next Katy

you. Thank

a the picture chain is or what data can is share demand Given that growing very the you blurring help investors understand flat, to that points is tracking a quarter got where also product standpoint on exited demand a iPhone relative a front, And the inventory for strong iPhone XX? on cycle the from product from supply XX, whether I’ve can down to then, iPhone Luca, channel And for normal that you you maybe follow-up. comment cycle?

Yes. of channel a is iPhone inventory, those. would can below ended environment, currently and it. range as in the targeted maybe constrained I below inventory Channel take expect you Look, both the

that’s so, that. And

We the points. look at orders orders ones at In there. number as our look of retail. terms blurring the at across that to demand data look on We channels, look orders a carrier do demand different store, we online of back back we demand, the We Katy, -- in take at of well. channel look through

have we’re working is strong we demand of feverishly different where very, of we supply number conclude on use how right to that about demand And And so, a side points is. we now. data the good very feel And that.

the a developer. Store. or for transactions And don’t them the to the They privacy, of consumers feedback and as the App ease the value in Tim, follow-up. We security, most China, surveyed with of apps with services want is recently pay U.S. direct and X,XXX

a So, to balancing push growth think for of a the impact with follow-on services some changes rate just potential into effect? the about as how about experience? regulators do how more of Store the you that’s happy choice base App the with And that, go existing the revenue and as you to Luca thinking customer are

we’re that and on security. to is Katy, the Store our App focus the keep main on thing focused on, privacy

very produced the on together developers And developers trust tenets to. audience are have consumers apps say a and a trusted what their the get developers can the and so, where and are sell to that over software the come the huge years these two they they the major environment and or consumers developers

number else And so, a our that’s Everything one sort second. distant of is list. on

And iPhone, and we’re decisions we on is also keeping restrictions that privacy that not the explain the so, key not it the have Store. made the get working on and what to by privacy sideloading have where we’ve to are and to which put security that the to up apps unreviewed doing the alternate ways there, is iPhone opens App

and we’re legislators. App very, elements with of the in regulators focused Store discussing very security the the so, And privacy and

Vogt We’ll UBS. our next with take from question David

one I questions, quick big And Great. have Thank theoretical. guys. you, just picture, two

X call. you it how the months. pretty sort on went supply of on philosophically just to what XX a picture thinking you just chain over in the covered extensive about given last detail So, through the maybe But bigger you’re

So, a from do crop and follow-up. ability from maybe disruptions mean to sort an around seem time? by that time a And sort of think a about to a of that, you either partner philosophy up rebound sort of or or chain adjustment supply have I your And to perspective how infrastructure the what regional perspective? current its I needed recalibration there then, and sort handle of is these

don’t came a I that The terms see of for number we’ve creating Yes. of along. picking fundamental a was that pandemic in. if what that’s made, error out, created the environment you’re It reasons. in we’re

even more outside than went Some Things people in the reset. went would straight and their demand. the pulled that happened predict. was down. demand orders industry industry reduce and a up would pandemic thought trend up what And people They the really some

making yields is are well. some now. like of mainly that are manageable so, that the those things that little overly And There’s the as in working simplistic. time. things other it things I’m industry But, and happening course like through

that shipping with and on is making are time, And cycle that helping are and at fab supply working increase we accurate off possible, they that that sure so we making our get their when we’re forth. reducing our times what same need so, and times, sure partners partners have the And chip them a our doing demand as statements and the that see product a yields. we quickly also you as in it’s so and a lead as fab

we’re doing. those are And things so, that things

there the more and the support investment We CHIPS also ground. Act in to put investment

for the spending we’re some advocating CHIPS well. time so, Act And as

think And came maybe mean of partnerships But that’s that support couple carriers And Great. earlier. years. follow-up. have helpful. And that maybe a just the just that to you about on devices the didn’t implicate last up, over you way. When purchasing touched can had you and that that off you I guys have messed quick maybe you they on you with given just the ratably, touch as

have demand that model, a your Do it’s put been of together sort a it’s think of this as globally, currently you sort globally. of the success, sort a key is be permanent you in? the relationships tight cycle Now, on depending of business component carriers a bit sense to structure, part of integral little there of that part we’re are for going that maybe is more or meaning transitory iPhones, it’s the driving

provided and kind a done. that And and it’s we’re there. I of is motivated I motivated potential, The year thing. a carrier a there. think that kind once not in multiyear It’s upgrade think of XG decade a one has

the We a other have has customer hugely mutual that of benefits number features new and interest XG a and it, from getting too. in phone XG

in has think or world -- model And the the it’s I on country. think that around stronger you depending is everybody never general, you and aligned call I and paint so, a upon the carrier are that The very marriage, wouldn’t there But, that if model because partnership purpose. on channel solid different is between it the been I Apple footing. variations will, global

from Cowen with our next question Company. and So, we’ll Krish Sankar take

the chain of two I And supply had reprieve you too. a two Tim, questions. I will them, from had give services. I on

let new gone transparency feedback? search I of the feature, received kind all business. from The ad the ad your And first follow-up. and that is users curious. your you and then, ads seen your own you’ve tracking ATT, know impacted have headlines a recently, how and us have the one or feedback has on I’m The advertisers also Can it

option they from having tracked overwhelmingly appreciate the feedback is positive. whether to want be not. or The customers Customers of

of customer we’ve of place more believe a the rolled side. to followed outpouring is data believe of for decades, and there and or an over who rather role in that us that to the reason that’s so. whether the privacy there’s in belongs. human the basic and to company’s for role it but historically this that another the did think -- year satisfaction the we data think we as just decide Apple’s decide, don’t And if we out strongly you that last right while, user individual customer a you hands features owns where so, more know, is on we that and to And for And the itself. to the what time decision We data that’s -- we share don’t share not believe

there. There’s And motivation. so, other that’s no motivation our

recent time. of have very kind been that’s And the can a some actions it, App those quick fair how Got affects on curious, then, to you follow-up, your there is business it. for or your curious Kind point? a a too And Store, you And I’m that. is at in Tim. Store way immaterial certain as this Thank that game limit that, quantify it governments of geographies. characterization. gaming App mobile Got there in just by

limiting Is games. you’re the at? getting what time mean that on You

that. trying Yes, game to decide to limit things exactly. time like you’re and Like

difficult talking App the It’s with that to Store at to it’s Saturday, people Sunday for kids policy Yes, that age about the a to this And difficult I each. policy very impact see below to on a certain Friday, you’re hour it those point. restrict of think the very one measure. it’s on don’t there’s -- know is

We’ll question with Chatterjee from Morgan. take Samik next our JP

first across about start off I products. guess, comment more XX, are your a strong Tim, to on specific if about demand And iPhone of I you if XX what just terms the seeing insight switching iPhone to intent, in wanted of can you give us too, installed of getting example, compare to base upgrades some we the switchers feedback for even strong China. rate in because are you in is, or terms activity either can from bit like

terms more So have a bit follow-up, of And who from. what’s is driving please. I there just it granular you then, if in demand -- get wondering the coming and a the can

so about iPhone XX last it’s than in market I quarter, been results talk the and you upgraders for tell digits. going cycle, XX the because less to the is into It’s our early switchers you on can grew days now. at if double only we on look from What

quarter. the for meaningful very last were results iPhone both so, And

on as the that iPhone. tell that And momentum as we’re I of so, store. there’s online the seeing in And some can we’re characterize robust, quotes you the currently from -- quoting the significant demand clearly would

but as component cost there. just wanted implications a to going I not follow-up, delays Okay. back only I hearing And up. guess, more we’re to to cost is chain the supply what relative And ask also but

-- you’re is you chain? this we to component upcoming manage Thank as you. coming I that as about look something supply through And through the looking seeing related how think cost are So, headwinds? cycle,

is I different consistent our you the are a put freight that would we across assume that current gave tell pretty thoughts increase margin the you, companies. we We’ve significant I in gross costs. And XX.X% to seeing XX.X%. in would guidance that that

inflation clearly we’re seeing so, there. And some

question Suva next our from Citigroup. with take We’ll Jim

my you. I’ll And the questions time. Tim. Probably same is at ask for first Thank both one the

And Fitness? quarter, mentioned and you the revenue, expected. supply Is identified then, get $X supply Luca ago chain or or when to are you or probably it there’s think Apple therefore, about billion gets $X worse, $X the so you better TV headwind two your you billion months Was that chain, about the terminology that delta so Apple us you just the earlier on went the ways delta of -- billion, or from open, of worse. to going One worse identified $X On billion three services AppleCare in therefore, above Can Are drove and just or you much this more is that? quarter. some Stores just details it’s you just mentioned higher saying $XX it than give it saying for December billion what that gets billion call? for more than Arcade more $X to

the Jim, asked, second the of the first the way I’m just question you one Luca going take that and on coined to take could you in services, reverse it.

constraints, what billion. supply the of supply be larger to the constraints than we of estimate that QX, -- the amount saying On we’re is nominal $X for amount

our important And to QX, have obviously, more in had lot it’s we because we’re sequential solid growth very than getting And that QX year-over-year. know supply so, a growth we in is significant.

just having demand amount for we supply of that so the that the And envision growing dramatically. constraints is supply It’s so, the is robust quarter.

what to We services, positive. actually the were continues on paying than base installed that across number of difficult at XX% better the rate that’s double continues the It’s allow really of was the the to records business, beginning have on always So, we payment strong about we was it growth sustainability board. a that single at The out a all-time all-time services cloud. had grow fact records of video, was people to Jim, obviously business, digits. AppleCare, And specific the area because was that grow, September the board. set that quarter. we App some the factors it And that are on the we we board, fundamental look us to think over the expecting right? the across fact Store good visibility The advertising, platform services, right? Music, across set quarter, a When the the

new XX lot that continue new million going right? gives we features, already versus And services, during that XXX XXX so, obviously, services offerings It’s months that now. a call, the The our launch fact subscriptions us just of we right to number the of an that increase on And ago, of have obviously we million we within the increases the have, forward. new subs paid that obviously opportunity. mentioned platform, momentum

that We’re very the billion a and We a lot very they business, sell large it’s seem diversified. our XX have a platform. now months fortunate to we on have and the services very the last customers really in $XX experience different -- enjoy very of

James. We’ll question next our Raymond Caso from with Chris take

question it’s you sale. models question, you did just some last if to year that the your QX. first in able fill that the recapture time at QX you product a experience weren’t you my missed this with about holidays. that and then, in from the some launched iPhone, are and the when of will the think all not year? is, we same similarly? you holidays, similar where QX, Do are have that that as past sales the should product expect Meaning For late, And also that all and behavior categories ability went And recapture to you you categories missed some the behave some

those some gifts are would not expect in time as it’s wait a if people we people different think a that lot as have for that there of that to products that it’s period. be But products well perishable. there that buy and I captured I will think

combination holiday this certain believe. quarter, a So, for it’s I the quarter,

Okay.

things handle iPhone all As They’re a the noted are constraints. and of you time. phones that the same mix? the year, would the iPhones that I Is again, one speak to could a given that were a all delivery bit And or have because little better of demand this for both? And follow-up, the bit on Pro that of supply long a the we Max. the on perhaps you at longer function is or time imagine launched a

point been on comments at has been it because we -- make this to constrained mix early too really It’s environment. Yes. in a have

becomes more once So, supply balanced. are mix the obvious, and demand

our from take question Kumar with next We’ll Sandler. Piper Harsh

constraints. first supply managing of job a everybody. all, great It’s affecting guys, Hey, the to obviously Yes.

one that if a then company a you, semiconductor question. congratulations. you’re about for one is And of strategic priority, Tim, alone. the high areas the thinks strategic example, stand When company would a for as So own, largest companies software Apple but we also that

the So, thinking goes that owning input some kind curious of that into of technology. piece -- about

batteries we For are and say people, survey important. they screens very example, when

-- like Apple doesn’t example, Apple areas from at causes why that? for what So, looking

at have where differentiation. ones can believe level and a of look we a We we make substantial difference

And not lot develop energy if so, products we design -- we’ve the we a in recently, you our well just what’s could of as we shifted And commercial have to that chips market. and could that own put were felt we more because call see, the as silicon buying on and made space can have in available we the that on the there. Mac

rule to I that’s see or we’ve more out. whether And differentiated not. so, We like to It’s materially the way or we not we wouldn’t it our whether that way really see chip feel done area. And in of better. something a is do want that doing something clear depends on to anything

that asked got a in margin. the I I’ve Luca. to Amit go to then, And gross want for earlier about the one call question back

faster product business, thing than something down same there was to into grew much a to OpEx, that Would go look example, So, that you’re clarified for that et for there’s when lot the needs But COGS, of opposed obviously launches. effectively margin new here? is at as marketing, not product cetera, I services be or saying and September quarter, the December. I think maybe

certainly, we what better new to make the product. that adding we the launch technology But, means new reality, which products. products we expenses of when and and always happens, is course, launch -- our and advertising, There in obviously, new features have marketing

of the one of the particularly when cost at you typically, next to cycle. the move higher, So, one, to be tend structures from the generation products beginning

the And a so, from transition level there is when always transition, you new to product. of margin that make some compression

the are higher we the is quarter, the percentage aspect holiday need is so have December higher for about September products the plays margins services you There’s other see for right? the the holiday December. because is know, in think And margin. business business that the between of the mix to in you gross September that’s services products And products have example. the the sequentially to also Company, as quarter margins quarter fact and a that and you move that from the as we season, that you The than what into therefore, than what

from Bank next Wamsi America. hear with of We’ll Mohan

the a was Can XX think I launched I could launched of that more question things deciding pricing at broadly slightly products. maybe in about year, year regions? at that? price us that are that last broadly in an a you of the through had look action you China. a And is take help Apple where And lower the than have follow-up. This you new XX about -- in iPhone other what some

a including We including number local things, and of rates a our of look competition, including at costs, and conditions different variety things. exchange

for at And we region. that it. formula And done points different so, by of there’s data points. determining not a by number -- there’s no do judgment It’s of a -- level region looking a

demand investors, think of as to curves that as you structural something shouldn’t, flex we But, that use more to globally? intend

something done. always It’s we’ve

new And and this to so, that year this is something cycle. not it’s

terms maybe and metrics in some how as have Can of few these paid become new important introduced new on over of like Okay. these you years, more Services you’ve either past are you a some lot And story. the the much of the a success of a And TV+ subs? part follow-up, investments? share the services measuring of Apple

of a don’t that at internally number look we we externally. things share Well,

can And to so, What service looking to would conversions we’re subscriptions Apple both and not million trying churn had, of with basis. sharing bet aggregate subs Luca we’ve at third that is all which of with and the we’re that subscription at look those and the give party. to XXX on the an covered number you earlier going into across we’re individual do ARPUs and a you normal and But, you things get business. visibility branded

it giving -- individual service bet level. an service instead you of view you so, that we’re individual And can the managing the we’re aggregated But, the it of at at level.

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

appreciate This concludes conference. We your participation. today’s