Apple (AAPL) 29 Jul 222022 Q3 Earnings call transcript

Good day, and welcome to the Apple Q3 FY 2022 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 the expense, expenses, the first company's that you'll those open some the today forecast. to that, cause call and capital and operation. 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 now 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, to over statements to please information, on speak turn the annual X-K call Form SEC Tim XX-K filed factors Apple like assumes no refer the recently the

which everyone, better Asia and of us. thank region. the rest business in the set and supply another billion, despite joining Russia. revenue foreign than Americas, quarter impact our Thank reporting the in headwinds constraints, Pacific Europe exchange you, strong Tejas. we of Good afternoon, Apple records was Today, with June $XX in in We and of is you for record quarter expected June

saw and all-time installed markets double-digit Brazil, both June growth and an saw active also We near base revenue great emerging records Indonesia in record a very enthusiasm for strong for products and services, in of and of our devices. India. quarter resulting doubling with in in We developed Vietnam revenue our

world the this a know beginning for around in variants of experiencing Ukraine range we to with of and the uncertain be. during We much challenge anticipated time while we below all constraints a living of the know dealing discussed less why the were is humanitarian empowering at we hard us consequences that can slightly everyone environment. more it coming is COVID-XX, through the those navigate create We reason it the all an crisis to world of world of it economic times, of the is the and them call. in prolonged confronting new as are as that supply world Our our uneasy than the significant customers help quarter, working last is to our

of next innovation. are a powered of completely systems ways MX, these innovation, generation Air including wave Apple MacBook Apple of redesigned a Both profound month, each Last both ease We with iPhone customers of Pro. change and in the Turning XX-inch to that unleashed been And new about XXth quarter tremendous and the along create use, faster a they've to by advanced the MacBook to like with our switchers the remains new iPhone performance, silicon world XX bandwidth MX it Res neural and content. Pro CPU, raving higher to proud its of record for GPU revenue innovation the engine like With set eye-catching lineup's find anniversary quality iPhone. with the capability a new We June and and also pace standard to continue celebrate gold camera device Mac. iPhone. acceleration. for continues Mac. for smartphones. Apple that photography to cinematic features the iPhone, were macro of in a delivers and silicon And mode continues extraordinary memory for capabilities

response on from This iPad during update our all-new range and our experience to iPadOS XX, lock are iPhone watchOS delete the so and sent ongoing and strong and new with an beta, constraints MacOS by such excited new constraints. of one organizing accessibility as have support of messages, be truly public we edit ability with made Mac, door incredible that creates to new supply we or of developers the strong many iPad, in developers captions all community a more we that have and like them. lineup. to customizable despite about the and couldn't at screen iPadOS the continue more. customers health, especially live iOS before. supply but quarter continued ever Ventura bringing features includes where been with iPad on demand We a way new and X we're extraordinary to XX, Mac, much innovations with disabilities of customers detection Today, more. communication apps June navigation, the encouraged control and what Customers and Mac, of unveiled to WWDC, with see see users announcements we're We XX. shared was to give more This a features than excited their

innovation about Wearables, from We even monitor Apple change also category, single Home and cycles bringing integration were to time soon with we're fuel more platform. And great the with irregular experience new of health-conscious a In with and hardware, their Pay a Watch more approval to And devices. on that win customers for across data let pleased customers. will the We Afib. new vehicle to way generation users wellness spend Accessories sleep flexibility products allowing to overall to with driving for our music, medications remains their Apple feature also rhythms watchOS track purchases announced into improving drivers with workouts, their the Apple deeper we're X. get over to the CarPlay, heart track arrive fitness. in updates their all customers a levels, the them and FDA continues they Later, infused make and our control next temperature which gives their integrated

and record to across year-over-year, TV+ Customers to captured by launch, looking Services content continue our Bird with more. content the line XX% imagination, counting. creators to increase Services. TV+ with has throughout quarter June billion, Severance the earned and Apple rose extraordinary since a We're to wins we're more fitness, have nominations enthusiastically of Apple like engage exceptional was In productions years expectations. proud how gaming news, a award music, Black forward popular and XXX our Turning X,XXX developed and in year. $XX.X and which now and over X.X revenue

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Now I want turn to retail. to

Hubei in store This we opened the new community doors quarter, first to China, earlier space. province fifth store our welcoming Apple Central Road, London. And the the we in opened to a in Brompton beautiful Apple's today,

stores with that Stores, customers lives enrich work mission. for Apple to Creating recently expanded STEM. take teams Studios equity next Global from purpose. and Apple opportunity Cal our commitment my State Equity care to Hub, racial that life. institutions their creators their to community provide with to pursuit XXXX gives our diversity includes bring we to do Care and where more people's inclusion, environment are continue we our our our are. young their skills to help ever careers the to It innovative and working it at they centers team making and products is channel help also partnership the best Hispanic-serving includes pursue in them mission will of grants aggressive and build today Creative Apple where to we to focus I'd like Northridge, to as innovators promote We high-demand in and our generation our work partner members express even everything and new services and We on that committed That values incredible potential underrepresented this our a goals. customer supporting And wherever justice. appreciation of Leading communities realize to reach to Innovation in announced creatives ideas and progress. includes the

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been optimism. our ultimately our of This resilience reflection and quarter a has

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you, Thank Tim, good and everyone. afternoon,

up in are Pacific. X% foreign our We during our new of our hardware, challenging records pleased billion, record despite impact Europe report the financial very basis while that quarter and to to quarter we business continue results the points software year-over-year very Around set innovate $XX XXX Americas, economic and effectively and circumstances. June June world, across exchange rest We set to constraints, operating demonstrate June of of in a in over supply Asia quarter headwinds the revenue ability business Russia. of services

the quarter revenue with $XX.X iPhone. June was On revenue for product a side, billion record

high of active all-time our for customer to categories to reached and levels well, major quarter, segments. and grow product and loyalty continue base of thanks installed all the satisfaction unmatched an our During geographic devices

and a record the ago, quarter Pacific records of with and Our over June up records all-time June the year revenue of in XX% Greater a revenue and Services billion, rest Europe Asia Americas $XX.X China. in set quarter

XX a was from quarter $XX.X records gross points Net partially was exchange basis Services, by seasonal of was each loss for exchange. revenue were while and $XX.X XX.X%, loss achieved XX.X%, leverage, income FX. June down due We last as diluted and margin driven Services were mix down including by to favorable and Cloud margin was XXX Apple gross June Care foreign Payment was share points flow and different also XX.X%, sequentially, $X.XX, down points category, margin Services. billion seasonal quarter revenue quarter gross mix earnings Services sequentially billion Music, a offset per mainly of all-time record. leverage and XXX Products major operating foreign of basis in records unfavorable cash Company basis mix.

each developed despite continue for XX to iPhone of now with both Let our geographies family reached me across customer in of a set year-over-year detail get more all all-time as emerging performance combined active quarter quarter iPhone categories. June into revenue new result X% to of be a We as revenue foreign of headwinds strong. customer base sales June iPhone and loyalty. installed record markets. $XX.X records this level our exchange to And response grew high billion the unmatched a

consumers In satisfaction of survey latest iPhone customer from fact, the XXX indicates U.S. of Research XX%.

We year-over-year growth. the number for of quarter, strong June also switchers record attracted a double-digit with

Mac, $X.X despite For and billion generated we revenue effects. constraints supply of negative

to Mac with relentless and continue opportunity experience innovation. our with excited our long-term We PC the be about redefining

new all-time high, faced Home the and the over iPad around enterprise customers and focus supply revenue investment macroeconomic strong our Wearables, base base and exchange being nearly installed continue has the year-over-year a new loyalty of revenue growth timing headwinds, constraints down as response tool our supply Our was quarter foreign iPad June environment. launch base, due billion, be world. in new new all-time Mac the this, which rates. installed across lineup a product. And half education all-time X% half markets high Mac significant products quarter the Accessories strong reached and down negative of were the to billion, and category the different a purchasing with devices very Despite drive to high to on $X.X during Customer as product. as we the and exchange. of the year-over-year new to well our Accessories in reached foreign customer customers an X% record, overall was helped consumer, thanks the installed constraints as for Home hit to $X.X during iPad to

Korea of emerging and the during many records developed performance grow, including reflects portfolio each our all-time installed set world, the category. markets example, India. record Services in Watch The the and quarter to a to $XX.X reaching First, of well across and Services during business of XXX basis our of up X/X continues its product. with June quarter as For as impacts over the Apple extend FX to had in Apple record revenue and Brazil, around segment Mexico, quarter June base the and an being purchasing reach, all-time billion, We revenue Watch from fronts: has set major both ecosystem macroeconomic Russia XX% records many our the June headwinds of customers countries despite points new our level geographic of in almost quarter environment. the strength U.S., an product continued on high

customer engagement the our increased during with saw quarter. also We Services

We with And believe Our subscriptions new TV+ current customers than paid In we our the the constant on market, new great features subscriptions we And to Services XXX the enterprise strong we iCloud transacting which alone. a breadth million and to finally, announced accounts, on paid large subscriptions to global advantage of Mac love. accounts expect and Air XX-inch paid recruiting which MX year-over-year. Apple Apple its XXX the XX from the continue our cost offerings, from growth. available powering MacBook customers to our and our more is investing platform, and recently accounts services and flow a workforce. improve with America quality paid Bank of Music, all during in Apple with than months customers have MacBook enterprise Apple content wealth more the for MX And is Arcade grew double last ownership. and as competitive will very million digits now of globally, showed chip total up access of as thanks entire is Pro, they instantly providing when Air and anywhere. another its more products are make their a to increasingly iPhones financial performance lower attract to superior the timely Wipro, to advisers advice information retain of MacBook we graduates client and in can so management all provide investing across customer, strategy talent. new new

billion. billion the paper total repaid debt with securities. while in increasing billion by me leaving quarter maturing Let We ended position. to of in now with our $XXX and $XXX marketable billion, $X cash cash debt $X us turn commercial We

was dividends the shareholders market million $XX through $XX of XXX billion quarter. returned repurchases during net to the This As $X.X quarter. billion nearly and equivalents and Apple a cash over the at billion in billion open $XX.X We June result, included of shares. end

value believe our to neutral of great continue time. cash there target net stock is in We maintain and our reaching position a over

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

today directional term, are revenue the and the worsen our accelerate the growth points world assumption despite we will exchange. outlook are current continued from the quarter business but in insights sharing to based what year-over-year Given not of compared we macroeconomic to providing believe are Overall, basis COVID-related we year-over-year we quarter some impacts around for our the not the projecting September near impact on that foreign during revenue guidance from the the quarter. uncertainty XXX do June negative approximately

supply we product the than the June On expect side, what during to experienced we be quarter. constraints lower

Services, to foreign from macroeconomic and to expect grow due revenue to we June but factors related Specifically decelerate quarter exchange. the

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

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

OI&E our of to mark-to-market impact minority and from negative expect XX%. the tax to be investments We [indiscernible] be rate around around

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

first have please? Thank you, Luca. [Operator Instructions]. we Operator, question, may the

question from Evercore. We'll Instructions]. with Daryanani first our take Amit [Operator

two discussion, I to the start Maybe from my on side. guess Luca. margin gross

sequentially down you can And are September. basis helpful. then Maybe FX other are bit be will in down I that what a would points be year-over-year and specifically, quarter very margin, the call XXX, just as the actually said in September in. just gross gross puts it what takes think, embedded headwinds margin You and well that implying XXX

guiding partially On Yes, offset decline by is expected to foreign also to driven be be better XX.X%. basis, will mix, exchange but you XX.X% Amit. the mentioned, by, leverage. We're as a sequential which

We expect foreign on exchange to impact basis XX basis be a sequential points.

a exchange year-over-year basis look spite ballpark year the we are from XXX a be that year in you to a fact in to it foreign negative of ago of at is points going the If ago. standpoint,

think is we that exchange foreign we're that us but clearly, fairly something is So affecting well. navigating

Fair of question. macro Tim could Certainly high then in demand. and your lot worries I impacting to the There's your And seem just if and very performance a doesn't ask enough. visible inflation consumer be expectations.

So I'm inflation or notable. wondering And related see consumer initial of you typically signs that, any if demand? was from end you seeing variables fears that implications fears you about, decline where to talk recession just really softening would your are to perhaps? Is

for the Thanks question.

my If macroeconomic and in our I'll we economist if to I'm comments business. that headwinds an do that saw you believe look at our results. you narrow impacted sort what business -- And not June we the of saw so and we the quarter,

there so Accessories, that impacted Home as macroeconomic FX, at would which FX, When the mentioned, and June the like Services didn't test to Luca no over so mentioned categories, a attribute were look some was besides see of Mac digital was environment. has XXX for there gated there obviously. as product macroeconomic example, rates. look by on at environment. impact that some When Wearables, then enough impacted, demand. clearly clearly iPhone, did And Luca supply during we Services, impact product that you that iPad advertising the were we were mentioned, the to and macroeconomic have evidence And the and year-over-year quarter is you we you by of obvious on one those was growth points basis

quarter. in very really that the a we we mixed And of the quarter, good that so about growth And the terms happy what believe for about are challenges with of saw. Overall, feel results. you up put we the in it's think we bag the number we when

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

Yes.

all, congratulations. of First

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to I'm business, that about this think So growth a of innovative how the struggling find model features. to you to good add considering way

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But our a is know, think about Well, it, think we the into way certainly in the number that don't guidance as it business current past provide way to levers I to we quarter. of there's think you about the take account. Services

base. is Installed base engine first and The company to one installed continues it the for is grow. our

As geographic it an I has high every reached category. all-time segment, across every mentioned, product across

level that's the more so lever And quality are the services time. and and subscriptions second mentioned, of we breadth important. to Then more so paid very grow. And we time. And is accounts, the engagement then accounts, getting that engagement. as customers you our continues paid over grow tends that Transacting engaged know the offer customer growing, the to of the are over

the term. long things that to us over So help are tend these all

at If good. you now, of they've look always over you rates growth been our quarters back go and a very number

an environment advertising this macro example, impact on times. mentioned, course, affected Of digital business. can Tim the can be for has have at

because the and have been there so lumpy During have on. been COVID, of some a and bit reopenings compares lockdowns

future entirety a state So difficult But the the good talk what we business. the at of are doing we in our we when Services Services about to it's of space, feel the business. for steady very rate about very look growth

business on And guess, growth look external to and targets products companies down so area, looking my Services at that Services the I behalf very the an of last at. helpful. there or months of valuations by in things accelerate in have come XX would to might its you the acquire? and appetite follow-up, particularly for be Apple Luca, for

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next our Erik take question We'll from Morgan with Woodring Stanley.

I a two if to you, iPhone there's Maybe start well. over I have your as X-year think debate been a I the XG look that years Tim, cadence if time, into evolution. in market there's you with back cycles. We're X iPhone

to in upgrade 'XX. track slowdown. as on 'XX year grow some really But and pressure be your could units slow. suggest That implies no You're there next rates comments

in double-digit iPhone. customers to new seeing You're growth

us of then through So walk follow-up. you are believe a can iPhone you I driving And have strength? just factors this the continued various some

and significantly. is base been driving Today, the earlier the size some mentioned other innovation that And the things product installed of the of it. key has the product course, growing the within where Luca that are variables

June We switchers also, quarter this quarter, quarter, for record in with just a the June set growth. double-digit strong

execute low there's is some geographies And installed of to the this so across continue base significant additional And we more. where even iPhone. penetration a fueling very

the markets, of India, and where opening Apple Indonesia for the between remarks quite called well, and to of market iPhone and for tends were the in did those the creating particularly products. at there be Some engine Vietnam out beginning we those

installed to number to switchers the base And the at really distribution. things these geographic of so we're of looking from the all

customer and thing important pleased is loyalty from XX% incredible an the we're latest most really the customers. satisfaction it's to us maintain that for iPhones. course, currently at the And for Of

low. those at the globally, look XG higher, is particularly is that penetration, you are some And it. the low. accelerant. so around it's geographies, obviously penetration the And XG but world, things XG it underpin been quite if still has an still In

reason so I And optimistic. be think to there's

helpful. for And maybe, you. then that's Luca, Okay,

that kind the from business? Meaning of maybe moving level Services us and a quarter, help an pieces great. the And the some understand can expect If a dig could for think you As of deceleration? the growth? June move you acceleration frame we could we to should just in deeper September maybe see be still us, or we do where you that double-digit would

still from our a in these I my XX% that so year-over-year Erik. numbers. we're quarter. lapping advertising that in that deceleration mind big in bit some the the in X% business us. in and impact June Also same that that will there mentioned of mind, is digital to Tim pockets year is a to grew weakness, basis for some Russia on a we're points, in a Yes, time, at mentioned from keep expect the see, prepared element we've foreign basis, also challenging. in Keep we had going remarks XXX compare primarily through. impact the that ago a business And Services need our of But work are we lot so the exchange

give out So we number today. don't have a to specific very

grow. expect Of to course, we

how develops. We see the will quarter

question next with Arete Research. Richard from our We'll Kramer take

role over clearly, just growth app in you to also not helping Apple ad reshaped sense perhaps really policies monetize but market. network ad how a as cited apps mobile have growing past, of Can time? you've the and the you you developers give Tim, taken us monetization ad in Apple's an and sales privacy the see

view fundamental we Richard, Yes. human privacy a as right.

their to try where do belongs with all it user our is back share put we privacy what data of want to whether believe the so as not. we to features And or at they on decision the

own that was the and We're their application a so And of own features. other number data make their behind choices. trying user and what to to empower transparency tracking was

and business we selling Store for that a have us the ad discovery of for developers. believe large search we represents App terms In ads, across way small a great

see we I a so role that play And that. in

time you plans other the people in the see do markets, markets? emerging that the us give that you follow-up We Can you Luca. launching to be Later, you're especially world. of going tight what know out especially evolution see around economically to now how of then steps And various payment for for into my maybe affordability a And sense, a be U.S. products? the Apple improve now taking might of -- you it's Pay

in been that installment the Yes. obviously, are very topic is X we One is now, affordability. a than in our emerging they we of here are many for United because important particularly installment most important years. available much on residual of mean, use can other working threshold. It's users. is they the on trading programs. raise major more And that important products huge in platforms. in the only other markets, a retain pay initiatives I do for in Incredibly Fundamentally, And become is plans them later They're Buy affordability the important our it's our value We to and markets. Trading After us of are doing markets. reducing they therefore, latest us. around a can for but back terms and affordability have differentiator value front. the in better States more this programs number plans for awareness. for markets. world, widespread not devices, bring incredibly

And to world. so continue we the programs will expand those around

trade-ins, on So important installments very, affordability. and very

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

remarks record having in have talked customers that some bills. know chains a that the back the signals on macro saw sort to the the seeing that of their of U.S. you're that sort paying versus demand of of of you of prepared about you're quarter. switchers and couple facing. I sort your that And been mentioned I wanted just there's supply circle carriers in difficulty you the of some sort number

get of because customer. a issues inflation? particular without kind difficulty specific sense some from And a seeing any I on are customers naming to have Macs. seeing having of And what in wanted a follow-up of just effect you maybe a spin-down you're channel are then sort for So because that

aggregate Wearables, an the there's headwind. not area. in the in saying not a doesn't there's on that from at clearly it looking point not Accessories Home obvious of there's worldwide, that looking we the On macroeconomic for June saying see data at the iPhone quarter, show view, that I'm evidence can one. the where it that there data -- I'm and

would those I so differentiate And X.

market drawdown the supply think overall constrained. supply Great. almost constrained, hearing, still seeing, like severely Do market Mac a sounds evidence impact evidence guess, with But throughout on chain I we're share XX the you the different of potential I the thinking is you're chip if of And XXX% know you days And chain you kind of in a I'm of Mac effectively versus business, are that how it way -- on guys is were anecdotal versus chain? and that components about the continue confident the sounds it's sort ago, you way? that slowing. but about market. like then kind business broader It the sure can about supply growth your grow pretty MX of particular to quantifiable to think there obviously I feel market. And the you PC new you like that could are some that the

that a for But hit the source want wouldn't to at reduced COVID the project Mac Yes, Shanghai corridor, restrictions we the was the completely lost supply running this And I for what into quarter. quarter. last units. of was for or primary saw in rate majority -- either of the down the quarter, we when

I being felt well also where the impact back of the classify kind We the But around issues a down driven were it business would we to this as because big translation the those impact XX the points. able get you. would we some X that in of very And Russia. But I that into of are to, business. of frankly, XX the course, so as by negative feeds world. quarter, good, of this the And by because the tell supply. reasons to There's were FX Mac was end

the that of believe estimate. story the that so out can't demand we've test far we we last have with from estimate what you was. out. the of great And and got testing getting Mac an demand you supply. But is terms have we quarter that demand, it think an unless is were how the with We doing. now recognize We MX MX really the In industry a

in very see offering for do We report October. a season this the very, strong quarter. back-to-school we and We'll how we'll back have

Bollin question Research. take Cleveland We'll from our next with Ben

Tim, could more you about you're I supply about how a was the headwinds. hoping share bit little thinking

that when And influence find balance think or replenishment when might also, challenges severe supply interested retail you channels? into into or on across less less said September. you how thoughts You of I'm supply products. any your worse

in of we that affected the the quarter cases, little out that constraint the last occurred, utilization we the And low of point $X And closures on that of in billion in the a range. the was a the part COVID component silicon view, quarter, resulted more our below, has than results in majority coming it X you what running less and full of of that saw majority number some constraint the June at then at give now. minority came from amount quarter, for several is for color of the the that slightly To are some is that of shortage put, quarters plant quarter. the had plants we X that end other the to restrictions

not the in for silicon piece numbers when the We we're components, aggregate, and optimistic the think than But the X less quarter. course, in these our If June there of constraint of were be the about forecasting COVID September end. you X shortage, look restriction of into we're future, the they this. that are that quarter the -- will will

Okay.

item. existing other is thinking opportunity? how thoughts Tim, The you're that strategy any about progress your in with learning how to thinking you're in or content VR about Anything evolving on AR, you're respect products?

say XX,XXX of to AR utilizing always and in And have they're new innovation that. we're so and the the emerging to people. incredible over I beyond for want wouldn't business And millions ARKit now exploring right thrilled apps that's we And are experiences App technologies. of anything But in Store. course, providing of We're iPhone iPad.

question our of from Wamsi with Mohan take Bank We'll America. next

bps to mentioned downside upside Or your it seasonality June around follow-up. on much abnormal takes a should normal could are as through, puts about those. that overall that you September time this and basis, maybe of we I drive a on assume XXX to year-over-year that? seasonality accelerate you expect? would would say And us billion of additional versus to how Luca, FX I potentially normal versus Would But think of or know a quarter-on-quarter have $X there you year-over-year in one revenues and help so? reasonable say sequential be growth rate. you noted

as few know, given we said earlier, of providing the you because as all Wamsi, guidance a But points. not we data we're Yes, uncertainty have out there.

So billion. foreign from there situation a That's math, approximately affect impact that to number seasonality right a different it's mean, as normal are one us, is around going from you've of XXX is do in that mentioned, them, basis Russia points you and I exchange. $X big rough of well. which we obviously some the having negative that

in lower Our as be still just going June seen are going to what but quarter Tim supply there. constraints, than be to said, they're the we've

So at the when we is acceleration headwinds combine that talked we pretty that feel you you remarkable. them look with those about, X and that,

follow that Okay, And Tim, the on about Luca. wanted wearables. up on you've I your comment to macro impact seen

Your is your across the at product lowest probably wearables range ASP portfolio portfolio.

portfolio? as it assuming some of an sort of across some is of investors much guidance of directional you products? maybe the how impact particularly the environment the As it or here, some you're to in -- these would any of higher assume of that to pertains macro-related this Why think the not slowdowns are giving ASP prudent driving, macro that hesitation guidance rest creep-up be would your potentially

Yes.

I bit Home which and saw. and which headwinds we've on Accessories talked saw saw Accessories. of FX, we've a We sort supply saw that little communicate Let talked on Home clearly We cocktail about. what We Wearables, expand a we Wearables, me of so about. constraints,

versus accessory tell in items, they're addition had a lower ASPs the was ASPs to things all from the And in whether launch announced believe, think, X Russia. timing different had environment this macroeconomic -- so it. year-ago But last year there we also because products. and example I Of certain products those in for some not a based of that data, addition or higher something course, phone, is on that things, hit. the can't be announcement that does be there there -- That's macroeconomic items we I that didn't didn't quarter, at those we business to also to the you of that X that looking those to addition can to I the tell headwinds believe in comparable a headwinds. to articulate which you the can numbers, impact that. X -- this in just and a the appear in we home was in announce an AirTag that those just year. affected degree, Like have we And

We'll with take question our from Samik JPMorgan. next Chatterjee

results an said impact start the there. of saw shutdowns that see you that demand to the And run snapback Great. comment with on about in can iPhone there market, in COVID wanted fall the from I yet. here If ending on a you guess lockdowns exit tough that? itself? Or on following to I in the market did rate a of COVID I smartphone was macro sort you you in the you Tim, And macro. follow-up. this that there have question China really material a earlier I seen response bit. thought haven't But impact congrats a wondering,

rebound XX, if lower end a We of the the come June which restrictions in shopping cities are beginning both some off memory June see that we see major the in a my of is China. time still in And quarter frame. The toward based lockdowns begin did in it We know, as you is COVID in did true. but And lockdowns toward particular, of COVID of the a the to June, holiday to think was demand correct. a cities same rebound June negative, that net time the affected. things by in the Yes, did on the run-up the frame. those

macro you is and that years, for can base where back the you've that at of question. Okay. talked I double-digit few that in at mean, you terms further the said areas about Are And an predict the forward? just of increasing to preparing just sort I the by look macro are call lot, thinking I percentage. in you for pull you of this look want of investment how back? or a if go that be last sort you're uncertainty trying been about the the how know follow-up, for my you've given on of don't But I the And guess uncertainty here sort to you going sort a OpEx economist.

downturn. We believe through investing the in

invest so we'll people And environment. in in deliberate but realities doing areas, and are to hire of more we the the of continue in being so recognition

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

we XX people replacement my it, been we've of normal and cycles where on my iPhone different kind While when though, have to like COVID Max rate and I'm cycles, all? hopefully, now of think Obviously, of replacement break with I calling changed great. how be Any wanted years it a that? change at you, should you upgrading would X.X through you from or upgrade loving have insights replacement, COVID, But just immediately. a that they cycles, I ask and about kind any that post Pro I phone, noticed at drop replace

and exact any at It's time challenging I'm point a precision, on with the to cycle question so going bit. the measure replacement punt in to

in However, that to their our task current want get. product and to that loves they a phone to is everybody make trade key

what that's so innovating crazy see that really and focused themselves and are on giving somebody like using. want they something we is And

gross that ask maybe Okay, margins. Luca sense. makes more the on Well, then I can question a

think the costs or quarter give and do, As us headwinds insights the issues, nature that, FX little worst the are those shipping expedited from looking and longer-term and timing Or is If maybe kind directions of the of you on benefiting to bit look margin and of due a probably impacts. you caught that you some that is commitments of has that lower higher contracts or up? your at some of you the your gross the could maybe suppliers you're already all ahead, kind of purchase supply delays do chain contractual all September things? there

But provide a would outside always we a our that. to control that of there's of bit for mindful gross Jim, guidance we need ahead, the current say be look of we in I margin are couple quarter. and if elements

headwind already foreign exchange for June. September the obviously, One having quarter, strong for impact be them is us. on environment. is And impact tends an of the to dollar an a That had

and We'll rates mitigate happens those As it foreign so But variable what exchange a and a track. we becomes program see time, more that is have off over impact. for us. over to with we going need roll you hedges so know, That be challenging time. hedging that we to

on margin other of has the our mix an services. that impact The is aggregate and one gross products

treatment As different you businesses, reasons, at different for times. very know, different margin even different accounting they have profiles

very it And us, in marketplace. so to last sure that we the is we've okay. also as track you've spite difficult and had want that, something matters have a going I and a components. around a price in actually we've seen goes From asking think back question equally commodity are over expanded. successful to to and services, of pressure is earlier, year, well. of the I we -- What think we time. margins to some We're inflation, than products our commodities in people want make some rates be on circumstances other need margins significant from that will components. love Tim silicon economic Certainly, interest up behaving are COVID gross you expansion over But our that were seeing standpoint, behaving to was them all saying Commodities to

members. team Congratulations to you your all and

you. Thank

with Sankar Company. next our take We'll question Cowen from and Krish

Tim, And also apologize, I it's macro-related.

Services. conversely, consider that for worsen, advertising now, have I parts else? the mentioned a does pay are do And curious, worry maybe if of that like something Service digital there follow-up subscriber growth, within the cetera? business macro Store buy you kind purchases, a you Luca. quick any it recession-proof, I'm App or And then later You et about just of impacted

Services in says that and the we're that quarter the all aggregate, compared thoughts guidance the We June the as side. our which accelerate have incorporated September to in quarter in of to decelerate Luca gave, revenues going the on will think we

the cloud, advertising continuing you And the so digital will, quarter. we if see current in

effects follow-up gaming during actually any region the downloads? effects the June you it. quarter. got revenue on noticeable App a it, Do quick on positive maybe or then Very for see And the helpful. Store negative Got any lockdown in more China like your

had results Services on China good last very quarter.

grew they average, record so new June strong digit quarter during they a company better the revenue set And double quarter. than the and

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

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