Apple (AAPL) 1 Aug 242024 Q3 Earnings call transcript

Good afternoon, and welcome to the Apple Q3 Fiscal Year 2024 Earnings Conference Call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded.

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

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

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

Woodring Erik with our We and first Stanley. will Morgan from ahead question go take

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Our next is Ben Melius. with question Reitzes from

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Ben. Sure,

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with Our next question Goldman Ng is from Sachs. Mike

have just I questions. X

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channel wondering partners, very several period? next focus That's that's I for expecting smartphone carriers, the was of what about your over And importance strong could potential just an the those Or from any upgrade promotional sales you're upgrader could you on during support device U.S. be then from with the U.S. years, a if partners given wireless whether what upgrade the environment retail on cycle. fair. talk

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Our is next Amit with from question Daryanani Evercore.

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question America. is next Mohan Our from Wamsi Bank with of

Intelligence, more announced Apple partnerships where also made potential -- your coming attractive you're around being leveraging with OpenAI your monetization and distribution obviously down by they're investors investments Tim, these partnerships the installed about the base. the CapEx very these you should think road. you but clearly models to but are How announced partners, presumably

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from with next Cowen. Krish TD is question Our Sankar

strong Congrats on results. the

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with UBS. Our next question from is Vogt David

of, do it's kind Intelligence. that new on X their itself terms I have the it Apple category follow-up Store in your games? Is about talked are and also. Is you. could be what's developers a what applications I'm hands more you sense may I you creative? these in the any then the to technology, naturally going to a days, early it currently there you're just instinct And first to that think for and currently this know Intelligence? developers when about think thinking for sort But to Luca. Tim, lends get available app about categories iterative you applications? with more getting of Is I just App are say trying how Two, Apple it. think of you if of

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Our Atif Malik next from Citi. question with is

the it's is X XX.X version positive. week Intelligence first My staggered this developers The Apple feedback very in response the a software question of like The early you reduced for these to features. features notification is days. talked beta about question, from I on earlier interruption focus and tried know iOS Tim. on launch is some an summary who have software

you we the could that at potentially next to XX? of thinking So of be Or part iOS XX some of announced these part WWDC be expecting are be year? features iOS of features most that you should

proceed U.S. and in in languages that we objective functionality, then said more regions is and we to English to June users the out Our as more fall next you that's features, more with and across the and will, year. roll coverage proceed if starting

so we we're a that. frame time -- gave sort And and that tracking to of

the Understand. impact comply seeing next the you Services growth made Luca. very seems any And for from momentum changes X rules? the Luca, Are with to strong. DMA

from we've way changes March. And in run changes. are already on know, the those in to good developers App level Europe adoption introduced you some we of a the seeing Store Well, we as

percentage discussing business Again, basis, in of the early We now. just obviously the App DMA. total. ensure frame European provide ongoing a general, with the X% about until an stage, of you the for good the Store how generate are, pretty revenue been Commission It's have and to the with European we from results of the Services on but that App our on compliance to for the full Store reference, is Union

with Chatterjee is JPMorgan. question from Samik next Our

guess, I well geographies. regulatory a in I Tim, There's aspect about if can well. just as you as certain Intelligence Apple ask

maybe about you're and aiming you're EU and time of And staggered in regulatory lines process, of the here? terms are embedding lines the the rollout, your sort the How in particular, have that? a in then thinking thinking. You regulatory you And -- about of how are I launch China? aspect for does that including And mentioned like follow-up. should timing think you time complexity the of the we

We're to guess, always we features is can, as obviously, both that out to get you there would everyone. our as as is our because objective regulatory move engaged, with you objective And for bodies mentioned. fast

to before a the requirements we're very engaged commit we doing understand commit that to schedule with But have We both. can that. to doing and regulatory constructively

Maybe trends acceleration can got sort the you in that's you category, And Okay, of terms Luca. I because drove has a past on know there mentioned parse that quarters. the of acceleration it. a been category what categories a which X that lagging basis. the in quick the just bit couple of Wearables for sequential terms been -- out on revenue a of

basis? a sequential of to curious it is sort to drive So on just accelerate what starting

one. that take I'll Yes,

the very we've the had at Home important have categories second Wearables, the and Ultra. remember a And launch SE for the to quarters benefit a continued you from we and running think few that we been Accessories that thing have when the Pro first last that and difficult is the Watch look year I Watch because still generation, compare. AirPods

And keep in so to mind. it's that important

of is Wearables, the sort which you If Home XX trailing ago. take the back, almost grown across a at billion, X and business double Accessories was grown however, $XX business years it's look -- and months, to has the it step what

Our is Research. Richard question Arete Kramer with from last

think your requiring rollout reached what even roll referenced R&D further or Do even OpEx Intelligence. they given it you or you And so Apple Tim, the launching June compute these new record ratio increases R&D of sales is investment I possible in increases forecast Services for usage that they're quarter to consumers? before out, innovation, a was see and in the features as capacity? for in CapEx cloud the

in ML ML. certain investing years. addition have we increased to AI and in investing Clearly, time. And for been R&D we've over We've also redeployed skills onto and more, AI

here, embedded sort our it's numbers the of in increasing shared And year-over-year. that growth so in we've

would increase part, remember appear hybrid we to approach, we to I things of that you can have will CapEx businesses. there's expect internally yes, But certain that the in On it's kind and where respective we important partners and invest externally continue mean, we CapEx their -- it do with do we that employ the a business where year-on-year.

a control And across Okay. margins mix, to is exactly seems up higher follow-up quick free for structurally in cash flow we business? to the us the the at year's free cost When product X margins what maybe what you this look mix materially. be cash Services or And months, given describe can for they're driving first flow the Luca.

that. you noticed I'm Yes, glad

our pleased We This shareholders Well, are things. think it's this with to a we've pretty capital a was quarter combination of of a also number quarter. for us. probably return And that one I noticed increased of fact. you that record

in had margin last over we've Of and the line improvement has the obviously that helps several years course, top several the quarters expansion an helped.

flow. cash that driving operating better is so And

as On the model. said, front, CapEx Tim a hybrid we employ

somewhere the we as of and try balance run else on But we investments up our general, go. investments company sheet Some and some show pay efficiently. show the up in we to other

We fact capital cash pleased flow And efficiency is our the that think a thing. that free is continue therefore, this with we're well doing to year. good

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