EARNINGS REVIEW
Apple, FY26 Q3 Earnings Results
Growth in iPhone, Mac and Services expanded revenue in the June-ended quarter. However, the high gross margin includes tariff refunds and must be distinguished from repeatable profitability.
Assessment · Growth in both products and services was confirmed. Future profitability depends on whether margins can be maintained excluding tariff refunds; financial capacity should also be assessed using a scope that includes noncurrent marketable securities.
Key management and company statements
Earnings release · Excerpt from the original“our strongest June quarter ever”Meaning · This was the strongest June-ended quarter on record.
Context · Although this is the second calendar quarter, it is Apple’s FY26 Q3.
Original statement ↗“Our installed base of active devices also reached a new all-time high”Meaning · The installed base of active devices also reached an all-time high.
Context · This metric describes the customer base for Services; the number of active devices is not itself revenue.
Original statement ↗01 Revenue, operating income and results versus expectations
Year over year · revenue 94.036 → 109.417 B$ (+16.4% · +15.381 B$), operating income 28.202 → 35.695 B$ (+26.6% · +7.493 B$).
Quarter over quarter · revenue 111.184 → 109.417 B$ (−1.6% · −1.767 B$), operating income 35.885 → 35.695 B$ (−0.5% · −0.190 B$), operating margin 32.3% → 32.6% (+0.3%p).
iPhone revenue increased by 9.670 B$ year over year and Services by 3.316 B$. Product sales expansion and growth in the services base occurred together, but iPad revenue declined. These are product/service revenue categories, distinct from disclosed geographic segments.
02 Earnings sustainability · From operating income to net income
Gross margin of 50.1% included a favorable effect of approximately 2%p from tariff refunds. That effect should not be treated as a margin improvement that automatically recurs in subsequent quarters.
The tariff-refund effect relates to gross margin. It is not presented as company-wide operating margin, nor is the full refund effect converted into a long-term margin improvement.
- Operating income
- 35.695 B$
- Net non-operating income
- 0.572 B$
- Income tax expense
- −6.478 B$
- Consolidated net income
- 29.789 B$
Net income of 29.789 B$ in the existing quarterly dataset is on a consolidated basis.
03 Cash flow quality · Net income → OCF → FCF
FCF was 31.914 B$, calculated by subtracting CapEx of 2.455 B$ from OCF of 34.369 B$. Cash CapEx is small relative to revenue, but it is not total investment spending inclusive of all supply-chain purchases and service operating costs.
- Consolidated net income
- 29.789 B$
- Total net adjustments for noncash items, working capital and other items¹
- 4.580 B$
- Operating cash flow
- 34.369 B$
- Cash CapEx
- −2.455 B$
- FCF
- 31.914 B$
¹ Total net adjustments calculated as OCF−net income. This is not a single disclosed line item; it combines noncash items, working capital, classification differences and other adjustments.
FCF versus previous quarter · 26.731 → 31.914 B$, 5.183 B$ improvement.
04 Financial capacity · Net debt and payment obligations
Previous-quarter net cash · 2026-03-28
Cash and current investments 68.507 / Debt 84.711 B$
Current-quarter net cash · 2026-06-27
Cash and current investments 62.399 / Debt 84.344 B$
Net debt worsened by 5.741 B$ from the previous quarter. The carrying amount of current debt is 13.004 B$. It may differ from the principal maturity schedule.
The common table’s cash and current investments of 62.399 B$ include only cash, cash equivalents and current marketable securities. Including noncurrent marketable securities of 84.118 B$ gives cash and securities of 146.517 B$, and net cash after debt of 62.173 B$.
Therefore, the table’s net cash of −21.945 B$ should not be read as indicating that Apple’s total cash and marketable securities are below its borrowings. Total liabilities and borrowings are also distinguished.
Common definition · Cash and current investments = cash equivalents + current investments and deposits. Debt = carrying amount of interest-bearing borrowings (current + noncurrent), excluding separately reported lease liabilities. This differs from total liabilities of 275.746 B$. Restricted cash, noncurrent securities and noncurrent deposits are excluded from cash and current investments.
05 Investment, capital allocation and cash returns
Operating cash flow amply covered the company’s own capital investment this quarter. However, tariff refunds, product-launch timing and the services mix must be separated to avoid mechanically extrapolating this quarter’s cash generation to a full year.
This quarter, cash CapEx/revenue is 2.2% and FCF/revenue is 29.2%. These ratios should not be used as a simple ranking of companies with different business models and FCF definitions.
Quarterly results · CY-aligned presentation
Amounts in B$. Based on the CY-aligned year of this report, the table shows all 4 quarters of the preceding year and the current year to date. Each fiscal quarter is assigned to the CY quarter with the greatest overlap in actual reporting dates, alongside its original FY/CY quarter and start/end dates. Amounts have not been recalculated into actual calendar quarters.
| CY alignment | 2025 · 4 quarters | 2026 · 2 quarters | Change this quarter | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Metric | 2025 total4-quarter totalBalances are period-end | 1QFY25 Q224-12-29 ~25-03-29 | 2QFY25 Q325-03-30 ~25-06-28 | 3QFY25 Q425-06-29 ~25-09-27 | 4QFY26 Q125-09-28 ~25-12-27 | 2026 year to date2-quarter totalBalances are period-end | 1QFY26 Q225-12-28 ~26-03-28 | 2QFY26 Q326-03-29 ~26-06-27 | QoQvs FY26 Q2 | YoYvs FY25 Q3 |
| Revenue | 435.617 | 95.359 | 94.036 | 102.466 | 143.756 | 220.601 | 111.184 | 109.417 | −1.6%−1.767 B$ | +16.4%+15.381 B$ |
| Operating income | 141.070 | 29.589 | 28.202 | 32.427 | 50.852 | 71.580 | 35.885 | 35.695 | −0.5%−0.190 B$ | +26.6%+7.493 B$ |
| Operating margin | 32.4% | 31.0% | 30.0% | 31.6% | 35.4% | 32.4% | 32.3% | 32.6% | +0.3%p | +2.6%p |
| FCF | 123.324 | 20.881 | 24.405 | 26.486 | 51.552 | 58.645 | 26.731 | 31.914 | +5.183 B$ | +7.509 B$ |
| Operating cash flow | 135.472 | 23.952 | 27.867 | 29.728 | 53.925 | 63.071 | 28.702 | 34.369 | +19.7%+5.667 B$ | +23.3%+6.502 B$ |
| Cash CapEx | 12.148 | 3.071 | 3.462 | 3.242 | 2.373 | 4.426 | 1.971 | 2.455 | +24.6%+0.484 B$ | −29.1%−1.007 B$ |
| Net cash | −23.602 | −49.688 | −46.326 | −43.960 | −23.602 | −21.945 | −16.204 | −21.945 | −5.741 B$ | +24.381 B$ |
| Cash and current investments | 66.907 | 48.498 | 55.372 | 54.697 | 66.907 | 62.399 | 68.507 | 62.399 | −8.9%−6.108 B$ | +12.7%+7.027 B$ |
| Debt | 90.509 | 98.186 | 101.698 | 98.657 | 90.509 | 84.344 | 84.711 | 84.344 | −0.4%−0.367 B$ | −17.1%−17.354 B$ |
Indented rows are components or reference items for the parent metric. Net cash = cash and current investments − debt. Depending on the company definition, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
Annual totals and year-to-date totals appear before each year’s quarters. Revenue, earnings and cash flow are sums of quarterly figures; margin is total operating income ÷ total revenue; net cash, cash and debt are balances at the end of the last quarter. Do not treat totals covering different lengths of time as directly comparable annual figures.
Net cash = cash and current investments − debt. A negative figure indicates net debt. Changes in FCF and net cash are shown as absolute amounts in B$. Quarterly figures have not been adjusted to force reconciliation with disclosed annual totals.
Comparison bases, calculation methods and quarterly sources
Calculation and presentation · Amounts in B$. Figures disclosed in millions of US dollars are divided by 1,000 without altering the source values. Where only cumulative cash flows are available, the previous cumulative period within the same fiscal year is deducted. YoY, QoQ and margins are calculated using amounts before display rounding. Earnings changes from negative or 0 bases are expressed as profit/loss transitions and absolute amounts.
Opinions and outlook · Management quotations include original excerpts and their translations. Quotations not identified as earnings-call transcripts come from earnings releases. Interpretations and implications are the author’s judgments. No numerical probability of achieving a target is assigned without quantitative verification.