Apple(AAPL) - 2026 Q1 - Quarterly Report

Financial Performance - Total net sales for the first quarter of 2026 reached $143.8 billion, a 16% increase from $124.3 billion in the same quarter of 2025[65] - iPhone sales increased by 23% to $85.3 billion, up from $69.1 billion year-over-year, primarily driven by higher sales of Pro models[71][72] - Services revenue grew by 14% to $30.0 billion, compared to $26.3 billion in the prior year, mainly due to higher sales from advertising, the App Store, and cloud services[71][75] - Gross margin for the first quarter of 2026 was $69.2 billion, representing a gross margin percentage of 48.2%, up from 46.9% in the same quarter of 2025[76] Expenses and Investments - Research and development expenses increased by 32% to $10.9 billion, accounting for 8% of total net sales, compared to 7% in the previous year[80] - The company repurchased $25.0 billion of its common stock and paid $3.9 billion in dividends during the first quarter of 2026[89] Obligations and Liabilities - Manufacturing purchase obligations totaled $44.4 billion, with $43.7 billion payable within 12 months as of December 27, 2025[86] - Other purchase obligations amounted to $35.1 billion, with $9.3 billion payable within 12 months[87] Taxation and Accounting - The effective tax rate for the first quarter of 2026 was 17.5%, lower than the statutory federal income tax rate of 21%[83] - The Company will adopt ASU 2025-06 regarding internal-use software in Q1 2029, allowing for capitalization of software costs when management commits to the project[91] - ASU 2024-03 will require the Company to disclose inventory purchases, employee compensation, depreciation, and intangible asset amortization in its income statement starting Q4 2028[92] - The Company will implement ASU 2023-09 in Q4 2026, requiring disaggregation of income taxes paid by federal, state, and foreign taxes[93] - There have been no material changes to the Company's critical accounting estimates since the 2025 Form 10-K[94] Market Risk and Outlook - The Company's market risk exposure has not materially changed during the first three months of 2026[95] - The company anticipates continued volatility and downward pressure on gross margins due to various factors, including tariffs and product mix[79]