We expect our June quarter total company revenue to grow by 14%-17% year-over-year, which comprehends our best view of constrained supply. On iPad, keep in mind, we face a difficult compare driven by the launch of the A16-powered iPad in the prior year. We expect services revenue to grow at a year-over-year rate similar to what we reported in the March quarter after removing the favorable year-over-year impact from foreign exchange tailwinds. Keep in mind, during the March quarter, FX was a 2.5 percentage point tailwind to the total company growth rate, and for services, that impact was slightly more favorable.
We expect gross margin to be between 47.5% and 48.5%. We expect operating expenses to be between $18.8 billion and $19.1 billion. We expect OINE to be around $250 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17%. With that, Tim and I will take questions.
- Kevan Parekh, CFO
Based on the above, here are the estimates for Revenues and Earnings per Share
Sequential change in segment revenues:
My Revenues and EPS expectations in table form:
My segment revenues and growth expectations in table form:
Note that the revenue expectations are for 15.6% growth while guidance is at 14% to 17%. Chances are that they will hit the upper end of the range and I may revise these estimates to reflect that as we get more data.
Revenues and growth rates for iPhone, Mac, iPad, Services, Wearables, plus Net Sales, Gross Margin, Operating Expense, Other Income and Expense, Tax Rate, Net Income, Share Count and EPS with a comparison to CFO guidance.
Ref. conference call's guidance, Kevan Parekh, Apple CFO: As we move ahead into March, I would like to review our outlook, […]. We expect our March total company revenue to grow by 13% to 16% year over year, which comprehends our best estimates of constrained iPhone supply during the quarter. We expect services revenue to grow at a year-over-year rate similar to what we reported in December. We expect →
In a recent interview Apple management was asked about AI, which is perceived as an area where Apple has been struggling. Greg Joswiak replied: We’ve been doing things with intelligence for many years, right? And gen AI allows us an opportunity to do that even more. So I’m excited about that, but boy, this is not a sprint. This is a marathon.
In contrast to AI, Spatial Computing is being largely ignored. It is however making significant leaps in utilization, especially in verticals. →
At just $3,000, the Studio Display XDR democratizes medical imaging, undercutting specialized monitors by up to 90% and revolutionizing healthcare accessibility.
The Studio Display XDR is priced at $2,899 with a VESA mount, and it is more affordable than many specialized medical imaging monitors.
It allows a new set of people to do what previously required only specialists to do and allows specialists to do more than they used to do. →
BofA slightly ups Apple's price target to $325, forecasting $113B revenue and $2.00 EPS for Q2, driven by strong iPhone sales and Services growth, slightly above my estimates of $110B and $2.00.
Q2 forecast update
My own estimates for Q2 revenues and EPS are $110B…
More to follow as we get closer to the earnings release date but this is a good preview. →
Apple's Mac shipments grew 5.4% to capture 11% market share in Q1 2026, driven by MacBook Air and Neo sales, with revenue estimates slightly differing from unit projections.
Apple growing at double market rate.
Omidia estimates that Apple reached a market shar…
…e of 11% with shipments growing 5.4% due to solid MacBook Air sales performance and the initial sell-in of the MacBook Neo.. This means 5.4% growth for Apple y/y. As I noted in my Office Hour yesterday, I adjusted my Mac growth from 0% to 6% based on the new products launched. This is an estimate of revenues not units but it might be pretty close. Omidia estimates 7,112 million units whereas I’m a little above 6 million. We seem to disagree on ASP. →
Amazon's acquisition of Globalstar boosts its satellite internet ambitions and strengthens ties with Apple, while highlighting the limited reach of space-based networks compared to terrestrial ones.
I assume Apple has wanted to steer clear of Starlink but it’s not clear that was a primary consideration in choosing Globalstar.
Starlink, considered the dominant player, serves about 11 million users. I would note that 11 million is 0.1% of the number of cellular subscriptions worldwide. →
iPhone users boast nearly quadruple the loyalty of Android counterparts, with actual annual switching rates favoring Apple slightly, despite inflated survey intentions.
I did a deep dive into the data and came up with graph above. The original report shows intention numbers which seem quite high. For instance, the net switching rate between iOS and Android is 10% in favor of Apple. This would imply that the entire user base would flip in 10 years. It would also imply…
I think actual net churn is 1.7% of the base each year. That’s still 100 million a year. For now it seems Apple is happy to maintain that rate. →
This episode of Asymco Office Hours covers a wide range of topics related to Apple, including geopolitical risks, financial performance, AI developments, and business strategy. The discussion is led by Horace Dediu and Gene Munster, with insights from industry experts.
Revenues and growth rates for iPhone, Mac, iPad, Services, Wearables, plus Net Sales, Gross Margin, Operating Expense, Other Income and Expense, Tax Rate, Net Income, Share Count and EPS with a comparison to CFO guidance.
Kevan Parekh, Apple CFO: As we move ahead into March, I would like to review our outlook, […]. We expect our March total company revenue to grow by 13% to 16% year over year, which comprehends our best estimates of constrained iPhone supply during the quarter.
We expect services revenue to grow at a year-over-year rate similar to what we reported in December. We expect gross margin to be between 48-49%. We expect operating expenses to be between $18.4 billion and $18.7 billion, which is at a similar level to what we reported in December and driven by higher R&D on a year-over-year basis. We expect OI&E to be around $100 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17.5%.
I've seen several market reports which estimate that iPhone shipments grew around 3% to 6% in the quarter. When I plug in, say, IDC's iPhones number into my model, and assume quite aggressive growth on the other categories (including Services) I get a y/y revenue growth of 11%. This is far below Kevan's January's guidance quoted above (13% to 16%).
Are IDC, Gartner, et. al. signaling a huge miss?
I need to point out that in the preceding December quarter the iPhone grew revenues at 23%! In order for Apple to hit its targets
I'd also point out that when Kevan Parekh made his forecast, in late January, a full month was already on the books for Apple. Visibility into the next month would have been relatively good as orders from the channel are partly foreseeable. For a change from implying nearly 20% growth in sales/14% in units one third of the way in, to IDC's 3% in units for the whole quarter would imply a collapse in demand into February and March. We're talking double digit decline in order volumes.
Moreover, IDC commentary on Apple is
Apple secured second place, driven by the strong performance of the iPhone 17 series, which saw significant growth in China of over 30%. This led to a 3.3% year-over-year increase in global sales for Q1. Although demand remains robust, supply disruptions and a reduction in channel support in some key markets have hindered growth..
30% growth in China! For this to be tied to 3.3% growth globally would imply significant declines elsewhere. I struggle to see how this adds up.
Here is my complete forecast for the quarter including growth rate for revenues for iPhone, Mac, iPad, Services, Wearables, Net Sales, Gross Margin, Operating Exp., OIE, Tax Rate, Net Income, Share Count and EPS with a comparison to CFO guidance.
While the commentariat assumes the worst, Apple delivers the best.
Last quarter Apple delivered a gross margin of 48.2%. This was above the high end of their guidance range and up 100 basis points sequentially. Management commented that this was "driven by favorable mix and leverage."
Further, products gross margin was 40.7%, up 450 basis points sequentially, driven by favorable mix and leverage. Services gross margin was 76.5%, up 120 basis points sequentially, driven by mix.
This performance is even more astonishing considering the history shown below. Apple is quite simply, delivering at the highest gross and net margins in its history.
Note that the graph actually projects forward one quarter because we have the following guidance: "We expect gross margin to be between 48-49%." The graph reflects the high end of this guidance range.
So what's going on? Especially as a drumbeat of constant doom is being broadcast by pundits. The conference call itself seemed to be dedicated to margins. It became what I call the Margin Call.
Amit Daryanani, the first questioning analyst, specifically kicked off with the following:
"there is a lot of focus on the impact of memory to host the companies, and I would love to kind of get your perspective when you are first guiding gross margins up into March. Talk about, a, your comfort in securing the bit that you need for shipment and b, how do we think about memory inflation flowing through Apple's model over time?"
Tim Cook answered:
We are currently constrained, and at this point, it is difficult to predict when supply and demand will balance. The constraints that we have are driven by the availability of the advanced nodes that our SoCs are produced on. And at this time, we are seeing less flexibility in the supply chain than normal, partly because of our increased demand that I just spoke about. From a memory point of view, to answer your question, memory had a minimal impact on Q1. So the December gross margin. We do expect it to be a bit more of an impact on the Q2 gross margin, and that was comprehended in the outlook of 48 to 49% that Kevin gave earlier.
what Apple is saying is that they are constrained by production of silicon but not of memory. They do see some impact in the future but that is included in a guidance of margin expansion.
Analysts still could not believe this, the following exchange soon followed:
Ben Reitzes: So the next question is on gross margin. I am pretty shocked I gotta hand it to you, Tim. I am, you know, that you are able to do 48 to 49. What is really going on there? How are you doing that with this memory, the NAND prices? Is it due to mix that there is a good less hardware and more services? Services and services margins are going up. How are you doing it to keep it at 48 to 49?
Kevan Parekh: Yeah, Ben. This is Kevin. [] Let me start maybe by just reflecting on the Q1 gross margin. I think we talked about the fact that we landed at 48.2%, so just above the high end of the range we provided, [], on the last call. [] if you look at that performance, [], we were up 100 basis points sequentially. We talked about the fact that we had favorable mix. [], as you know, when we have a good product cycle, strong price cycle we are seeing for iPhone, that does lend itself to a bit more favorable opportunity on the [] leverage side.
So we are having a strong iPhone cycle as Tim outlined. And so that also translates itself. So we talked about products sequentially went up by 450 basis points. So I think, in general, I think we are just seeing, [], favorable mix dynamics as well. [], service continues to contribute as well. That business is growing, [], double digits, so that also is a contributor. And I think that, [], if you looked at our guidance, [], we are providing a similar range to where we reported in December. There are going to be a few puts and takes. [], we do expect to see favorable mix in the services.
As you know, when we move from Q1 to Q2, that tends to be the case, and that is partly offset by a seasonal loss leverage. So there will be puts and takes, but again, we feel pretty good about the guide of 48 to 49%, which is similar to the range we reported in December.
Still not enough. Two more questions followed on margin. I will quote one here.
Aaron Rakers: Yep. And then as a quick follow-up, you know, kind of tied to memory, maybe not so much, but part of this current generation iPhone cycle is you clearly deepened some of your own internal silicon capabilities on the device. I am curious if that if we should think about that as a lever and maybe a supportive factor to gross margin that might be underappreciated and any thoughts on where we go from here as far as continual opportunities of internalizing your own silicon? Thank you.
Timothy D. Cook: Yeah. I will let Kevin talk about the gross margin. But in terms of the product, which is at the heart of what we think about in the user, Apple silicon has just been an incredible game changer for us. Starting with iPhone and then on iPad and, of course, the Mac as of a few years ago. And so we believe it is a game changer and a major advantage.
Kevan Parekh: Yeah. And as far as impact on gross margin, yeah, we have been, as you know, investing in core technologies like our own silicon and our own modem. And certainly, while those do provide opportunities for cost savings and can be plugged in margins, they also importantly provide, [], the differentiation that is really important for our products as well and us more control of our roadmap. So I think there is a lot of strategic value to it, but also we are seeing, [], investments in our core technologies impacting, [], gross margin in a positive way.
After all this, the financial commentariat continues to assume that Apple will be hit with margin pressure from memory and that has presumably been affecting the share price since the call.
Well, we've seen all this before. Before the great memory crisis Apple was going to be constrained by tariffs, by China, by developer dissatisfaction, by AI, by regulators, etc.
The feeling one gets is that Apple is always navigating through a minefield of pitfalls and gotchas. The opposite is true. It's highly likely that Apple has sufficient leverage which increases its access to supply and that everyone is keen to work with the company. Leverage comes from scale, from lead time, from vertical integration and from engineering. Management is saying as much. Indeed, the evidence of leverage across the supply chain and over the entire ecosystem and economy is evident in its margin expansion story told in the graph above.
