Apple Inc. designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services. The Company's fiscal year is the 52- or 53-week period that ends on the last Saturday of September. The Company manages its business primarily on a geographic basis, with reportable segments consisting of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company's customers and distribution partners and the unique market dynamics of each geographic region.

The markets for the Company's products and services are highly competitive and are characterized by aggressive price competition, downward pressure on gross margins, continual improvement in product performance, and price sensitivity on the part of consumers and businesses. The Company's ability to compete successfully depends heavily on ensuring the continuing and timely introduction of innovative new products, services and technologies to the marketplace. The Company designs and develops nearly the entire solution for its products, including the hardware, operating system, numerous software applications and related services. The Company has a minority market share in the global smartphone, personal computer, tablet and wearables markets. Some of the Company's competitors have broad product lines, low-priced products, large installed bases of active devices, and large customer bases. Certain competitors have the resources, experience or cost structures to provide products and services at little or no profit or even at a loss.

The Company generates revenue through the sale of its hardware products — iPhone, Mac, iPad, and Wearables, Home and Accessories — and through a growing portfolio of Services, which includes Advertising, AppleCare, Cloud Services, Digital Content (including the App Store, Apple Arcade, Apple Fitness+, Apple Music, Apple News+, and Apple TV), and Payment Services (including Apple Card and Apple Pay). The Company sells its products and resells third-party products in most of its major markets directly to customers through its retail and online stores and its direct sales force, and also employs a variety of indirect distribution channels, such as third-party cellular network carriers and other resellers. During 2025, the Company's net sales through its direct and indirect distribution channels accounted for 40% and 60%, respectively, of total net sales ¹.

iPhone net sales were $209.586 billion ² in 2025, compared to $201.183 billion ³ in 2024, an increase of 4% ⁴ driven by higher net sales of Pro models. Mac net sales were $33.708 billion ⁵ in 2025, compared to $29.984 billion ⁶ in 2024, an increase of 12% ⁷ primarily due to higher net sales of laptops and desktops. iPad net sales were $28.023 billion ⁸ in 2025, compared to $26.694 billion ⁹ in 2024, an increase of 5% ¹⁰ primarily due to higher net sales of iPad Air, iPad mini and iPad, partially offset by lower net sales of iPad Pro. Wearables, Home and Accessories net sales were $35.686 billion ¹¹ in 2025, compared to $37.005 billion ¹² in 2024, a decrease of 4% ¹³ primarily due to lower net sales of Accessories and Wearables.

Services net sales were $109.158 billion ¹⁴ in 2025, compared to $96.169 billion ¹⁵ in 2024, an increase of 14% ¹⁶ primarily due to higher net sales from advertising, the App Store and cloud services. Services gross margin was $82.314 billion ¹⁷ in 2025, compared to $71.050 billion ¹⁸ in 2024. Services gross margin percentage was 75.4% ¹⁹ in 2025, compared to 73.9% ²⁰ in 2024, an increase primarily due to a different mix of services, partially offset by higher costs.

Significant product and service announcements during fiscal year 2025 included MacBook Pro, Mac mini, iMac, iPad mini in the first quarter; iPhone 16e, iPad Air, iPad, MacBook Air, Mac Studio in the second quarter; iOS 26, macOS Tahoe 26, iPadOS 26, watchOS 26, visionOS 26 and tvOS 26 in the third quarter; and iPhone 17, iPhone Air, iPhone 17 Pro and iPhone 17 Pro Max, Apple Watch Series 11, Apple Watch SE 3 and Apple Watch Ultra 3, and AirPods Pro 3 in the fourth quarter. On May 1, 2025, the Company announced an additional program to repurchase up to $100 billion ²¹ of the Company's common stock. During 2025, the Company repurchased $89.3 billion ²² of its common stock and paid dividends and dividend equivalents of $15.4 billion ²³. The Company's quarterly cash dividend was $0.26 ²⁴ per share as of September 27, 2025.

Total net sales for fiscal year 2025 were $416.161 billion ²⁵, compared to $391.035 billion ²⁶ in fiscal 2024, an increase of 6% ²⁷. Net income was $112.010 billion ²⁸ in 2025, compared to $93.736 billion ²⁹ in 2024. Diluted earnings per share were $7.46 ³⁰ in 2025, compared to $6.08 ³¹ in 2024. Total gross margin percentage was 46.9% ³² in 2025, compared to 46.2% ³³ in 2024. Cash generated by operating activities was $111.482 billion ³⁴ in 2025, compared to $118.254 billion ³⁵ in 2024.

The Company states that it assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

The Company is focused on expanding its market opportunities related to smartphones, personal computers, tablets, wearables and accessories, and services. The Company continues to develop new technologies to enhance existing products and services, and to expand the range of its offerings through research and development, licensing of intellectual property and acquisition of third-party businesses and technology. The Company's new products often utilize custom components available from only one source, and when a component or product uses new technologies, initial capacity constraints may exist until the suppliers' yields have matured or their manufacturing capacities have increased.

The Company's growth in Services net sales increased 14% ³⁶ during 2025 compared to 2024, driven by higher net sales from advertising, the App Store and cloud services. The Company offers a portfolio of fee-based service and support products under the AppleCare brand, operates various platforms including the App Store that allow customers to discover and download applications and digital content, and offers subscription-based services including Apple Arcade, Apple Fitness+, Apple Music, Apple News+, and Apple TV. The Company also offers payment services including Apple Card and Apple Pay.

The Company believes, in general, gross margins will be subject to volatility and downward pressure. Products gross margin percentage decreased during 2025 compared to 2024 primarily due to a different mix of products and tariff costs, partially offset by other favorable costs. Services gross margin percentage increased during 2025 compared to 2024 primarily due to a different mix of services, partially offset by higher costs. The Company's future gross margins can be impacted by a variety of factors, including continued industry-wide global product pricing pressures, increased competition, supply shortages, potential increases in the cost of components, shifts in the mix of products and services, fluctuations in foreign exchange rates, and the imposition of new or increased tariffs and other trade restrictions.

The Company's global supply chain is large and complex and a majority of the Company's supplier facilities, including manufacturing and assembly sites, are located outside the U.S. A significant majority of the Company's manufacturing is performed in whole or in part by outsourcing partners located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam, in addition to sourcing from partners and facilities located in the U.S. The Company relies on single-source partners in the U.S., Asia and Europe to supply and manufacture many components, and on partners primarily located in Asia, for final assembly of substantially all of the Company's hardware products. The Company has outsourced much of its transportation and logistics management. The Company has entered into agreements for the supply of many components; however, the Company may not be able to extend or renew agreements for the supply of components on similar terms, or at all.

Research and development expense was $34.550 billion ³⁷ in 2025, compared to $31.370 billion ³⁸ in 2024, an increase of 10% ³⁹. The growth in R&D expense during 2025 compared to 2024 was primarily driven by increases in headcount-related expenses and infrastructure-related costs. Capital expenditures for acquisition of property, plant and equipment were $12.715 billion ⁴⁰ in 2025, compared to $9.447 billion ⁴¹ in 2024. As of September 27, 2025, the Company had an authorized share repurchase program of up to $100 billion ⁴² announced in May 2025, with $221 million ⁴³ of that program utilized as of that date. The Company's quarterly cash dividend was $0.26 ⁴⁴ per share as of September 27, 2025, and the Company intends to increase its dividend on an annual basis, subject to declaration by the Board.

Beginning in the second quarter of 2025, new tariffs were announced on imports to the U.S., including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the European Union, among others. In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other retaliatory measures. Various modifications to the U.S. Tariffs have been announced and further changes could be made in the future, which may include additional sector-based tariffs or other measures. For example, the U.S. Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into, among other things, imports of semiconductors, semiconductor manufacturing equipment, and their derivative products, including downstream products that contain semiconductors. Tariffs and other measures that are applied to the Company's products or their components can have a material adverse impact on the Company's business, results of operations and financial condition, including impacting the Company's supply chain, the availability of rare earths and other raw materials and components, pricing and gross margin.

The Company's operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can materially adversely affect the Company's business, results of operations, financial condition and stock price. The Company has international operations with sales outside the U.S. representing a majority of the Company's total net sales. Adverse macroeconomic conditions, including slow growth or recession, high unemployment, inflation, tighter credit, higher interest rates, and currency fluctuations, can adversely impact consumer confidence and spending and materially adversely affect demand for the Company's products and services. The Company's primary exposure to movements in foreign exchange rates relates to non-U.S. dollar-denominated sales, cost of sales and operating expenses worldwide. The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of the Company's foreign currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company's products.

Management's discussion emphasizes that the Company's fiscal years 2025 and 2024 spanned 52 weeks each, whereas fiscal year 2023 spanned 53 weeks. The Company notes that macroeconomic conditions, including inflation, interest rates and currency fluctuations, have directly and indirectly impacted, and could in the future materially impact, the Company's results of operations and financial condition. Management highlights that tariffs and other measures that are applied to the Company's products or their components can have a material adverse impact on the Company's business, results of operations and financial condition. The Company believes its balances of cash, cash equivalents and marketable securities, which totaled $132.4 billion ⁴⁹ as of September 27, 2025, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond. The Company intends to increase its dividend on an annual basis, subject to declaration by the Board.

Total net sales were $416.161 billion ⁵⁰ in 2025, compared to $391.035 billion ⁵¹ in 2024. Net income was $112.010 billion ⁵² in 2025, compared to $93.736 billion ⁵³ in 2024. Diluted earnings per share were $7.46 ⁵⁴ in 2025, compared to $6.08 ⁵⁵ in 2024. Operating income was $133.050 billion ⁵⁶ in 2025, compared to $123.216 billion ⁵⁷ in 2024. Total gross margin percentage was 46.9% ⁵⁸ in 2025, compared to 46.2% ⁵⁹ in 2024. Cash generated by operating activities was $111.482 billion ⁶⁰ in 2025, compared to $118.254 billion ⁶¹ in 2024. As of September 27, 2025, the Company had cash, cash equivalents and marketable securities of $132.420 billion ⁶², total term debt of $90.678 billion ⁶³, and total shareholders' equity of $73.733 billion ⁶⁴. The provision for income taxes was $20.719 billion ⁶⁵ in 2025, compared to $29.749 billion ⁶⁶ in 2024, with the decrease primarily due to a $10.7 billion ⁶⁷ year-over-year decrease related to the State Aid Decision. Americas segment net sales were $178.353 billion ⁶⁸ in 2025, compared to $167.045 billion ⁶⁹ in 2024.

The Company's business can be materially adversely affected by the imposition of new or increased tariffs and other trade restrictions, as beginning in the second quarter of 2025, new U.S. Tariffs were announced on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the EU, among others, and the ultimate impact remains uncertain. The Company relies on single or limited sources for the supply and manufacture of many critical components, and a significant majority of its manufacturing is performed by outsourcing partners located primarily in Asia, exposing it to significant supply and pricing risks. The Company is subject to intense regulatory scrutiny, including antitrust investigations and litigation in various jurisdictions; for example, on April 23, 2025, the European Commission fined the Company €500 million ⁴⁵ in the Article 5(4) Investigation and issued a cease and desist order, and the Commission may impose fines up to 10% of the Company's annual worldwide net sales in the Article 6(4) Investigation. The Company's effective tax rate is subject to volatility, and as of September 27, 2025, the total amount of gross unrecognized tax benefits was $23.2 billion ⁴⁶, of which $10.6 billion ⁴⁷, if recognized, would impact the Company's effective tax rate. The Company generates a significant portion of its net sales from a single product category, iPhone, which accounted for $209.586 billion ⁴⁸ of total net sales in 2025, and a decline in demand for that product could significantly impact net sales and gross margins.