Apple Inc 10-Q for FY2024 Q1
Apple Inc. (AAPL)
10-Q
2024-02-02
For: 2023-12-30
View Original
Added on
April 01, 2026
About this 10-Q
Apple Inc filed this 10-Q on February 2, 2024, covering the quarter ended December 30, 2023 (FY2024 Q1).
Headline figures
Quarter ended December 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $119.58B
- up 2.1% from $117.15B a year earlier
- Net income
- $33.92B
- up 13.1% from net income of $30B a year earlier
- Diluted EPS
- $2.18
- up 16.0% from $1.88 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended December 30, 2023
or
For the transition period from to .
Commission File Number: 001-36743
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(408 ) 996-1010
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Apple Inc.
Form 10-Q
For the Fiscal Quarter Ended December 30, 2023
TABLE OF CONTENTS
| Page | ||||||||
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares, which are reflected in thousands, and per-share amounts)
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| Products | $ | $ | |||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total net sales | |||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| Products | |||||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
| Gross margin | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Other income/(expense), net | ( | ( | |||||||||||||||||||||
| Income before provision for income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
| Shares used in computing earnings per share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2024 Form 10-Q | 1
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Other comprehensive income/(loss): | |||||||||||||||||||||||
| Change in foreign currency translation, net of tax | ( | ||||||||||||||||||||||
| Change in unrealized gains/losses on derivative instruments, net of tax: | |||||||||||||||||||||||
| Change in fair value of derivative instruments | ( | ( | |||||||||||||||||||||
| Adjustment for net (gains)/losses realized and included in net income | ( | ( | |||||||||||||||||||||
| Total change in unrealized gains/losses on derivative instruments | ( | ( | |||||||||||||||||||||
| Change in unrealized gains/losses on marketable debt securities, net of tax: | |||||||||||||||||||||||
| Change in fair value of marketable debt securities | |||||||||||||||||||||||
| Adjustment for net (gains)/losses realized and included in net income | |||||||||||||||||||||||
| Total change in unrealized gains/losses on marketable debt securities | |||||||||||||||||||||||
| Total other comprehensive income/(loss) | ( | ||||||||||||||||||||||
| Total comprehensive income | $ | $ | |||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2024 Form 10-Q | 2
Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares, which are reflected in thousands, and par value)
| December 30, 2023 | September 30, 2023 | ||||||||||
| ASSETS: | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Marketable securities | |||||||||||
| Accounts receivable, net | |||||||||||
| Vendor non-trade receivables | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Non-current assets: | |||||||||||
| Marketable securities | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Other non-current assets | |||||||||||
| Total non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Other current liabilities | |||||||||||
| Deferred revenue | |||||||||||
| Commercial paper | |||||||||||
| Term debt | |||||||||||
| Total current liabilities | |||||||||||
| Non-current liabilities: | |||||||||||
| Term debt | |||||||||||
| Other non-current liabilities | |||||||||||
| Total non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholders’ equity: | |||||||||||
Common stock and additional paid-in capital, $ | |||||||||||
| Retained earnings/(Accumulated deficit) | ( | ||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2024 Form 10-Q | 3
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(In millions, except per-share amounts)
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Total shareholders’ equity, beginning balances | $ | $ | |||||||||||||||||||||
| Common stock and additional paid-in capital: | |||||||||||||||||||||||
| Beginning balances | |||||||||||||||||||||||
| Common stock withheld related to net share settlement of equity awards | ( | ( | |||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||
| Ending balances | |||||||||||||||||||||||
| Retained earnings/(Accumulated deficit): | |||||||||||||||||||||||
| Beginning balances | ( | ( | |||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Dividends and dividend equivalents declared | ( | ( | |||||||||||||||||||||
| Common stock withheld related to net share settlement of equity awards | ( | ( | |||||||||||||||||||||
| Common stock repurchased | ( | ( | |||||||||||||||||||||
| Ending balances | |||||||||||||||||||||||
| Accumulated other comprehensive income/(loss): | |||||||||||||||||||||||
| Beginning balances | ( | ( | |||||||||||||||||||||
| Other comprehensive income/(loss) | ( | ||||||||||||||||||||||
| Ending balances | ( | ( | |||||||||||||||||||||
| Total shareholders’ equity, ending balances | $ | $ | |||||||||||||||||||||
| Dividends and dividend equivalents declared per share or RSU | $ | $ | |||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2024 Form 10-Q | 4
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
| Three Months Ended | |||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||
Cash, cash equivalents and restricted cash, beginning balances | $ | $ | |||||||||
| Operating activities: | |||||||||||
| Net income | |||||||||||
| Adjustments to reconcile net income to cash generated by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation expense | |||||||||||
| Other | ( | ( | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable, net | |||||||||||
| Vendor non-trade receivables | |||||||||||
| Inventories | ( | ( | |||||||||
| Other current and non-current assets | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Other current and non-current liabilities | ( | ||||||||||
| Cash generated by operating activities | |||||||||||
| Investing activities: | |||||||||||
| Purchases of marketable securities | ( | ( | |||||||||
| Proceeds from maturities of marketable securities | |||||||||||
| Proceeds from sales of marketable securities | |||||||||||
| Payments for acquisition of property, plant and equipment | ( | ( | |||||||||
| Other | ( | ( | |||||||||
| Cash generated by/(used in) investing activities | ( | ||||||||||
| Financing activities: | |||||||||||
| Payments for taxes related to net share settlement of equity awards | ( | ( | |||||||||
| Payments for dividends and dividend equivalents | ( | ( | |||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Repayments of term debt | ( | ||||||||||
| Repayments of commercial paper, net | ( | ( | |||||||||
| Other | ( | ( | |||||||||
| Cash used in financing activities | ( | ( | |||||||||
| Increase/(Decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash, ending balances | $ | $ | |||||||||
| Supplemental cash flow disclosure: | |||||||||||
| Cash paid for income taxes, net | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2024 Form 10-Q | 5
Apple Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 – Summary of Significant Accounting Policies
Basis of Presentation and Preparation
The condensed consolidated financial statements include the accounts of Apple Inc. and its wholly owned subsidiaries (collectively “Apple” or the “Company”). In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the use of management estimates. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the “2023 Form 10-K”).
The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. An additional week is included in the first fiscal quarter every five or six years to realign the Company’s fiscal quarters with calendar quarters, which occurred in the first fiscal quarter of 2023. The Company’s fiscal years 2024 and 2023 span 52 and 53 weeks, respectively. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.
Note 2 – Revenue
Net sales disaggregated by significant products and services for the three months ended December 30, 2023 and December 31, 2022 were as follows (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
iPhone® | $ | $ | |||||||||||||||||||||
Mac® | |||||||||||||||||||||||
iPad® | |||||||||||||||||||||||
| Wearables, Home and Accessories | |||||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total net sales | $ | $ | |||||||||||||||||||||
Total net sales include $3.5 billion of revenue recognized in the three months ended December 30, 2023 that was included in deferred revenue as of September 30, 2023 and $3.4 billion of revenue recognized in the three months ended December 31, 2022 that was included in deferred revenue as of September 24, 2022.
The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 10, “Segment Information and Geographic Data” for the three months ended December 30, 2023 and December 31, 2022, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.
As of December 30, 2023 and September 30, 2023, the Company had total deferred revenue of $12.5 billion and $12.1 billion, respectively. As of December 30, 2023, the Company expects 66 % of total deferred revenue to be realized in less than a year, 26 % within one-to-two years, 7 % within two-to-three years and 1 % in greater than three years.
Apple Inc. | Q1 2024 Form 10-Q | 6
Note 3 – Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for the three months ended December 30, 2023 and December 31, 2022 (net income in millions and shares in thousands):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average basic shares outstanding | |||||||||||||||||||||||
Effect of dilutive share-based awards | |||||||||||||||||||||||
| Weighted-average diluted shares | |||||||||||||||||||||||
| Basic earnings per share | $ | $ | |||||||||||||||||||||
| Diluted earnings per share | $ | $ | |||||||||||||||||||||
Approximately 89 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the three months ended December 31, 2022 because their effect would have been antidilutive.
Note 4 – Financial Instruments
Cash, Cash Equivalents and Marketable Securities
The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of December 30, 2023 and September 30, 2023 (in millions):
| December 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Current Marketable Securities | Non-Current Marketable Securities | |||||||||||||||||||||||||||||||||||
| Cash | $ | $ | — | $ | — | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Level 1: | |||||||||||||||||||||||||||||||||||||||||
| Money market funds | |||||||||||||||||||||||||||||||||||||||||
Mutual funds | ( | ||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ||||||||||||||||||||||||||||||||||||||||
Level 2 (1): | |||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | ( | ||||||||||||||||||||||||||||||||||||||||
| U.S. agency securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Non-U.S. government securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit and time deposits | |||||||||||||||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Municipal securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Mortgage- and asset-backed securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ||||||||||||||||||||||||||||||||||||||||
Total (2) | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Apple Inc. | Q1 2024 Form 10-Q | 7
| September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Current Marketable Securities | Non-Current Marketable Securities | |||||||||||||||||||||||||||||||||||
| Cash | $ | $ | — | $ | — | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Level 1: | |||||||||||||||||||||||||||||||||||||||||
| Money market funds | |||||||||||||||||||||||||||||||||||||||||
Mutual funds and equity securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ||||||||||||||||||||||||||||||||||||||||
Level 2 (1): | |||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | ( | ||||||||||||||||||||||||||||||||||||||||
| U.S. agency securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Non-U.S. government securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit and time deposits | |||||||||||||||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Municipal securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Mortgage- and asset-backed securities | ( | ||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ||||||||||||||||||||||||||||||||||||||||
Total (2) | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
(1)The valuation techniques used to measure the fair values of the Company’s Level 2 financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.
(2)As of December 30, 2023 and September 30, 2023, total marketable securities included $13.9 billion and $13.8 billion, respectively, that were restricted from general use, related to the European Commission decision finding that Ireland granted state aid to the Company, and other agreements.
The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of December 30, 2023 (in millions):
| Due after 1 year through 5 years | $ | ||||
| Due after 5 years through 10 years | |||||
| Due after 10 years | |||||
| Total fair value | $ | ||||
Derivative Instruments and Hedging
The Company may use derivative instruments to partially offset its business exposure to foreign exchange and interest rate risk. However, the Company may choose not to hedge certain exposures for a variety of reasons, including accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange or interest rates.
Foreign Exchange Rate Risk
To protect gross margins from fluctuations in foreign exchange rates, the Company may use forwards, options or other instruments, and may designate these instruments as cash flow hedges. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign exchange rates, the Company may use forwards, cross-currency swaps or other instruments. The Company designates these instruments as either cash flow or fair value hedges. As of December 30, 2023, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for term debt–related foreign currency transactions is 19 years.
The Company may also use derivative instruments that are not designated as accounting hedges to protect gross margins from certain fluctuations in foreign exchange rates, as well as to offset a portion of the foreign currency gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.
Apple Inc. | Q1 2024 Form 10-Q | 8
Interest Rate Risk
To protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may use interest rate swaps, options or other instruments. The Company designates these instruments as either cash flow or fair value hedges.
The notional amounts of the Company’s outstanding derivative instruments as of December 30, 2023 and September 30, 2023 were as follows (in millions):
| December 30, 2023 | September 30, 2023 | ||||||||||
| Derivative instruments designated as accounting hedges: | |||||||||||
| Foreign exchange contracts | $ | $ | |||||||||
| Interest rate contracts | $ | $ | |||||||||
| Derivative instruments not designated as accounting hedges: | |||||||||||
| Foreign exchange contracts | $ | $ | |||||||||
The carrying amounts of the Company’s hedged items in fair value hedges as of December 30, 2023 and September 30, 2023 were as follows (in millions):
| December 30, 2023 | September 30, 2023 | ||||||||||
| Hedged assets/(liabilities): | |||||||||||
| $ | $ | ||||||||||
| $ | ( | $ | ( | ||||||||
Accounts Receivable
Trade Receivables
The Company’s third-party cellular network carriers accounted for 34 % and 41 % of total trade receivables as of December 30, 2023 and September 30, 2023, respectively. The Company requires third-party credit support or collateral from certain customers to limit credit risk.
Vendor Non-Trade Receivables
The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture subassemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. The Company does not reflect the sale of these components in products net sales. Rather, the Company recognizes any gain on these sales as a reduction of products cost of sales when the related final products are sold by the Company. As of December 30, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 50 % and 20 %. As of September 30, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 48 % and 23 %.
Note 5 – Condensed Consolidated Financial Statement Details
The following table shows the Company’s condensed consolidated financial statement details as of December 30, 2023 and September 30, 2023 (in millions):
Property, Plant and Equipment, Net
| December 30, 2023 | September 30, 2023 | ||||||||||
| Gross property, plant and equipment | $ | $ | |||||||||
Accumulated depreciation | ( | ( | |||||||||
| Total property, plant and equipment, net | $ | $ | |||||||||
Apple Inc. | Q1 2024 Form 10-Q | 9
Note 6 – Debt
Commercial Paper
The Company issues unsecured short-term promissory notes pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of December 30, 2023 and September 30, 2023, the Company had $2.0 billion and $6.0 billion of commercial paper outstanding, respectively. The following table provides a summary of cash flows associated with the issuance and maturities of commercial paper for the three months ended December 30, 2023 and December 31, 2022 (in millions):
| Three Months Ended | |||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||
| Maturities 90 days or less: | |||||||||||
| Repayments of commercial paper, net | $ | ( | $ | ( | |||||||
| Maturities greater than 90 days: | |||||||||||
| Repayments of commercial paper | ( | ||||||||||
| Total repayments of commercial paper, net | $ | ( | $ | ( | |||||||
Term Debt
As of December 30, 2023 and September 30, 2023, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $106.0 billion and $105.1 billion, respectively (collectively the “Notes”). As of December 30, 2023 and September 30, 2023, the fair value of the Company’s Notes, based on Level 2 inputs, was $96.7 billion and $90.8 billion, respectively.
Note 7 – Shareholders’ Equity
Share Repurchase Program
During the three months ended December 30, 2023, the Company repurchased 118 million shares of its common stock for $20.5 billion. The Company’s share repurchase program does not obligate the Company to acquire a minimum amount of shares. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Note 8 – Share-Based Compensation
Restricted Stock Units
A summary of the Company’s RSU activity and related information for the three months ended December 30, 2023 is as follows:
Number of RSUs (in thousands) | Weighted-Average Grant Date Fair Value Per RSU | Aggregate Fair Value (in millions) | |||||||||||||||
| Balance as of September 30, 2023 | $ | ||||||||||||||||
| RSUs granted | $ | ||||||||||||||||
| RSUs vested | ( | $ | |||||||||||||||
| RSUs canceled | ( | $ | |||||||||||||||
| Balance as of December 30, 2023 | $ | $ | |||||||||||||||
The fair value as of the respective vesting dates of RSUs was $7.7 billion and $6.8 billion for the three months ended December 30, 2023 and December 31, 2022, respectively.
Apple Inc. | Q1 2024 Form 10-Q | 10
Share-Based Compensation
The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of Operations for the three months ended December 30, 2023 and December 31, 2022 (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Share-based compensation expense | $ | $ | |||||||||||||||||||||
| Income tax benefit related to share-based compensation expense | $ | ( | $ | ( | |||||||||||||||||||
As of December 30, 2023, the total unrecognized compensation cost related to outstanding RSUs was $27.4 billion, which the Company expects to recognize over a weighted-average period of 2.9 years.
Note 9 – Contingencies
The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.
Note 10 – Segment Information and Geographic Data
The following table shows information by reportable segment for the three months ended December 30, 2023 and December 31, 2022 (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Americas: | |||||||||||||||||||||||
| Net sales | $ | $ | |||||||||||||||||||||
| Operating income | $ | $ | |||||||||||||||||||||
| Europe: | |||||||||||||||||||||||
| Net sales | $ | $ | |||||||||||||||||||||
| Operating income | $ | $ | |||||||||||||||||||||
| Greater China: | |||||||||||||||||||||||
| Net sales | $ | $ | |||||||||||||||||||||
| Operating income | $ | $ | |||||||||||||||||||||
| Japan: | |||||||||||||||||||||||
| Net sales | $ | $ | |||||||||||||||||||||
| Operating income | $ | $ | |||||||||||||||||||||
| Rest of Asia Pacific: | |||||||||||||||||||||||
| Net sales | $ | $ | |||||||||||||||||||||
| Operating income | $ | $ | |||||||||||||||||||||
Apple Inc. | Q1 2024 Form 10-Q | 11
A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three months ended December 30, 2023 and December 31, 2022 is as follows (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Segment operating income | $ | $ | |||||||||||||||||||||
| Research and development expense | ( | ( | |||||||||||||||||||||
| Other corporate expenses, net | ( | ( | |||||||||||||||||||||
| Total operating income | $ | $ | |||||||||||||||||||||
Apple Inc. | Q1 2024 Form 10-Q | 12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Item and other sections of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. For example, statements in this Form 10-Q regarding the potential future impact of macroeconomic conditions on the Company’s business and results of operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the 2023 Form 10-K under the heading “Risk Factors.” The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.
The following discussion should be read in conjunction with the 2023 Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.
Available Information
The Company periodically provides certain information for investors on its corporate website, www.apple.com, and its investor relations website, investor.apple.com. This includes press releases and other information about financial performance, information on environmental, social and governance matters, and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
Business Seasonality and Product Introductions
The Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday demand. Additionally, new product and service introductions can significantly impact net sales, cost of sales and operating expenses. The timing of product introductions can also impact the Company’s net sales to its indirect distribution channels as these channels are filled with new inventory following a product launch, and channel inventory of an older product often declines as the launch of a newer product approaches. Net sales can also be affected when consumers and distributors anticipate a product introduction.
Fiscal Period
The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. An additional week is included in the first fiscal quarter every five or six years to realign the Company’s fiscal quarters with calendar quarters, which occurred in the first quarter of 2023. The Company’s fiscal years 2024 and 2023 span 52 and 53 weeks, respectively.
Quarterly Highlights
The Company’s first quarter of 2024 included 13 weeks, compared to 14 weeks during the first quarter of 2023.
The Company’s total net sales increased 2% or $2.4 billion during the first quarter of 2024 compared to the same quarter in 2023, driven primarily by higher net sales of iPhone and Services, partially offset by lower net sales of iPad and Wearables, Home and Accessories.
During the first quarter of 2024, the Company announced an updated MacBook Pro® 14-in., MacBook Pro 16-in. and iMac®.
The Company repurchased $20.5 billion of its common stock and paid dividends and dividend equivalents of $3.8 billion during the first quarter of 2024.
Macroeconomic Conditions
Macroeconomic conditions, including inflation, changes in 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.
Apple Inc. | Q1 2024 Form 10-Q | 13
Segment Operating Performance
The following table shows net sales by reportable segment for the three months ended December 30, 2023 and December 31, 2022 (dollars in millions):
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | Change | |||||||||||||||||||||||||||||||||
| Net sales by reportable segment: | |||||||||||||||||||||||||||||||||||
| Americas | $ | 50,430 | $ | 49,278 | 2 | % | |||||||||||||||||||||||||||||
| Europe | 30,397 | 27,681 | 10 | % | |||||||||||||||||||||||||||||||
| Greater China | 20,819 | 23,905 | (13) | % | |||||||||||||||||||||||||||||||
| Japan | 7,767 | 6,755 | 15 | % | |||||||||||||||||||||||||||||||
| Rest of Asia Pacific | 10,162 | 9,535 | 7 | % | |||||||||||||||||||||||||||||||
| Total net sales | $ | 119,575 | $ | 117,154 | 2 | % | |||||||||||||||||||||||||||||
Americas
Americas net sales increased 2% or $1.2 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher net sales of Services and iPhone, partially offset by lower net sales of iPad. The strength in foreign currencies relative to the U.S. dollar had a net favorable year-over-year impact on Americas net sales during the first quarter of 2024.
Europe
Europe net sales increased 10% or $2.7 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher net sales of iPhone. The strength in foreign currencies relative to the U.S. dollar had a net favorable year-over-year impact on Europe net sales during the first quarter of 2024.
Greater China
Greater China net sales decreased 13% or $3.1 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to lower net sales of iPhone, iPad and Wearables, Home and Accessories. The weakness in the renminbi relative to the U.S. dollar had an unfavorable year-over-year impact on Greater China net sales during the first quarter of 2024.
Japan
Japan net sales increased 15% or $1.0 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher net sales of iPhone. The weakness in the yen relative to the U.S. dollar had an unfavorable year-over-year impact on Japan net sales during the first quarter of 2024.
Rest of Asia Pacific
Rest of Asia Pacific net sales increased 7% or $627 million during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher net sales of iPhone, partially offset by lower net sales of Wearables, Home and Accessories.
Apple Inc. | Q1 2024 Form 10-Q | 14
Products and Services Performance
The following table shows net sales by category for the three months ended December 30, 2023 and December 31, 2022 (dollars in millions):
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | Change | |||||||||||||||||||||||||||||||||
| Net sales by category: | |||||||||||||||||||||||||||||||||||
| iPhone | $ | 69,702 | $ | 65,775 | 6 | % | |||||||||||||||||||||||||||||
| Mac | 7,780 | 7,735 | 1 | % | |||||||||||||||||||||||||||||||
| iPad | 7,023 | 9,396 | (25) | % | |||||||||||||||||||||||||||||||
| Wearables, Home and Accessories | 11,953 | 13,482 | (11) | % | |||||||||||||||||||||||||||||||
| Services | 23,117 | 20,766 | 11 | % | |||||||||||||||||||||||||||||||
| Total net sales | $ | 119,575 | $ | 117,154 | 2 | % | |||||||||||||||||||||||||||||
iPhone
iPhone net sales increased 6% or $3.9 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher net sales of Pro models, partially offset by lower net sales of other models.
Mac
Mac net sales were relatively flat during the first quarter of 2024 compared to the same quarter in 2023.
iPad
iPad net sales decreased 25% or $2.4 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to lower net sales of iPad Pro, iPad 9th generation and iPad Air.
Wearables, Home and Accessories
Wearables, Home and Accessories net sales decreased 11% or $1.5 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to lower net sales of Wearables and Accessories.
Services
Services net sales increased 11% or $2.4 billion during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher net sales from advertising, video and cloud services.
Apple Inc. | Q1 2024 Form 10-Q | 15
Gross Margin
Products and Services gross margin and gross margin percentage for the three months ended December 30, 2023 and December 31, 2022 were as follows (dollars in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Gross margin: | |||||||||||||||||||||||
| Products | $ | 38,018 | $ | 35,623 | |||||||||||||||||||
| Services | 16,837 | 14,709 | |||||||||||||||||||||
| Total gross margin | $ | 54,855 | $ | 50,332 | |||||||||||||||||||
| Gross margin percentage: | |||||||||||||||||||||||
| Products | 39.4 | % | 37.0 | % | |||||||||||||||||||
| Services | 72.8 | % | 70.8 | % | |||||||||||||||||||
| Total gross margin percentage | 45.9 | % | 43.0 | % | |||||||||||||||||||
Products Gross Margin
Products gross margin increased during the first quarter of 2024 compared to the same quarter in 2023 due primarily to cost savings and a different Products mix, partially offset by the weakness in foreign currencies relative to the U.S. dollar and lower Products volume.
Products gross margin percentage increased during the first quarter of 2024 compared to the same quarter in 2023 due primarily to cost savings and a different Products mix, partially offset by the weakness in foreign currencies relative to the U.S. dollar.
Services Gross Margin
Services gross margin increased during the first quarter of 2024 compared to the same quarter in 2023 due primarily to higher Services net sales and a different Services mix.
Services gross margin percentage increased during the first quarter of 2024 compared to the same quarter in 2023 due primarily to a different Services mix.
The Company’s future gross margins can be impacted by a variety of factors, as discussed in Part I, Item 1A of the 2023 Form 10-K under the heading “Risk Factors.” As a result, the Company believes, in general, gross margins will be subject to volatility and downward pressure.
Apple Inc. | Q1 2024 Form 10-Q | 16
Operating Expenses
Operating expenses for the three months ended December 30, 2023 and December 31, 2022 were as follows (dollars in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Research and development | $ | 7,696 | $ | 7,709 | |||||||||||||||||||
| Percentage of total net sales | 6 | % | 7 | % | |||||||||||||||||||
| Selling, general and administrative | $ | 6,786 | $ | 6,607 | |||||||||||||||||||
| Percentage of total net sales | 6 | % | 6 | % | |||||||||||||||||||
| Total operating expenses | $ | 14,482 | $ | 14,316 | |||||||||||||||||||
| Percentage of total net sales | 12 | % | 12 | % | |||||||||||||||||||
Research and Development
Research and development (“R&D”) expense was relatively flat during the first quarter of 2024 compared to the same quarter in 2023.
Selling, General and Administrative
Selling, general and administrative expense increased 3% or $179 million during the first quarter of 2024 compared to the same quarter in 2023.
Provision for Income Taxes
Provision for income taxes, effective tax rate and statutory federal income tax rate for the three months ended December 30, 2023 and December 31, 2022 were as follows (dollars in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Provision for income taxes | $ | 6,407 | $ | 5,625 | |||||||||||||||||||
| Effective tax rate | 15.9 | % | 15.8 | % | |||||||||||||||||||
| Statutory federal income tax rate | 21 | % | 21 | % | |||||||||||||||||||
The Company’s effective tax rate for the first quarter of 2024 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, tax benefits from share-based compensation, and the impact of the U.S. federal R&D credit, partially offset by state income taxes.
The Company’s effective tax rate for the first quarter of 2024 was relatively flat compared to the same quarter in 2023.
Liquidity and Capital Resources
The Company believes its balances of cash, cash equivalents and unrestricted marketable securities, 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’s contractual cash requirements have not changed materially since the 2023 Form 10-K, except for manufacturing purchase obligations.
Manufacturing Purchase Obligations
The Company utilizes several outsourcing partners to manufacture subassemblies for the Company’s products and to perform final assembly and testing of finished products. The Company also obtains individual components for its products from a wide variety of individual suppliers. As of December 30, 2023, the Company had manufacturing purchase obligations of $38.0 billion, with $37.9 billion payable within 12 months.
Apple Inc. | Q1 2024 Form 10-Q | 17
Capital Return Program
In addition to its contractual cash requirements, the Company has an authorized share repurchase program. The program does not obligate the Company to acquire a minimum amount of shares. As of December 30, 2023, the Company’s quarterly cash dividend was $0.24 per share. The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.
Recent Accounting Pronouncements
Income Taxes
In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt ASU 2023-09 in its fourth quarter of 2026. ASU 2023-09 allows for adoption using either a prospective or retrospective transition method.
Segment Reporting
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which will require the Company to disclose segment expenses that are significant and regularly provided to the Company’s chief operating decision maker (“CODM”). In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. The Company will adopt ASU 2023-07 in its fourth quarter of 2025 using a retrospective transition method.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, “Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the 2023 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 2023 Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the Company’s market risk during the first three months of 2024. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2023 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of December 30, 2023 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the first quarter of 2024, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Apple Inc. | Q1 2024 Form 10-Q | 18
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Epic Games
Epic Games, Inc. (“Epic”) filed a lawsuit in the U.S. District Court for the Northern District of California (the “District Court”) against the Company alleging violations of federal and state antitrust laws and California’s unfair competition law based upon the Company’s operation of its App Store®. On September 10, 2021, the District Court ruled in favor of the Company with respect to nine out of the ten counts included in Epic’s claim. The District Court found that certain provisions of the Company’s App Store Review Guidelines violate California’s unfair competition law and issued an injunction enjoining the Company from prohibiting developers from including in their apps external links that direct customers to purchasing mechanisms other than Apple in-app purchasing. The injunction applies to apps on the U.S. storefront of the iOS and iPadOS® App Store. On April 24, 2023, the U.S. Court of Appeals for the Ninth Circuit (the “Circuit Court”) affirmed the District Court’s ruling. On June 7, 2023, the Company and Epic filed petitions with the Circuit Court requesting further review of the decision. On June 30, 2023, the Circuit Court denied both petitions. On July 17, 2023, the Circuit Court granted Apple’s motion to stay enforcement of the injunction pending appeal to the U.S. Supreme Court (the “Supreme Court”). On January 16, 2024, the Supreme Court denied both the Company’s and Epic’s petitions and the stay terminated. The Supreme Court’s denial of Epic’s petition confirms the District Court’s ruling in favor of the Company with respect to all of the antitrust claims. Following termination of the stay, the Company implemented a plan to comply with the injunction and filed a statement of compliance with the District Court. On January 31, 2024, Epic filed a notice with the District Court indicating its intent to dispute the Company’s compliance plan.
Masimo
Masimo Corporation and Cercacor Laboratories, Inc. (together, “Masimo”) filed a complaint before the U.S. International Trade Commission (the “ITC”) alleging infringement by the Company of five patents relating to the functionality of the blood oxygen feature in Apple Watch® Series 6 and 7. In its complaint, Masimo sought a permanent exclusion order prohibiting importation to the U.S. of certain Apple Watch models that include blood oxygen sensing functionality. On October 26, 2023, the ITC entered a limited exclusion order (the “Order”) prohibiting importation and sales in the U.S. of Apple Watch models with blood oxygen sensing functionality, which includes Apple Watch Series 9 and Apple Watch Ultra™ 2. The Company subsequently proposed a redesign of Apple Watch Series 9 and Apple Watch Ultra 2 to the U.S. Customs and Border Protection (the “CBP”) and appealed the Order. On January 12, 2024, the CBP found that the Company’s proposed redesign of Apple Watch Series 9 and Apple Watch Ultra 2 falls outside the scope of the Order, permitting the Company to import and sell the models in the U.S.
Other Legal Proceedings
The Company is subject to other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. The Company settled certain matters during the first quarter of 2024 that did not individually or in the aggregate have a material impact on the Company’s financial condition or operating results. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
Item 1A. Risk Factors
The Company’s business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the 2023 Form 10-K under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, the Company’s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. Except as set forth below, there have been no material changes to the Company’s risk factors since the 2023 Form 10-K.
The technology industry, including, in some instances, the Company, is subject to intense media, political and regulatory scrutiny, which exposes the Company to increasing regulation, government investigations, legal actions and penalties.
From time to time, the Company has made changes to its App Store, including actions taken in response to litigation, competition, market conditions and legal and regulatory requirements. The Company expects to make further business changes in the future. For example, in the U.S. the Company has implemented changes to how developers communicate with consumers within apps on the U.S. storefront of the iOS and iPadOS App Store regarding alternative purchasing mechanisms.
Apple Inc. | Q1 2024 Form 10-Q | 19
In January 2024, the Company announced changes to iOS, the App Store and Safari® in the European Union to comply with the Digital Markets Act (the “DMA”), including new business terms and alternative fee structures for iOS apps, alternative methods of distribution for iOS apps, alternative payment processing for apps across the Company’s operating systems, and additional tools and application programming interfaces (“APIs”) for developers. Although the Company’s compliance plan is intended to address the DMA’s obligations, it is still subject to potential challenge by the European Commission or private litigants. In addition, other jurisdictions may seek to require the Company to make changes to its business. While the changes introduced by the Company in the European Union are intended to reduce new privacy and security risks the DMA poses to European Union users, many risks will remain.
The Company is also currently subject to antitrust investigations in various jurisdictions around the world, which can result in legal proceedings and claims against the Company that could, individually or in the aggregate, have a materially adverse impact on the Company’s business, results of operations and financial condition. For example, the Company is the subject of investigations in Europe and other jurisdictions relating to App Store terms and conditions. If such investigations result in adverse findings against the Company, the Company could be exposed to significant fines and may be required to make further changes to its App Store business, all of which could materially adversely affect the Company’s business, results of operations and financial condition.
Further, the Company has commercial relationships with other companies in the technology industry that are or may become subject to investigations and litigation that, if resolved against those other companies, could materially adversely affect the Company’s commercial relationships with those business partners and materially adversely affect the Company’s business, results of operations and financial condition. For example, the Company earns revenue from licensing arrangements with other companies to offer their search services on the Company’s platforms and applications, and certain of these arrangements are currently subject to government investigations and legal proceedings.
There can be no assurance the Company’s business will not be materially adversely affected, individually or in the aggregate, by the outcomes of such investigations, litigation or changes to laws and regulations in the future. Changes to the Company’s business practices to comply with new laws and regulations or in connection with other legal proceedings can negatively impact the reputation of the Company’s products for privacy and security and otherwise adversely affect the experience for users of the Company’s products and services, and result in harm to the Company’s reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, and lost sales.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Share repurchase activity during the three months ended December 30, 2023 was as follows (in millions, except number of shares, which are reflected in thousands, and per-share amounts):
| Periods | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||||||||||||
October 1, 2023 to November 4, 2023: | ||||||||||||||||||||||||||
August 2023 ASRs | 6,498 | (2) | 6,498 | |||||||||||||||||||||||
| Open market and privately negotiated purchases | 45,970 | $ | 174.03 | 45,970 | ||||||||||||||||||||||
November 5, 2023 to December 2, 2023: | ||||||||||||||||||||||||||
| Open market and privately negotiated purchases | 33,797 | $ | 187.14 | 33,797 | ||||||||||||||||||||||
December 3, 2023 to December 30, 2023: | ||||||||||||||||||||||||||
| Open market and privately negotiated purchases | 31,782 | $ | 194.29 | 31,782 | ||||||||||||||||||||||
| Total | 118,047 | $ | 53,569 | |||||||||||||||||||||||
(1)As of December 30, 2023, the Company was authorized by the Board of Directors to purchase up to $90 billion of the Company’s common stock under a share repurchase program announced on May 4, 2023, of which $36.4 billion had been utilized. The program does not obligate the Company to acquire a minimum amount of shares. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
(2)In August 2023, the Company entered into accelerated share repurchase agreements (“ASRs”) to purchase up to a total of $5.0 billion of the Company’s common stock. In October 2023, the purchase periods for these ASRs ended and an additional 6 million shares were delivered and retired. In total, 29 million shares were delivered under these ASRs at an average repurchase price of $174.93 per share.
Apple Inc. | Q1 2024 Form 10-Q | 20
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements
On November 11, 2023 and November 27, 2023 , respectively, Luca Maestri , the Company’s Senior Vice President and Chief Financial Officer , and Katherine L. Adams , the Company’s Senior Vice President and General Counsel , each entered expire
Item 6. Exhibits
| Incorporated by Reference | ||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date/ Period End Date | ||||||||||||||||||||||
| 31.1* | ||||||||||||||||||||||||||
| 31.2* | ||||||||||||||||||||||||||
| 32.1** | ||||||||||||||||||||||||||
| 101* | Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. | |||||||||||||||||||||||||
| 104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. | |||||||||||||||||||||||||
* Filed herewith.
** Furnished herewith.
Apple Inc. | Q1 2024 Form 10-Q | 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: February 1, 2024 | Apple Inc. | ||||||||||
| By: | /s/ Luca Maestri | ||||||||||
| Luca Maestri | |||||||||||
| Senior Vice President, Chief Financial Officer | |||||||||||
Apple Inc. | Q1 2024 Form 10-Q | 22
Exhibit 31.1
CERTIFICATION
I, Timothy D. Cook, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Apple Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: February 1, 2024
| By: | /s/ Timothy D. Cook | ||||||||||
| Timothy D. Cook | |||||||||||
| Chief Executive Officer | |||||||||||
Exhibit 31.2
CERTIFICATION
I, Luca Maestri, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Apple Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: February 1, 2024
| By: | /s/ Luca Maestri | ||||||||||
| Luca Maestri | |||||||||||
| Senior Vice President, Chief Financial Officer | |||||||||||
Exhibit 32.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Timothy D. Cook, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Apple Inc. on Form 10-Q for the period ended December 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Apple Inc. at the dates and for the periods indicated.
Date: February 1, 2024
| By: | /s/ Timothy D. Cook | ||||||||||
| Timothy D. Cook | |||||||||||
| Chief Executive Officer | |||||||||||
I, Luca Maestri, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Apple Inc. on Form 10-Q for the period ended December 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Apple Inc. at the dates and for the periods indicated.
Date: February 1, 2024
| By: | /s/ Luca Maestri | ||||||||||
| Luca Maestri | |||||||||||
| Senior Vice President, Chief Financial Officer | |||||||||||
A signed original of this written statement required by Section 906 has been provided to Apple Inc. and will be retained by Apple Inc. and furnished to the Securities and Exchange Commission or its staff upon request.