Apple delivered solid Q2 results, driven by record Services revenue and resilient demand for its products. This performance comes at a pivotal moment as the company begins its leadership transition, with John Ternus set to succeed Tim Cook as CEO in September. Management emphasised operational continuity. While the face of leadership is changing, the core strategies regarding product innovation and capital allocation remain in place.
| Financial indicator | Q2 2025 (US$ million) | Q2 2026 (US$ million) | Percentage change |
| Revenue | 95,359 | 111,184 | +16.6% |
| Products | 68,714 | 80,208 | +16.7% |
| Services | 26,645 | 30,976 | +16.3% |
| Net income | 24,780 | 29,578 | +19.4% |
| Diluted earnings per share (US$) | 1.65 | 2.01 | +21.8% |
Apple posted a record March revenue quarter, underpinned by double-digit growth across developed and emerging markets amid a 2.5% foreign exchange tailwind. Despite constraints on iPhone and to a smaller extent on Mac, products revenue rose 16.7% year-on-year. The issue stemmed from limited supply of the advanced semiconductor nodes required for SoC (System-on-Chip) production. Without these impacts, quarterly revenue would have been higher.
Apple’s installed base of active devices reached an all-time high across all major product categories and regions to above 2.5 billion, led by high customer satisfaction. Services revenue recorded double-digit growth across developed and emerging markets and set all-time records across most categories.
As part of its US$600 billion commitment to boost its American supply chain, Apple is expanding its Houston manufacturing capabilities to produce Mac mini. The management spent US$11 billion on share buybacks and returned US$3.8 billion to shareholders as dividend. Cash dividend per share increased 4% to US$0.27. The company was in a net cash position of US$61.9 billion and the management plans to spend additional US$100 billion on share buybacks.
Revenue in Q3 2026 is expected to grow between 14% and 17% year-on-year amid supply constraints on Mac and given a tough comparison against the launches of A16-powered iPad in Q3 2025. Services revenue is forecast to increase at mid-teens without any foreign exchange tailwind. Gross margin is expected to hover between 47.5% and 48.5% despite significantly higher memory costs as well as research and development expenses.
Products
In Q2 2026:
- Revenue from iPhoneincreased 21.7% year-on-year to US$57.0 billion, driven by the iPhone 17 lineup.
- Mac revenue increased 5.7% year-on-year to US$8.4 billion, driven by higher-than-expected levels of demand for MacBook Neo, Mac mini, and Mac Studio.
- iPad revenue increased 8.0% year-on-year to US$6.9 billion, driven by M4-powered iPad Air, A16-powered iPad, and the M5-powered iPad Pro.
- Revenue from Wearables, home, and accessories increased 5.0% year-on-year to US$7.9 billion.
The number of iPhone and Mac upgraders as well as customers new to Mac reached a March record high. According to IDC, iPhone and Mac gained market shares during the quarter. Mac revenue from emerging markets including India and Indonesia grew double digits.
iPhone revenue achieved double-digit growth across most of the markets. According to Worldpanel, iPhone was a top-selling smartphone in the US, urban China, the UK, Australia, and Japan.
The solid revenue growth in iPad was driven by both developed and emerging markets, with notable double-digit growth in the latter including India, Mexico, and Thailand. More than half of the customers who purchased an iPad or an Apple Watch were new to the products.
Services
- In Q2 2026, both transacting and paid accounts continued to increase.
- Apple is strengthening its entertainment and sports offerings including Major League Soccer and Formula One to capture audiences and drive Services revenue.
- High levels of retail footfall were observed throughout the quarter as the company opened its sixth store in India.
- Tap to Pay is now available across over 50 markets.
Key analyst questions
Apple will no longer stick to being “net cash neutral” as its formal target after reducing net cash by over US$100 billion since 2018. Moving forward, to drive long-term value, the company will evaluate cash and debt levels and prioritise all necessary capital expenditures to support core operations and growth as well as return excess cash through dividends and share buybacks.
Overall gross margin improved from 48.2% in Q1 2026 to 49.3% in Q2 2026, driven by higher Services gross margin, lower tariff costs, and elevated memory inventory, though partially offset by higher memory prices and seasonal deleveraging. As such, products gross margin declined from 40.7% to 38.7% sequentially. Services gross margin increased from 76.5% to 76.7% over the same period, driven by business mix. Tariff costs during the quarter decreased sequentially due to lower product volume and the full-quarter impact of lower overall tariff rates.
Apple’s advertising revenue grew year-on-year during the quarter as it expanded App Store ad inventory by introducing new placements. By Q3 2026, Apple will introduce search ads to Apple Maps in the U.S. and Canada.
Revenue from Greater China grew 28.1% year-on-year in Q2 2026, primarily driven by iPhone. According to Cook, Mac mini and MacBook Air were the top-selling desktop and laptop respectively in China.
India remains a primary long-term growth driver as the world’s second-largest smartphone market. Over half of iPhone, Mac, iPad, and Apple Watch buyers in the region were new to the products.
The fifth perspective
Apple’s near-term performance will be driven by strong iPhone and Mac demand despite higher memory prices. With high customer retention and continued expansion into emerging markets, the growing installed base is expected to support Apple’s long-term revenue trajectory.
