Apple sells iPhones, computers and other devices, then earns additional revenue from services such as cloud storage, advertising and the App Store. In fiscal 2026, ended September 26, stronger iPhone sales helped operating profit reach $158.1 billion, while operating cash flow rose to $145.1 billion. That gives Apple room to develop and deliver more capable AI services, even as development costs rise and more money is committed to components and licensed rights.
Research cutoff: November 4, 2026, New York time. Annual figures below cover fiscal 2026 unless another period is stated.
Source: Apple FY2026 Form 10-K, Item 7, pp. 25–28; consolidated statements, pp. 32 and 36.
1. iPhone supplied most of the growth, while China recovered
iPhone generated 71% of Apple’s annual revenue increase. Total sales rose 15.1%, considerably faster than the previous year’s 6.4%. Apple attributed the iPhone increase to higher sales of Pro models and the Mac increase to laptops. This points to stronger Pro-phone and laptop sales. The filing does not separate how much came from selling more devices, changing prices or selling a different mix of models.
The three-year comparison shows where the improvement was concentrated. Services continued to grow, while iPad and Wearables, Home and Accessories were almost unchanged in 2026.
| Revenue, US$ billions | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| iPhone | 201.183 | 209.586 | 254.098 |
| Mac | 29.984 | 33.708 | 37.929 |
| iPad | 26.694 | 28.023 | 27.929 |
| Wearables, Home and Accessories | 37.005 | 35.686 | 35.577 |
| Services | 96.169 | 109.158 | 123.301 |
| Total | 391.035 | 416.161 | 478.834 |
Source: Apple FY2026 Form 10-K, Item 7, “Products and Services Performance,” p. 26; Note 2, p. 39. All three years contain 52 weeks. The 71% contribution is calculated from iPhone’s $44.512 billion increase divided by Apple’s $62.673 billion increase.
Services added another $14.143 billion of revenue, mainly from advertising and cloud services. Apple’s advertising category includes payments from other companies to distribute their services, as well as Apple’s own advertising platforms. It therefore reaches beyond advertisements that Apple sells directly.
The geographic recovery was also meaningful. Greater China revenue rose 28.0% after declining in 2025, and exceeded the $67.0 billion recorded in 2024. Apple attributed the improvement mainly to iPhone and Mac, with a stronger renminbi helping the dollar comparison.
| Geographic revenue, US$ billions | FY2025 | FY2026 |
|---|---|---|
| Americas | 178.353 | 198.083 |
| Europe | 111.032 | 127.604 |
| Greater China | 64.377 | 82.378 |
| Japan | 28.703 | 30.908 |
| Rest of Asia Pacific | 33.696 | 39.861 |
Source: Apple FY2026 Form 10-K, Item 7, “Segment Operating Performance,” p. 25.
Every region grew. Americas and Europe both benefited from iPhone, Services and Mac. Currency movements helped Europe; this reporting region also includes India, the Middle East and Africa. Greater China includes mainland China, Hong Kong and Taiwan.
These are Apple’s sales to its customers and distribution partners. About 60% of annual revenue passed through indirect channels, including carriers and resellers, and most product revenue is recorded when goods ship. These amounts measure revenue Apple records from customers and distributors; they include direct customer purchases but do not measure final consumer purchases from distributors and resellers.
Source: Apple FY2026 Form 10-K, Item 1, “Services,” “Segments,” and “Markets and Distribution,” p. 2; Item 7, pp. 25–26; Note 2, p. 38.
2. Higher gross profit covered the research increase, but the final quarter was tighter
Apple kept more operating profit from each dollar of annual sales despite a much larger research bill. Operating margin—sales left after product, service and operating costs, before interest and income taxes—rose from 32.0% to 33.0%.
The improvement began with the amount Apple retained after supplying its products and services. Product gross margin rose from 36.8% to 39.3%. Apple cited a better product mix and tariff refunds, partly offset by higher costs, including memory. Services gross margin rose from 75.4% to 76.2%, helped by the mix of services sold.
| Reported consolidated results | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Operating profit, US$ billions | 123.216 | 133.050 | 158.063 |
| Operating margin | 31.5% | 32.0% | 33.0% |
| Net income, US$ billions | 93.736 | 112.010 | 132.175 |
| Net income as a share of revenue | 24.0% | 26.9% | 27.6% |
| Diluted earnings per share, US$ | 6.08 | 7.46 | 8.98 |
Source: Apple FY2026 Form 10-K, consolidated statement of operations, p. 32; Item 7, “Gross Margin,” p. 27. Margins are calculated from the reported amounts.
Services supplied 40.2% of gross profit while representing 25.8% of revenue. That makes it an important contributor to company-wide spending. But its 76.2% gross margin is not a standalone operating margin: Apple records third-party app sales through the App Store as only the commission it retains, whereas hardware revenue generally includes the device’s full selling price. Apple also reports research spending centrally rather than assigning it to Services and Products.
Apple’s research and development expense rose 32.5%, to $45.765 billion from $34.550 billion. Management attributed the increase mainly to infrastructure costs, including AI investment, and employee-related expenses. The extra gross profit was large enough to cover that increase and higher selling and administrative expenses. The precise operating-profit bridge appears in the calculation notes.
Source: Apple FY2026 Form 10-K, Item 7, p. 27; Note 2, p. 38; Note 14, p. 52. Services’ revenue and gross-profit shares are calculated from the consolidated totals.
Tariff refunds deserve separate treatment. Apple records refunds received as a reduction in product costs. They improve reported profit, but do not establish that producing the next device has become cheaper. The annual filing does not provide the full-year refund amount needed to separate that benefit. All annual earnings figures here include the refunds.
The September quarter also shows that the annual improvement was not continuing at the same pace. In this three-month period, sales grew faster than operating profit, and operating margin declined. Research expense rose to $11.730 billion from $8.866 billion.
| September quarter, consolidated | FY2025 fourth quarter | FY2026 fourth quarter |
|---|---|---|
| Revenue, US$ billions | 102.466 | 114.477 |
| Operating profit, US$ billions | 32.427 | 35.631 |
| Operating margin | 31.6% | 31.1% |
Apple reported a 47.9% gross margin for that quarter, including an approximately one-percentage-point benefit from tariff refunds. The combination of that benefit and a lower operating margin makes rising development costs a concrete issue for the next period, even though annual profit improved strongly.
Sources: Apple FY2026 Form 10-K, Item 7, “Tariffs and Other Measures,” p. 25; Apple fourth-quarter results, November 2, 2026; fourth-quarter financial statements, p. 1. The table is quarterly, not annual; operating margins are calculated.
Income taxes absorbed part of the annual operating improvement. Apple’s effective tax rate rose to 17.0% from 15.6%, mainly because of the rate on foreign earnings, foreign-currency tax rules and a favorable item in the prior year. Net income still increased 18.0%. The longer comparison also needs context: 2024 included a $10.246 billion net income-tax charge from the European Commission’s Irish state-aid case, while 2025 included a $486 million tax benefit associated with that decision. Those items affected income tax, not operating profit.
Source: Apple FY2026 Form 10-K, Item 7, “Provision for Income Taxes,” p. 28; Note 8, pp. 44–45. All earnings in the table remain reported GAAP amounts.
3. Apple’s AI plan reaches beyond the money spent on equipment
Lower equipment spending did not mean Apple’s technology expansion became cheaper. Cash purchases of property and equipment fell to $9.041 billion from $12.715 billion. At the same time, research expense rose, licensed assets expanded and Apple continued to depend on both its own and outside computing capacity.
Management’s purpose is to make Apple devices more useful through an assistant that can understand personal information and take actions across applications. Its January 2026 agreement with Google provides a technological foundation: the companies said Apple’s next generation of underlying AI software would use Gemini models and cloud technology. Apple Intelligence would continue running on Apple devices and Private Cloud Compute, Apple’s system for processing requests on servers. This approach combines outside model technology with Apple’s control over the device and user experience. The agreement does not disclose its price.
Sources: Apple FY2026 Form 10-K, Item 1, pp. 3–4; consolidated cash-flow statement, p. 36; Google and Apple joint statement, January 12, 2026; Apple’s Siri AI announcement, June 8, 2026, architecture and availability sections.
Apple took a further step on November 3 by opening a Siri AI integration preview to all developers. The preview lets developers connect app content and actions to Siri; Apple described a customer rollout in a few months and App Store submissions opening in spring. This could give customers more reasons to use Apple devices throughout the day, provided developers build useful integrations and those integrations work reliably.
The commercial model is still developing. Apple says expanded access to certain server-based AI features will carry a fee in the future, but the announcement gives no price or revenue forecast. It also says Siri AI remains unavailable on iPhone, iPad and Apple Watch in the EU. The preview therefore supports a broader future service opportunity, with timing and geographic limits, rather than an established new source of annual revenue.
Source: Apple Developer, “Siri AI is now open to all developers,” November 3, 2026, preview timing and availability notes. These developments occurred after the fiscal year-end and are plans or preview features, not FY2026 financial results.
The balance sheet shows a wider investment burden. Assets representing licenses and other intangible rights nearly doubled, from $13.301 billion to $25.700 billion, including both current and non-current amounts. Most of the increase came from licensed rights, whose net value rose from $9.179 billion to $20.943 billion. Apple does not identify how much of these licenses relates to AI, entertainment content or other technology, so they cannot all be assigned to Siri or Google.
These rights will continue to affect profit as Apple uses them. Apple expects $6.617 billion of amortization in fiscal 2027 on intangible assets already held at year-end. Amortization is the gradual recording of those assets’ cost as an expense. The scheduled amount is about $1.7 billion above the $4.9 billion expense recorded in 2026, before considering future additions or other changes.
The $20.278 billion intangible line on the balance sheet excludes $5.422 billion classified as current assets. Both portions must be included to see the full scale. Meanwhile, the net value of buildings, equipment and internal-use software rose from $49.834 billion to $52.084 billion. Apple is expanding the resources it uses, through several accounting categories; equipment purchases alone cannot measure the cost of its AI strategy.
Source: Apple FY2026 Form 10-K, Notes 5–6, pp. 42–43; consolidated balance sheets, p. 34. The 2027 amortization amount is a disclosed schedule for existing assets, not a forecast of Apple’s total expenses or cash investment.
4. More cash is tied up in components before devices can be sold
Components accounted for 94% of the inventory increase. Apple ended the year with $14.541 billion of inventory, compared with $5.718 billion a year earlier. Finished devices grew much less than the parts used to make them.
| Operating balances, US$ billions | September 27, 2025 | September 26, 2026 |
|---|---|---|
| Components held in inventory | 2.124 | 10.447 |
| Finished goods held in inventory | 3.594 | 4.094 |
| Customer receivables | 39.777 | 43.817 |
| Amounts owed by manufacturing vendors | 33.180 | 39.896 |
| Amounts owed to suppliers | 69.860 | 82.252 |
Source: Apple FY2026 Form 10-K, consolidated balance sheets, p. 34; Note 4, “Accounts Receivable,” p. 42; Note 7, “Inventories,” p. 43. The 94% calculation compares the $8.323 billion component increase with the $8.823 billion total inventory increase.
The component balance is especially relevant because Apple says memory, storage and advanced semiconductors are becoming harder or more expensive to obtain. It expects the memory and storage pressures to intensify. The inventory disclosure does not separate higher quantities from higher prices or identify a deliberate stockpiling program. What it establishes is that more resources are committed to parts that still have to move through production and sale.
Samsung’s October 29 results provide useful outside evidence. Its mobile business reported higher sales from new flagship models, while higher memory costs remained a burden. Samsung also expected memory demand to exceed supply in 2027 and planned to emphasize advanced memory products. That is a supplier’s outlook, not a prediction of Apple’s purchasing price, but it supports the pressure Apple itself describes. Samsung’s premium-phone growth also shows that Apple’s competitors are pursuing the same higher-end customers.
Sources: Apple FY2026 Form 10-K, Item 7, “Macroeconomic Conditions,” p. 24; Note 13, p. 51; Samsung Electronics third-quarter results, October 29, 2026, Mobile eXperience discussion and 2027 memory outlook. Samsung is used for operating context; its accounting margins are not compared with Apple’s.
Money owed by manufacturing vendors is another part of the production process. Apple buys components and sells them to companies that assemble its products. The resulting receivable is money those manufacturers owe Apple; these component transfers are not recorded as ordinary product revenue. Two vendors accounted for 45% and 27% of that balance, making collection dependent on a small number of manufacturing relationships.
Customer collections also matter. Trade receivables rose by $4.040 billion, and one customer represented 13% of the year-end balance. Carriers accounted for 33%. Apple obtains collateral or other credit support from some customers, but the filing does not disclose a collection problem explaining these increases.
Supplier bills provided an offset: accounts payable rose by $12.392 billion. That helps cash temporarily because Apple has not yet paid all the costs it has incurred. It does not remove the eventual payment obligation.
Apple had also committed to $89.7 billion of manufacturing purchases, including $82.7 billion due within twelve months. These commitments help arrange future production, but require cash and leave Apple exposed if product demand disappoints or component prices rise further. They are operating purchase commitments, not the same thing as bank or bond debt.
Source: Apple FY2026 Form 10-K, Note 4, p. 42; Item 7, “Manufacturing Purchase Obligations,” p. 28; consolidated balance sheets, p. 34.
5. Operating cash covered shareholder payments and left room to reduce debt
Operating cash covered equipment purchases, dividends and repurchases, leaving $33.9 billion. A year earlier, the same calculation showed a $7.4 billion shortfall. This is the clearest evidence that Apple had more funding flexibility in 2026.
| Cash generation and allocation, US$ billions | FY2025 | FY2026 |
|---|---|---|
| Cash generated by operations | 111.482 | 145.097 |
| Cash purchases of property and equipment | 12.715 | 9.041 |
| Free cash flow, as defined below | 98.767 | 136.056 |
| Cash dividends and dividend equivalents paid | 15.421 | 15.721 |
| Cash paid for share repurchases | 90.711 | 86.390 |
| Remainder after these payments | -7.365 | 33.945 |
Calculation notes: Free cash flow here means operating cash flow minus cash payments to acquire property, plant and equipment. It is a calculated, non-GAAP measure. It does not deduct every form of investment separately; payments already included in operating cash flow remain included. The last row subtracts paid dividends and paid repurchases from this defined free cash flow.
Source: Apple FY2026 Form 10-K, consolidated cash-flow statement, p. 36. Cash payments differ from amounts authorized, declared or recorded in shareholders’ equity.
Profit growth was the largest contributor to the cash improvement, but payment timing also helped. After allowing for money Apple still owed, the cash tied up in unpaid customer and vendor bills, inventory and other operating assets increased by $14.9 billion. That was less than the $25.0 billion increase in 2025. Growth in unpaid supplier bills and other liabilities helped offset the cash committed to those assets.
Taxes show why cash and profit can move differently. Cash income-tax payments fell from approximately $43.4 billion to $34.588 billion, even though the income-tax expense in the earnings statement increased. Payments can settle taxes recorded in another period. The lower payments helped this year’s cash flow; the calculation notes keep that timing effect within the overall cash reconciliation.
Apple also added back $13.789 billion of share-based compensation when calculating operating cash flow. That expense did not require an equivalent operating cash payment, but employees received share awards that can increase the share count. These awards still have a cost to shareholders because new shares spread earnings across more owners. Repurchases can offset that effect, but require cash.
Sources: Apple FY2026 Form 10-K, consolidated cash-flow statement, p. 36; Note 8, “Cash Paid for Income Taxes,” p. 47; Note 12, p. 50. The profit-to-cash calculation is reproduced in the end notes.
Apple used its funding capacity to repay $12.396 billion of term debt and a net $5.911 billion of commercial paper, without issuing new term debt. It also bought more investment securities than matured or were sold. After all operating, investing and financing movements, cash increased by only $371 million. The small change in the bank balance reflects these uses of cash, rather than weak cash generation.
Source: Apple FY2026 Form 10-K, consolidated cash-flow statement, p. 36.
6. The financial cushion improved, although future bills extend beyond borrowings
Apple reduced financing debt while increasing its cash and marketable investments. Debt here means bonds and commercial paper, the short-term notes Apple issues to borrow money. The comparison uses the amounts recorded on the balance sheet.
| Financial resources and borrowing, US$ billions | September 27, 2025 | September 26, 2026 |
|---|---|---|
| Cash and all marketable securities | 132.420 | 136.935 |
| Commercial paper and term debt | 98.657 | 80.111 |
| Financial assets minus financing debt | 33.763 | 56.824 |
| Cash plus short-term marketable securities | 54.697 | 56.722 |
Calculation notes: The third row is a calculated cushion that excludes leases and operating obligations. Apple still needs resources to pay those other bills. The fourth row is a subset of the first, not an additional asset.
Cash and short-term securities compare with about $10.0 billion of bond principal due in fiscal 2027 and $2.0 billion of commercial paper due within twelve months. A further $9.3 billion of bond principal comes due in 2028. This gives Apple room to repay approaching maturities without an immediate need to replace them with new borrowing.
Source: Apple FY2026 Form 10-K, consolidated balance sheets, p. 34; Note 4, pp. 40–41; Note 10, pp. 48–49. Longer-term marketable securities are investments classified by maturity, not bank cash. Debt principal and carrying values differ because of issuance costs, discounts and hedge adjustments.
Interest and leases add ongoing costs. Contractual future interest on the notes totals $34.4 billion, with $2.4 billion due within twelve months. The bonds are not secured against specific assets. Agreements with financial counterparties make the interest cost on part of the borrowing move with market rates, even though the bonds themselves have fixed rates. Commercial paper had a year-end weighted-average interest rate of 3.80%.
Fixed lease commitments totaled approximately $17.8 billion, including leases not yet started, with $2.8 billion payable within twelve months. Those fixed payments do not capture all lease costs. Variable lease expense was $17.7 billion in 2026, up from $16.1 billion. The filing does not identify all of that cost as AI infrastructure, but it illustrates why purchasing equipment is only one way Apple pays for the resources it uses.
Source: Apple FY2026 Form 10-K, Item 7, “Debt” and “Leases,” p. 28; Notes 9–10, pp. 47–49. Lease cash commitments, discounted balance-sheet liabilities and annual lease expense measure different things.
Apple also owed more outside its borrowing programs. Other liabilities due beyond one year rose from $41.5 billion to $54.3 billion. The filing does not fully explain that increase. Within other short-term liabilities, income taxes payable fell from $13.0 billion to $5.3 billion, but growth in other bills largely offset that decline. Total liabilities rose by $6.9 billion despite the debt reduction.
Apple also recorded more assets outside inventory and equipment. Other short-term assets rose by $4.3 billion, mostly because of the increase in current licensed rights. Other long-term assets rose by $5.5 billion even as recorded future tax benefits in that category declined slightly. Together with the wider increase in obligations, this shows that lower financing debt did not mean the rest of Apple’s business needed fewer resources.
Source: Apple FY2026 Form 10-K, consolidated balance sheets, p. 34; Notes 6–7, pp. 43–44. Current licensed rights are included in other current assets; non-current intangible assets are presented separately.
Apple’s capital-return program remained substantial but flexible. The company authorized another $100 billion of repurchases in April and increased its quarterly dividend to $0.27. The authorization does not require Apple to buy a minimum number of shares. That discretion is useful if investment or supply costs rise faster than cash generation.
Repurchases removed about 296.7 million shares from the outstanding count, while net issuance added 55.7 million. The resulting decline was 241.0 million shares. The weighted-average diluted share count fell 1.9%, helping earnings per share grow 20.4%, faster than the 18.0% increase in net income. Repurchases thus increased each remaining share’s portion of earnings, while using cash that could otherwise support other company needs.
Shareholders’ equity—the accounting amount left after subtracting liabilities from assets—rose from $73.7 billion to $112.1 billion. Profit and additions from shares and share awards more than covered repurchases, dividends, employee tax withholding and valuation losses recorded outside profit. The calculation notes reconcile those movements and distinguish shares outstanding from employee awards.
Source: Apple FY2026 Form 10-K, Item 7, “Capital Return Program,” p. 28; consolidated shareholders’ equity statement, p. 35; Notes 3, 11 and 12, pp. 39 and 49–50.
7. Changes to App Store and search rules could affect an important profit source
The main regulatory business risk is a change in how Apple earns service revenue. Fines matter, but restrictions on commissions, payment choices and search-distribution agreements can alter money Apple earns repeatedly.
The European Commission’s €500 million fine in April 2025 concerned Apple’s restrictions on developers directing customers to other offers. Apple has appealed and continues to change its compliance arrangements. A separate investigation into contractual terms for alternative app distribution remained unresolved in the filing. The law permits substantial penalties for violations, including fines up to 10% of annual worldwide sales in the circumstances described by Apple; that ceiling is not an estimate of a likely loss.
The U.S. Epic Games case also concerns customers paying outside Apple’s system. Apple says an injunction still prevents it from charging commissions on purchases completed through external links in third-party iPhone and iPad apps. In December 2025, the appeals court said some commission could be permitted and sent the terms back to the lower court. The Supreme Court is now reviewing the standard for civil contempt—failure to obey a court order. The outcome matters because it could change which fees Apple can collect.
Sources: Apple FY2026 Form 10-K, Item 1A, p. 16, and Item 3, pp. 20–21; European Commission decision announcement, April 23, 2025. Current case status here follows Apple’s November 3 filing.
Search payments are another exposure within advertising revenue. The September 2025 Google remedies restricted exclusive distribution arrangements. Apple’s filing says both Google and the Justice Department appealed, and warns that further remedies could impair its ability to earn search-licensing revenue. Apple does not disclose a separate current-year profit figure for these payments, so the report does not assign a precise earnings loss to a possible legal outcome.
Google’s AI collaboration with Apple is a different arrangement from payments for search distribution. Access to Google’s model technology does not offset or resolve the legal risk to search revenue. Separately, the Justice Department’s smartphone case against Apple seeks changes to allegedly anticompetitive conduct, and related private cases seek damages and other relief. These matters could affect how Apple connects devices, applications and services, as well as impose legal costs.
Sources: Apple FY2026 Form 10-K, Item 1A, competition-law discussion, pp. 16–17; Item 3, p. 21; U.S. Department of Justice, Google remedies announcement, September 2, 2025; Google and Apple joint statement, January 12, 2026.
Apple’s contingency note says management did not identify a reasonably possible material loss, or a material loss beyond recorded accruals, for asserted legal and other claims. That assessment does not eliminate the risk that future rules change the business model. The filing also says fourth-quarter settlements were not material individually or together.
Tax disputes remain a separate financial exposure. Apple had claimed tax benefits whose acceptance remained uncertain, so it had not treated them all as final tax savings in its accounts. That gross amount was $22.487 billion, down from $23.242 billion. If accepted, $10.6 billion of the ending amount would reduce the reported tax rate. The amount is not a forecast of a new cash fine. The company continues to face examinations in the United States and major foreign jurisdictions, and its auditor identified these judgments as a critical audit matter.
Source: Apple FY2026 Form 10-K, Item 3, p. 21; Note 8, p. 46; Note 13, p. 51; independent auditor’s report, pp. 54–55.
8. Apple can finance the expansion; earning back its growing costs is the next test
Apple entered the next fiscal year with greater capacity to fund investment and absorb operating pressure. Its stronger device business and large Services contribution produced more profit, while cash generation supported shareholder payments and debt reduction. The financial statements show sufficient funding strength to pursue the AI rollout without depending on an immediate increase in borrowing.
The harder business question is how much additional profit that rollout can produce. Useful app integrations and paid access could deepen customers’ use of Apple products. Their contribution will depend on adoption, availability and the cost of serving each request. Meanwhile, more expensive components and the scheduled recognition of license costs will consume part of the benefit from higher sales.
The September quarter’s lower operating margin is the clearest counterweight to the strong annual result. Sustained device demand and additional service revenue would help Apple absorb its larger cost base. If those gains arrive slowly while computing and component costs rise, Apple’s financial cushion would remain valuable, but a smaller part of each extra sales dollar would reach profit and cash available for other uses.
Sources: Apple FY2026 Form 10-K, Item 7, pp. 24–28; Notes 6, 10 and 13, pp. 43, 48–49 and 51; fourth-quarter financial statements, p. 1; Apple Developer announcement, November 3, 2026. The business effects described in this conclusion are conditional assessments.
Reporting basis and calculation notes
Reporting basis: Apple Inc., CIK 0000320193; Form 10-K; accession 0000320193-26-000026, filed November 3, 2026. Fiscal 2026 ran from September 28, 2025, through September 26, 2026. Fiscal 2025 and fiscal 2024 ended September 27, 2025, and September 28, 2024. Each contained 52 weeks. The accounts combine Apple and its wholly owned subsidiaries under U.S. generally accepted accounting principles, or GAAP. Prior-period amounts are taken from the FY2026 presentation, which reclassifies certain items for comparability. Inventory uses first-in, first-out costing, which assigns the oldest purchase costs to goods sold first.
Sources: SEC submissions record; Apple FY2026 Form 10-K, cover and Note 1, p. 37; SEC company facts. Checks against the SEC’s computer-readable financial data, called XBRL, use the selected accession, consolidated facts, actual annual start/end dates and USD units. Share facts use shares; earnings-per-share facts use USD per share. The filing’s financial statements present dollars in millions and share counts in thousands; tables above convert dollars to billions.
Reporting basis: The research cutoff is November 4, 2026, New York time. The latest Apple materials used are the November 3 filing and developer announcement; financial results were released November 2. The supplier and regulatory sources carry their own dates beside the relevant discussion. This is a review of those identified materials, not a claim that every announcement through the cutoff was surveyed.
Calculation notes: Growth means the current-period amount divided by the comparable prior-period amount, minus one. Margin means the relevant profit divided by revenue. A margin change is expressed in percentage points. The tables below use US$ billions unless stated otherwise; differences may be obscured when narrative amounts are rounded.
A. How the increase in operating profit reconciles
| Annual operating-profit bridge, US$ billions | Amount |
|---|---|
| FY2025 operating profit | 133.050 |
| Increase in gross profit | +38.401 |
| Increase in research, selling and administrative expenses | -13.388 |
| FY2026 operating profit | 158.063 |
Calculation notes: Gross profit increased by $26.772 billion for Products and $11.629 billion for Services. Research expense increased by $11.215 billion and selling, general and administrative expense by $2.173 billion. These components reconcile the two signed changes above. The bridge retains tariff refunds and all other items included in reported operating profit.
Source: Apple FY2026 Form 10-K, pp. 27 and 32.
B. Why operating cash differed from net income
| Annual profit-to-cash reconciliation, US$ billions | FY2025 | FY2026 |
|---|---|---|
| Net income | 112.010 | 132.175 |
| Depreciation and amortization | +11.698 | +13.423 |
| Share-based compensation expense | +12.863 | +13.789 |
| Other reconciliation adjustments | -0.089 | +0.568 |
| Changes in operating assets and liabilities | -25.000 | -14.858 |
| Operating cash flow | 111.482 | 145.097 |
Calculation notes: For FY2026, increases in customer receivables used $3.994 billion; manufacturing-vendor receivables used $6.716 billion; inventory used $8.905 billion; and other operating assets used $21.117 billion. Changes in accounts payable provided $12.171 billion, and other operating liabilities provided $13.703 billion. Together these six movements used $14.858 billion. Cash-flow movements need not equal simple balance-sheet changes because noncash and other accounting movements can affect the latter.
Calculation notes: The $33.615 billion increase in operating cash consists of $20.165 billion more net income, $3.308 billion more reconciliation adjustments and $10.142 billion less cash used by operating asset and liability movements. Lower cash taxes are already reflected in this reconciliation.
Calculation notes: For fiscal 2026, opening cash of $35.934 billion + operating inflow of $145.097 billion − investing outflow of $17.280 billion − financing outflow of $127.446 billion = closing cash of $36.305 billion. Investing outflow comprises $5.850 billion of net security purchases, $9.041 billion of property and equipment purchases and $2.389 billion of other investing outflow. The cash-flow statement’s cash-and-restricted-cash totals match the balance-sheet cash totals at both endpoints; no extra restricted-cash amount is added.
Source: Apple FY2026 Form 10-K, consolidated cash-flow statement, p. 36.
C. Balance-sheet and ownership checks
| Balance-sheet identity, US$ billions | September 27, 2025 | September 26, 2026 |
|---|---|---|
| Total assets | 359.241 | 404.548 |
| Total liabilities | 285.508 | 292.455 |
| Shareholders’ equity | 73.733 | 112.093 |
| Liabilities plus shareholders’ equity | 359.241 | 404.548 |
Calculation notes: The $45.307 billion increase in assets equals the $6.947 billion increase in liabilities plus the $38.360 billion increase in equity. Other current assets include current licensed rights, so those rights must not be added to total assets again.
| FY2026 shareholders’ equity reconciliation, US$ billions | Amount |
|---|---|
| Opening equity | 73.733 |
| Net income | +132.175 |
| Common stock issued | +1.603 |
| Share-based compensation credited to equity | +14.562 |
| Shares withheld for employee taxes, both equity accounts | -6.940 |
| Dividends and equivalents declared | -15.704 |
| Repurchases recorded in equity | -86.485 |
| Other comprehensive loss | -0.851 |
| Closing equity | 112.093 |
Calculation notes: Common stock and paid-in capital records additions from issuing shares and share awards. It reconciles as $93.568 billion + $1.603 billion issued − $4.918 billion withheld + $14.562 billion of share-based compensation = $104.815 billion.
Calculation notes: Retained earnings records accumulated profits after distributions and other assigned changes. Its reconciliation is −$14.264 billion opening deficit + $132.175 billion profit − $15.704 billion declared dividends − $2.022 billion withheld for employee taxes − $86.485 billion repurchases = $13.700 billion.
Calculation notes: Some investment, currency and hedging gains or losses are recorded in equity outside current profit. The accumulated balance of these losses increased from $5.571 billion to $6.422 billion. The $0.851 billion additional loss comprises a $1.407 billion loss on marketable debt securities, partly offset by $0.544 billion from derivatives and $0.012 billion from currency translation, all after tax. These movements affected equity outside the current net-income total.
Calculation notes: Apple reports no separate treasury-share balance on these balance sheets. The equity statement’s repurchase, dividend and compensation entries are not substitutes for cash payments. Note 11 separately reports $85.8 billion spent to repurchase approximately 297 million shares, while the cash-flow statement reports $86.390 billion of repurchase payments. The report preserves each source’s scope instead of treating these amounts as interchangeable.
Calculation notes: Outstanding shares, in millions, reconcile as 14,773.260 − 296.699 repurchased + 55.698 net issued = 14,532.259. Dividing FY2026 net income of $132,175 million by the prior year’s diluted average of 15,004.697 million shares produces approximately $8.81 per share. Using the actual 14,720.306 million diluted average produces approximately $8.98. The roughly $0.17 difference shows the effect of dividing the same profit among fewer shares. It is a calculation, not a forecast; repurchases and employee share issuance both affect the share count.
Sources: Apple FY2026 Form 10-K, consolidated statements, pp. 33–36; Notes 3, 11 and 12, pp. 39 and 49–50.
D. When borrowing and other commitments require payment
| Note principal due, US$ billions | Amount |
|---|---|
| Fiscal 2027 | 9.991 |
| Fiscal 2028 | 9.300 |
| Fiscal 2029 | 5.175 |
| Fiscal 2030 | 4.956 |
| Fiscal 2031 | 3.750 |
| Thereafter | 45.506 |
| Total note principal | 78.678 |
Calculation notes: Note principal of $78.678 billion − $0.277 billion of net discounts and issuance costs − $0.287 billion of hedge accounting adjustments = $78.114 billion of term-debt carrying value. Adding $1.997 billion of commercial paper gives the $80.111 billion financing-debt total used above. Contractual interest is additional to principal. Note 10 does not give a numerical test of how close Apple is to limits set by its debt contracts. The funding assessment uses disclosed cash, debt and payment schedules.
Calculation notes: Undiscounted payments on leases already started total $17.129 billion. Removing $2.761 billion representing the financing cost of paying over time gives $14.368 billion of recorded lease liabilities. Adding $0.644 billion of commitments for leases not yet started to the undiscounted schedule gives $17.773 billion, which rounds to management’s $17.8 billion total fixed commitment.
Calculation notes: Other purchase obligations were $27.3 billion, including $9.9 billion due within twelve months, in addition to the disclosed manufacturing commitments. Note 13’s $24.844 billion schedule covers unconditional purchase obligations with remaining terms longer than one year. It is a different scope, not another amount to add to the broader purchase totals. These operating purchases are also not deducted again from historical cash flow.
Source: Apple FY2026 Form 10-K, Item 7, p. 28; Notes 9, 10 and 13, pp. 48–49 and 51.
This report provides information and business analysis. It is not investment advice or a recommendation to transact in securities.