AAPLApple Inc.

You disclose that services net sales increased due to higher net sales across all lines of business. In the December 30, 2023 Form 10-Q, you state that services net sales increased in the first fiscal quarter of fiscal 2024 compared to the same quarter in fiscal 2023 due primarily to higher net sales from advertising, video and cloud services.

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Further, during the February 1, 2024 earnings call you referred to December quarter revenue records for App Store and AppleCare and state that paid subscriptions continue to grow double-digits. Where two or more factors contributed to a material change from period-toperiod, including any offsetting factors, a quantitative discussion of such factors should be included, and using vague terms such as "primarily" in favor of specific quantification should be avoided. Please revise to include such quantitative discussion as it relates to your services revenue and provide us with a sample of any proposed revised disclosures you intend to include in future filings. Refer to Item 303(b) of Regulation S-K.

The Company respectfully advises the Staff that, when preparing the discussion and analysis of results of operations in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), management analyzes the Company’s results of operations based on the instructions and guidance in Item 303 of Regulation S-K, including its instructions and the Commission’s and the Staff’s related guidance.

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The Company notes in particular Item 303(b) states:

Where the financial statements reflect material changes from period-to-period in one or more line items, including where material changes within a line item offset one another, describe the underlying reasons for these material changes in quantitative and qualitative terms. Where in the registrant’s judgment a discussion of segment information and/or of other subdivisions (e.g., geographic areas, product lines) of the registrant’s business would be necessary to an understanding of such business, the discussion must focus on each relevant reportable segment and/or other subdivision of the business and on the registrant as a whole.

In addition, the Company refers to the Commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations, Release No. 33-8350 (effective Dec. 29, 2003), which provides:

Instruction 4 and the guidance in the 1989 Release do not require a discussion of every line item and its changes without regard to materiality. Discussion of a line item and its changes should be avoided where the information that would be disclosed is not material and would not promote understanding of MD&A.

AI-002

The Company notes that, in the adopting release for the Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, Release No. 33-10890 (effective Feb. 10, 2021), the Commission clarified that the amendments to Item 303 did not change this approach to MD&A disclosure:

By moving a portion of current Instruction 4 to Item 303(a) to the main text of amended Item 303(b) and clarifying that the provision requires underlying reasons for material changes in quantitative and qualitative terms, our amendments underscore the importance of the analysis provided in MD&A. In a change from what was proposed, we are eliminating language in current Instruction 4 that the reasons for material changes must be described to the extent necessary to an understanding of the registrant’s business as a whole. We believe this language is duplicative of the language in amended Item 303(a) and the amendments discussed in this section.

In applying Item 303(b) to the Company’s MD&A, including for the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the “Form 10-K”), management uses a materiality threshold of [***] at the registrant level as a starting point, as well as considering any qualitative factors. As the relevant components approach this [***], or qualitative factors are identified, management evaluates providing additional disclosures. For purposes of the Products and Services Performance disclosure in the Form 10-K, [***]. Management observed a decrease in Total Net Sales from fiscal year 2022 to fiscal year 2023 of $11.0 billion, an amount well below the [***] materiality threshold the Company established. Additionally, there were no quantitatively or qualitatively material changes within either Products net sales or Services net sales that offset one another during fiscal year 2023. Finally, Services net sales increased $7.1 billion from fiscal year 2022 to fiscal year 2023, which was also well below the Company’s [***] materiality threshold, with no material offsetting factors. As a result, management did not believe further description of the change in Services net sales was necessary for an understanding of the Company’s business as a whole.

Accordingly, with respect to the discussion of the Company’s Services net sales, management has reviewed Item 303(b) of Regulation S-K and believes its disclosures are appropriate. Consistent with the Staff’s comment, management will continue to monitor the Company’s results of operations, and in future filings will continue to provide disclosures that management believes will enhance a reader’s understanding of the Company’s results of operations and allow investors to view the Company from management’s perspective, in line with the objective outlined in Item 303(a) of Regulation S-K.

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You disclose net sales disaggregated by significant products and services; however, Services is presented as one line item. Based on your disclosures on page 2, Services includes advertising, AppleCare, cloud services, digital content and payment services. Please tell us how you considered these services to be similar for purposes of providing disclosures pursuant to ASC 280-10-50-40.

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As part of your response, please provide us with a breakout of services revenue by type of service for each period presented.

The Company respectfully advises the Staff it believes the services included within Services net sales to be similar in nature as they all represent services delivered to Apple product customers related to Apple products.

•Advertising net sales represent amounts earned from businesses for Apple customer activity on Apple products.

•App Store net sales represent amounts earned from Apple customer purchases of apps, app-related items and subscriptions through the Company’s App Stores for use on Apple products.

•Digital Content net sales represent amounts earned from Apple customers for

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streaming or purchasing video, music and other media for use on Apple products.

•AppleCare net sales represent amounts earned from Apple customers on extended warranty contracts sold in conjunction with Apple products and out-of-warranty repairs performed on Apple products.

•Cloud Services net sales represent amounts earned from Apple customers for cloud-based storage for Apple products.

[***]

Accordingly, while the Company does provide commentary on the nature of certain services in Item 1, Business, the Company believes it is appropriate for all the individual services to be aggregated and presented collectively in Services net sales.

The breakout of Services net sales by type of service for each period presented in the Form 10-K is being provided as supplemental information in connection with the Staff’s consideration of the foregoing response.

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AI-004

The Company acknowledges that:

•the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

•Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

•the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under federal securities laws of the United States.

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We note your response to prior comment 1. Please describe further the qualitative factors considered in assessing the level of disclosures provided in your results of operations discussion and specifically how you applied such factors to your current discussion of changes in Services revenue.

The Company respectfully advises the Staff that, as noted in response to prior comment 1 in the Company’s letter dated March 20, 2024 (the “Prior Response Letter”), in applying Item 303(b) of Regulation S-K to the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), management considers both a quantitative threshold and applicable qualitative factors when assessing materiality.

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As the relevant components approach the quantitative threshold or qualitative factors are identified, management evaluates providing additional disclosures.

In assessing qualitative factors when preparing disclosures regarding the Company’s results of operations, including with respect to discussing the Company’s Services net sales, management is mindful of the objective under Item 303(a) of Regulation S-K to provide material information relevant to an assessment of the results of operations. This includes disclosure of matters that have had a material impact on reported operations or that management assesses are reasonably likely to have a material impact on future operations, and data that will enhance a reader's understanding of the Company’s results of operations. As such, management’s evaluation of qualitative factors is intended to result in disclosure of non-routine events or trends that are, or are reasonably likely to be, material to an understanding of the Company’s reported results of operations. Qualitative factors management considers in assessing the level of information provided in the Company’s results of operations disclosures include, but are not limited to, the following:

•Whether a discussion of a component of the Company’s results of operations would highlight a change in earnings not otherwise apparent from the reported results or reveal other trends, in each case material to an understanding of the business;

•Whether a discussion of a component of the Company’s results of operations would highlight any non-routine or non-recurring event or factor material to an understanding of the business;

•Whether the Company’s ability to meet, or any failure to meet, analysts’ consensus expectations was materially impacted due to factors that were unexpected or due to drivers that would be difficult for analysts and investors to discern;

•Whether there are non-routine business, political or regulatory developments that materially affected demand for the Company’s products or services or the Company’s ability to provide products or services to customers.

AI-002

With respect to the discussion of the Company’s Services net sales in the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, management concluded that the change in Services net sales was both quantitatively and qualitatively immaterial and, as such, concluded that no additional disclosures would be required under Item 303(a) of Regulation S-K to enhance a reader’s understanding of the Company’s results of operations. The Company respectfully notes that the Commission Guidance Regarding Management's Discussion and Analysis of Financial Condition and Results of Operations, Release No. 33-8350 (effective Dec. 29, 2003) specifically directs companies to (i) “eliminate immaterial information that does not promote understanding of companies’ financial condition, liquidity and capital resources, changes in financial condition and results of operations”; (ii) “avoid the unnecessary information overload for investors that can result from disclosure of information that is not required, is immaterial, and does not promote understanding”; (iii) “de-emphasize (or, if appropriate, delete) immaterial information that is not required and does not promote understanding”; and (iv) “avoid unnecessary duplication and immaterial detail that is not required and does not promote understanding of a company’s overall financial condition and operating performance.” See Release No. 33-8350, Sections I.B., I.C. & III.B.

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We note your response to prior comment 2 that you believe the services included within Services net sales to be similar in nature as they all represent services delivered to Apple product customers related to Apple products.

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Please expand on your analysis supporting your conclusion that each of the various types of services within the “Services” grouping are similar for the purpose of providing disclosures pursuant to ASC 280-10-50-40. As part of your response, address the following: • Expand on the descriptions of the various categories of services provided in your prior response, including the similarities and differences between them. For example, describe the specific type or types of advertising services and tell us how they are similar to or different from streaming or purchasing video and music media under digital content and extended warranty contracts and out-of-warranty repairs under AppleCare. • Tell us how you considered differences in revenue recognition between each of the categories of services and reasons underlying such differences. For example, tell us how you considered differences between services where the company accounts for sales on a net basis (e.g., third-party application–related sales through the App Store) and those services you account for on a gross basis. • Tell us how you considered differences in the customers for each category of your services. In this regard, you indicate advertising net sales are amounts earned from businesses for Apple customer activity on Apple products whereas Digital Content net sales are amounts earned from Apple customers for streaming or purchasing video, music, etc. • Explain how you considered the quantitative significance of various categories of services.

The Company respectfully advises the Staff that expanded descriptions of the various main categories of services are as follows:

•Advertising net sales consist of Browser and Platform.

◦Browser represents Apple’s share of advertising net sales generated by searches on third-party search platforms through Apple devices. [***] with the customer being third-party search platforms.

◦Platform represents advertising generated on the App Store.

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[***] with the customer being App developers.

•App Store net sales consist of Apps and Subscriptions.

◦Apps represent Apple’s share of the sale of third-party apps on the App Store and any subsequent in-app purchases. [***] with the customer being Apple device end users.

◦Subscriptions represent Apple’s share of subscriptions to third-party services sold on the App Store. [***] with the customer being Apple device end users.

•Digital Content net sales consist of Apple Streaming Services and Digital Purchases.

◦Apple Streaming Services represent subscriptions to various Apple services (e.g., Apple TV+, Apple Music). [***] with the customer being Apple device end users.

◦Digital Purchases represent discrete sales of digital content (e.g., downloading a song, renting a movie). [***] with the customer being Apple device end users.

•AppleCare net sales consist of Extended Warranty, Business-to-Business and Out-of-Warranty.

◦Extended Warranty represents extended service agreements for Apple products, generally entered into at the time of sale of the device. [***] with the customer being Apple device end users.

◦Business-to-Business represents discrete sales of service parts for third-party repair of Apple products. [***] with the customer being third-party service providers.

◦Out-of-Warranty represents the discrete repair of an Apple device after the contractual warranty period has expired. [***] with the customer being Apple device end users.

•Cloud Services net sales represent the subscription to access additional iCloud storage using Apple devices. [***] with the customer being Apple device end users.

ASC 280-10-50-40 requires disclosure of “revenues from external customers for each product and service or each group of similar products and services unless it is impractical to do so.” The guidance, however, does not provide a definition of “similar.” When considering the Company’s services for the purpose of providing disclosures pursuant to ASC 280-10-50-40, management views [***]

AI-004

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AI-005

The Company acknowledges that:

•the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

•Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

•the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under federal securities laws of the United States.

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