Apple Inc.

Hey, everyone. Welcome to the Apple Incorporated Second Quarter Fiscal Year 2020 earnings conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Tejas Kala, Senior Manager, Corporate Finance and Investor Relations. Please go ahead.

Thank you. Good afternoon and thank you for joining us. Speaking first today is Apple CEO Tim Cook, and he'll be followed by CFO Luca Maestri. After that, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook, including the potential impact of COVID-19 on the company's business and results of operations. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in Apple's most recently filed periodic reports on Form 10-K and Form 10-Q and the Form 8-K filed with the SEC today, along with the associated press release. Apple assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. I'd now like to turn the call over to Tim for introductory remarks.

Thanks, Tejas. Good afternoon, everyone. Thanks for joining us today. I hope you're staying safe and well. Today, Apple reports $58.3 billion in revenue, an all-time record for services, and a quarterly record for wearables, home, and accessories. It was also a quarterly revenue record for Apple retail, powered by phenomenal growth in our online store. amid the most challenging global environment in which we've ever operated our business, we're proud to say that Apple grew during the quarter. But before we dive more deeply into the numbers, I want to speak just for a bit on COVID-19. This is something Apple has been contending with since January. And I think that how we have responded, what we have been inspired to do, tells an important story about Apple's great durability as a business and the enduring importance of our products and our customers' lives. It also speaks to Apple's unmatched capacity to be creative, to think always in terms of the long term, and to forge ahead when others may feel an instinct to pull back. Before COVID-19 was on the horizon, we anticipated that Q2 was going to be a prolific and energetic period for Apple. And when the pandemic did strike, our teams not only succeeded in growing the business, in introducing powerful new products, and in meeting our customers' needs, but they also rose to the occasion in terms of meeting our broader obligations to the communities in which we live and work. Let's look quickly across the business. At the same time that they were leaving no stone unturned to get our latest generation of devices manufactured into our customers' hands, our worldwide network of supply chain partners, logistics and operations folks, and every part of the company were also sourcing more than 30 million masks for frontline medical workers, ensuring they're donated to places of greatest need in every region around the world. While our product teams were preparing to launch a new iPad Pro, Magic Keyboard, MacBook Air, and the new iPhone SE, all of which have been very well received by reviewers and consumers alike, they were also working with our suppliers to design, test, manufacture, and distribute more than seven and a half million face shields. And we continue to ship more than one million of these every week to the doctors, nurses, and medical personnel on the front lines. In a quarter where our services teams achieve strong growth, which Luca will dig into in a minute, and which speaks to the real durability of our services strategy, these teams were also putting COVID-19 front and center. As Apple News reached 125 million monthly active users, we elevated trusted information from reliable sources through a special COVID-19 vertical. We let customers skip payments without incurring interest on Apple Card for March and April in light of financial hardship for many families. We worked with everyone from Oprah to Lady Gaga to inform, entertain, and give back through Apple TV. And services like FaceTime and Messages set new all-time records for daily volume during this quarter as users relied on their devices to stay connected in a new reality. In software, at the same time that our teams work with great creativity and excitement as we prepare to deliver our first ever all online worldwide developers conference later this quarter, they also worked with the same creativity and speed to put together our COVID-19 symptom checking website and app. in partnership with the CDC. As of today, the app has been installed nearly two million times, and the web tool has received over three million unique visits. And just this month, to accelerate contact tracing, we are launching a joint effort with Google to enable the use of Bluetooth technology to help governments and health agencies reduce the spread of the virus with user privacy and security central to the design. We've paired these programmatic efforts with a broader strategy to give back where it's needed most. We've made major corporate donations to response efforts around the world to support global citizen, as well as a new fund for Americans experiencing food insecurity as a result of the crisis. When you tally these things up and consider our ongoing two-to-one match for employee donations, Apple's contributions to the global response are significant, diverse, and a great source of pride for the whole team. We're also doing what we can to help our employees, their families, and by extension their communities stay safe and well by modifying our operations where appropriate. This extends, of course, to our retail employees. They are Apple's face to our customers and an instrumental part of our business, and we're compensating them normally despite store closures. During a quarter where circumstances evolved by the hour, we have been gratified by the resilience and adaptability of our global supply chain. While we felt some temporary supply constraints in February, our operations team, suppliers, and manufacturing partners have been safely returning to work and production was back at typical levels toward the end of March. At this time of social distance, of shuttered schools and gathering places, of delayed plans and new ways of socializing, we have seen significant evidence that our products have taken a renewed importance for our customers. Teachers and students around the world are relying on on our technology to teach learn and stay connected with each other. We are in the process of deploying major orders of iPads to school systems working to keep. learning going strong at a distance, including tens of thousands in Ontario, Canada, Glasgow, Scotland, and Puerto Rico, 100,000 to the city of Los Angeles, and 350,000 to New York City, our largest educational iPad deployment ever. Since early March, we've seen unprecedented demand for our pro apps from students, enthusiasts, and creative professionals. These folks are keeping us all entertained and inspired as we stay at home. And to help them do it, we made Final Cut Pro 10 and Logic Pro 10 available for free for 90 days for everyone. And the reaction has been overwhelming, driving software downloads and usage to record levels. And doctors and medical professionals are making even greater use of Apple Watch and other health features to communicate with patients and to treat them safely from a distance when necessary. With new FDA guidance on non-invasive remote patient monitoring, for example, the ECG app on Apple Watch is increasingly being used to facilitate remote ECG measurements and recordings for telemedicine usage, reducing patient and healthcare