Tim Cook concluded his tenure with outstanding performance. Apple reported impressive March quarter results on Thursday, with revenue surging 17%, driven primarily by a 22% year-over-year increase in iPhone revenue. The highly popular smartphone reversed its sales slump of recent years, indicating a significant rebound in consumers choosing to upgrade their devices.
Cook recently announced he will step down as Chief Executive Officer on September 1st, with John Ternus, the head of hardware engineering, set to succeed him. During Thursday's earnings call, Cook remained upbeat. Following Apple's customary style, he and his successor Ternus exchanged lavish praise.
Ternus hailed Cook as "one of the greatest business leaders of all time"; Cook reciprocated by stating, "There's no one on the planet I trust more than John Ternus to lead Apple into the future." However, even before Cook's official departure, Apple has begun implementing several significant strategic changes.
Firstly, Cook revealed during the call that the company's R&D expenditure increased by 34% this quarter. He stated that the increased investment aims to capitalize on growth opportunities across both product and service business segments.
Apple has not traditionally been known for high R&D spending: in recent years, its R&D expenses have consistently hovered around 8% of revenue, roughly half that of Alphabet, Google's parent company. With artificial intelligence reshaping the tech industry and a new cycle of innovation approaching for smart devices, Apple clearly aims not to fall behind.
Simultaneously, Chief Financial Officer Kevin Paret informed analysts that the company is formally abandoning its long-held net cash neutral cash management strategy.
The net cash neutral strategy aimed to maintain a balance between total cash and debt on the balance sheet. Established in 2018 by former CFO Luca Maestri and Cook, this strategy long supported Apple's massive share repurchase programs. As of March 31st, Apple's net cash (cash minus net debt) had dwindled to $62 billion; when the target was initially introduced in 2018, this figure stood as high as $163 billion.
Paret did not explicitly state the reason for the strategic shift, using only standard corporate language. Nevertheless, this adjustment signals that Apple may now prioritize increasing its cash reserves and retaining more cash flow.
Although the company raised its dividend and announced a new share buyback program, the scale of repurchases in the March quarter halved compared to the same period last year. Meanwhile, the company's free cash flow surged by 28%. Paret suggested that the reduced buybacks this quarter were related to the announcement of the CEO transition: prolonged market speculation about the leadership change potentially caused stock price volatility, leading the company to temporarily slow the pace of repurchases.
Why would Apple want to accumulate more cash? On one hand, Cook has hinted that memory chip prices may continue to soar significantly. Both Cook and Ternus might be building a cash reserve preemptively to manage rising cost pressures. On the other hand, as other tech giants engage in heavy capital expenditure, depleting their substantial cash reserves, Apple's strong cash position could allow it to seize potential merger, acquisition, or asset purchase opportunities—high-quality assets that other major players, constrained by heavy investments, might be unable to acquire. While Apple has historically been cautious with large acquisitions, the coming years could see the company pursue more aggressive strategic changes than currently anticipated.
Atlassian Beats Quarterly Expectations Despite widespread market concerns that the enterprise software sector would be negatively impacted by AI, Atlassian strongly countered this pessimistic outlook with robust earnings on Thursday: company revenue jumped 32%, a significant acceleration from the 23% growth rate seen in the previous quarter.
Following the earnings release, Atlassian's stock price soared 24% in after-hours trading to approximately $85. If these gains hold into Friday's early trading session, it would mark one of its best recent performances.
Prior to this surge, the stock had plummeted 57% year-to-date, having closed 2025 at $162.
Notable Quote from This Week's Earnings Calls "The value of human beings in the future will only become more important, not less." — Mark Zuckerberg, CEO of Meta Platforms
Other Industry News
Reddit reported a 69% increase in first-quarter revenue, with strong advertising growth momentum continuing into this year, even as growth in its core user base has nearly stalled. Meta Platforms' stock fell 8% on Thursday after the social media giant raised its capital expenditure forecast for 2026; Meta has also launched a new $25 billion bond offering. During the second round of depositions for the lawsuit against OpenAI, Elon Musk acknowledged that his xAI, while developing its own models, had to some extent referenced and refined models from OpenAI. Bloomberg reported on Thursday that the U.S. National Security Agency is utilizing Anthropic's Mythos large language model to identify security vulnerabilities in Microsoft software.
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