Apple on Tuesday delivered stronger-than-expected results in the just-ended quarter as growth from services helped offset weak iPhone sales, sparking a rally in shares of the tech giant.
Profit in the third quarter to June fell 13 percent from the year-ago period to USD 10 billion while overall revenues increased one percent to a better-than-forecast USD 53.8 billion.
The results beat reined-in expectations of analysts, and Apple shares rose more than four percent in after-hours trade.
As iPhone sales have weakened, Apple has been shifting to earnings from digital content and services sold to the legions of fans of its devices.
"This was our biggest June quarter ever -- driven by all-time record revenue from services, accelerating growth from wearables, strong performance from iPad and Mac and significant improvement in iPhone trends," said Apple chief executive Tim Cook.
Apple has stopped reporting iPhone unit sales, but Cook said he saw a "strong customer response" to iPhone promotions and financing programs.
Long the driver of Apple's money-making machine, iPhone revenue was down 12 percent from last year to USD 26 billion.
The premium smartphone market has grown fiercely competitive and overall sales have cooled as a lack of stunning innovation has caused people to wait longer before upgrading to new models.
California-based Apple is expected to try to rev up iPhone sales with the launch of a new model later this year, but its rivals will be bringing flagship models of their own to the market.
Sales of Mac computers and iPad tablets were up in the quarter, as was a "wearables and accessories" category that includes Apple's smartwatch, smart speaker and popular wireless ear buds.
Money taken in from services, which Apple has repeatedly stressed as being a potential big revenue source for the company, rose to USD 11.5 billion from $10 billion in the same quarter last year.
"These results are promising across all our geographic segments, and we're confident about what's ahead," Cook said.
"The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products."
Apple launches slated for later this year include an Apple TV+ streaming television service to compete against the likes of Netflix and Amazon along with a new credit card that ties in with its Apple Pay digital payments.
The company said it expects revenue between USD 61 billion and USD 64 billion in the current quarter.
Apple is among the big tech firms facing growing scrutiny in Washington over competition concerns. Apple has maintained it is not a monopoly but has faced questions on how it deals with competitors on its online App Store.
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