The tech giant sold 45.51 million iPhones in the three months to 24 September, beating an average estimate of 44.8 million, reports The BBC.
The company also forecast higher-than-expected holiday season revenue of between $76bn and $78bn.
That meant annual revenue fell for the first time since 2001, highlighting a slowdown in the smartphone market as well as intensifying competition, particularly from Chinese rivals.
Apple executives said demand for the new iPhone 7 was strong, despite fiscal fourth-quarter revenue falls in China and the Americas, its two most important markets.
Revenue from Greater China, once seen as Apple’s next growth hope, fell 30 per cent in the quarter, after dropping 33 per cent in the previous quarter.
In the same period last year, revenue from Greater China doubled.
Apple’s shares were down 3 per cent at about $114.80 in after-hours trading.
“Apple didn’t have a great [fourth quarter] as iPhones, Macs, China, the US and what appears to be Watch were down,” said Patrick Moorhead, an analyst at Moor Insights & Strategy.
Net income fell to $9.01bn in the fourth quarter, down from $11bn in the same quarter last year.
For the year, net income fell to $45.7bn from $53.4bn.