NEW YORK - Apple reported modestly higher quarterly profits despite another dip in revenues, as a record performance in services offset lower iPhone sales.
Besides services, executives spotlighted increased sales in China and several key emerging markets that helped to compensate for declines in the United States where iPhone sales have ebbed in a saturated smartphone environment.
Overall iPhone sales lagged analyst estimates.
"We did exceptionally well in emerging markets," said Chief Executive Tim Cook on a conference call, highlighting year-over-year gains in China after the prior quarter had seen a decline in the same comparison.
Profits for Apple's third fiscal quarter were $19.9 billion, up 2.3 percent from the year-ago period. Revenues again declined, this time by 1.4 percent to $81.8 billion, the third straight quarter with a year-over-year decline.
Bright spots in the quarter for the tech giant included an "all-time high" in services revenue from the App Store, Apple Pay, Apple TV and other subscription services.
Chief Financial Officer Luca Maestri pointed to "across the board gains" in services in explaining the 8.2 percent jump to $21.2 billion.
Revenues also climbed in wearables. Maestri said strong gains in China in the Apple Watch showed improving engagement in Apple's "ecosystem."
But Apple suffered a 2.4 percent drop in iPhone sales, which account for nearly half of total revenues. The company also experienced declines in revenues from the Mac and iPad.