It sold 45.51 million iPhones in the three months to September 24, beating an average estimate of 44.8 million.
The company also forecast higher-than-expected holiday season revenue of between $76 billion and $78 billion.
But revenue in Q4 fell 9% to $46.85 billion.
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% in the quarter, after dropping 33% in the previous quarter.
In the same period last year, revenue from Greater China doubled.
Apple’s shares were down 3% at about $114.80 in after-hours trading.
Net income fell to $9.01 billion in the fourth quarter, down from $11 billion in the same quarter in 2015.
For the year, net income fell to $45.7 billion from $53.4 billion.
Apple CFO Luca Maestri said it was “impossible to know” if there was any effect yet from rival Samsung halting production of Galaxy Note 7 phones earlier this month.
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