The technology giant reported revenue of $50.6 billion (£34.7bn) for the first three months of 2016, a drop of 13 per cent on the same period last year.
Meanwhile, iPhone sales fell for the first time since the device was launched in 2007, dropping from 61 million to 51 million units.
Industry experts have suggested the decline in iPhone sales – which make up more than half of Apple’s total revenue and is therefore crucial to its success – is down to an increasingly saturated smartphone market as competition increases from established rivals such as Samsung, HTC and Google, but also emerging Chinese firms such as Huawei.
To battle this, the firm updated their smaller 4-inch screen iPhone, last seen as the iPhone 5s in 2013, by launching the iPhone SE in March, aiming the device at emerging markets such as China and India.
Apple chief executive Tim Cook said of the latest results: “Our team executed extremely well in the face of strong macroeconomic headwinds.
“We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”
The other flagship products in Apple’s line-up – the iPad and Mac computers – both also recorded a decline in their sales for the first three months of the year.