Sales of Apple iPhones dropped at the end of last year, as the tech firm’s roll out of new artificial intelligence (AI) features was met with a lukewarm response.
Chief executive Tim Cook said the new features helped to drive stronger sales in the countries where they were available, such as the US.
But iPhone sales slipped about 1% overall compared with last year, to $69.1bn (£55bn).
The company is also contending with other challenges, including a sales drop in China and the possibility its US sales will be hit by tariffs threatened by President Donald Trump.
He has called for tariffs of up to 60% on products made in China, where Apple does much of its manufacturing.
But the timing and full scope of those plans, which would put a new tax on imports into the US, remains highly uncertain.
Mr Cook told investors on Thursday the company was monitoring the situation.
Apple has been gradually introducing AI features to its products, starting last year in the US.
Investors have been hoping this will re-ignite sales, which have slowed as customers hold onto their phones and other products for longer.
Mr Cook said Apple was expecting to push out the AI features to more languages in April.
However, the features have not been without controversy. The AI’s news roundup alerts came under fire earlier this month for making repeated mistakes in their summaries of news headlines – including ones from the BBC.
The feature was eventually suspended following over a week of criticism.
Meanwhile, Mr Cook said on Thursday Apple had seen a record number of purchases of new iPhones from people who already own older iPhones.
The company said overall sales rose 4% to $124.3bn, lifted by a jump in its computer sales and strong growth in its services business, which includes Apple TV, Apple News and Apple Pay.
Profits rose 7% year-on-year to $36.3bn.
Emarketer analyst Jacob Bourne said Apple was going to have to have to speed up the roll-out and start looking at new kinds of products to maintain its edge.
“The results show Apple can still execute, but the next few quarters will test whether it can balance its cautious approach with the market’s hunger for AI innovation,” he said.
