Tim Cook Apple

The latest June news out of Silicon Valley looks like a tale of two Apples: On one hand, the Cupertino, Calif.-based iPhone maker reported earnings on Tuesday that beat expectations, sending its stock up more than 3 percent in after-hours trading. But the company also reported net income that had fallen almost 13 percent and revenue that slowed to 1 percent growth.

Net income fell to $10.04 billion for the fiscal third quarter, shaving off more than $1 billion over its $11.5 billion a year ago. Revenue ticked up from $53.3 billion to $53.8 billion, compared to the year-ago quarter.

It’s clear which picture chief executive officer Tim Cook was painting for investors: “This was our biggest June quarter ever,” he said in a prepared statement, “driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac and significant improvement in iPhone trends.”

The tech giant no longer reports unit iPhone sales, but its growing services business — which clocked in with revenue that grew more than 12 percent to $11.5 billion — hasn’t quite made up for the drop in smartphone sales. To help stem the decline, the company explored new financing offers and iPhone trade-in programs, as well as cut prices in the Chinese market.

“For iPhone, we generated $26 billion in revenue,” Cook added on Tuesday’s earnings call. “While this is down 12 percent from last year’s June quarter it is a significant improvement to the 70 percent year-over-year declining Q2.”

As for wearables, including the Apple Watch, Cook described the business over the last four quarters as bigger than 60 percent of Fortune 500 companies, with growth accelerating over 50 percent.

For one of the world’s most valuable companies — one that rode the iPhone to legendary success — it may be a harsh reality to see the device slipping for three straight quarters. The smartphone industry as a whole has become a crowded field, with competitors struggling to break through and reach new buyers.

That doesn’t mean that it’s leaving phones behind. Last week, the company announced it would acquire the majority of Intel’s smartphone modem business. “This is our second largest acquisition by dollars and our largest ever in terms of staff,” added Cook, explaining that the move will add to a burgeoning portfolio of wireless technology patents, topping 17,000. Long-term, Apple aims to own and control more of the underlying technologies that power its products. Analysts expect Apple to release 5G iPhones in 2020.

Apple also touted advances in its augmented reality platform, with new tools that can streamline development, offer more realistic visuals and support real-time machine learning capable of recognizing human bodies. According to Cook, the company is “placing big bets” on AR.

The company confirmed that its new Apple Card will arrive in August, and touted the success and adoption of its Apple Pay mobile wallet and payments system. Apple Pay is now completing nearly one billion transactions per month, and is available in 47 total markets now.

The quarter saw some sea changes at the company, with the Intel deal as well as high-profile executive departures, including retail chief Angela Ahrendts and design head Jony Ive. Meanwhile, the Department of Justice’s scrutiny over “Big Tech” still looms, with an antitrust review pointing at Apple, in particular, over its App Store.

The store, as well as other services — such as its new and upcoming news, music, gaming and TV offerings — will become even more important to the company, as the future of its iPhone business remains unclear.