The device brought in US$26.4 billion (A$37.6 billion) in revenue in the final quarter, down from US$33.4 billion a year ago.
And for the full 12 months ending on 26 September, iPhone sales brought in revenue of US$137.8 billion, down from US$142.4 billion for the 12 months that ended on 28 September 2019.
British news agency Reuters said this was the steepest quarterly drop in iPhone sales in two years.
Overall, the company said it had record September quarter revenue of US$64.7 billion and quarterly earnings per diluted share of $0.73. International sales accounted for 59% of the quarter’s revenue.
“Apple capped off a fiscal year defined by innovation in the face of adversity with a September quarter record, led by all-time records for Mac and Services,” said Apple chief executive Tim Cook.
“Despite the ongoing impacts of COVID-19, Apple is in the midst of our most prolific product introduction period ever, and the early response to all our new products, led by our first 5G-enabled iPhone line-up, has been tremendously positive.
"From remote learning to the home office, Apple products have been a window to the world for users as the pandemic continues, and our teams have met the needs of this moment with creativity, passion, and the kinds of big ideas that only Apple can deliver.”
Apple chief financial officer Luca Maestri said: “Our outstanding September quarter performance concludes a remarkable fiscal year, where we established all-time records for revenue, earnings per share, and free cash flow, in spite of an extremely volatile and challenging macro environment.
“Our sales results and the unmatched loyalty of our customers drove our active installed base of devices to an all-time high in all of our major product categories. We also returned nearly US$22 billion to shareholders during the quarter, as we maintain our target of reaching a net cash neutral position over time.”