Technology giant Apple reported profits of $10.2bn (£6.1bn) after selling 43.7 million iPhones during the three-month period ending 29 March.
Apple also announced plans to buy an additional $30bn of its stock back from shareholders and to increase its quarterly dividend by 8%.
It also said it would split its stock for the first time in nine years.
The moves are meant to appease investors as the firm reports slowing revenue growth.
Shares in the firm surged more than 7% in after-hours trading, as investors also welcomed news of the seven-for-one split, which is set to take effect in June.
Christmas in February
The strong iPhone sales surprised analysts, who had been expecting a sharper decline in post-holiday buying.
Sales of Apple's iPhone - which is the company's most popular product, contributing to more than half of its revenue - decreased by 14% from last quarter, as users await new models.
However, they were up 17% compared to the same period earlier.
"We're very proud of our quarterly results, especially our strong iPhone sales and record revenue from services," said chief executive Tim Cook in a statement.
On a conference call to discuss earnings, Mr Cook added that it was Apple's biggest non-holiday quarter ever.
He said that Apple has acquired 24 companies in the last 18 months in order to expand its research and development into new features and products.
Apple has faced stiff competition from rival Samsung, which sells cheaper smartphones that mostly run Google's Android operating system.
Also on the call, Mr Cook and new chief financial officer Lucas Maestri sought to reassure investors about iPad sales, which fell 16% - the steepest drop ever for the device.
Mr Maestri and Mr Cook chalked it up to how sales were calculated, while Mr Cook also noted that the iPad is the fastest selling product in Apple's history, with more than 210 million in total sold since launching in 2010.
Total sales of Apple's once-popular iPod music player continued to decline sharply, falling to just 2.8 million units during the second quarter - a 54% decrease from the previous three-month period.