Apple's latest financial report shows iPhone sales are still surging, driven partly by growth in China. On the other hand, it seems that Apple's smartwatch may not be selling as fast expected. at least for the investor's eyes. Apple sold more than 47.5 million iPhones during the three months ending in June, or 35 percent more than a year ago. That sent Apple's profit soaring nearly 38 percent for the quarter, to $10.7 billion.

Apple also desribed the launch of Apple Watch as successful. CEO Tim Cook said that watch sales outpaced initial sales of the iPhone and iPad during the first nine weeks after their launch.

"We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch," said Tim Cook, Apple’s CEO. The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall."

"In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent," said Luca Maestri, Apple’s CFO. "We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program."

"Sales of the watch did exceed our own forecasts," Cook told analysts on a conference call, adding that demand outpaced supply in the early weeks. He said watch sales in June were greater than in May or April, when the watch first became available.

Apple's quarterly revenue from all sources grew 33 percent from last year to $49.6 billion in the April-June quarter, with the iPhone contributing $31.4 billion in sales. Net income climbed nearly 38 percent to $10.7 billion, while earnings amounted to $1.85 per share.

Apple got a big boost from new markets like China, which contributed more than a quarter of the company's revenue, or $13.2 billion. China sales more than doubled from a year ago.

However, the company said Tuesday that it's expecting between $49 billion and $51 billion in revenue for the quarter ending in September.