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Apple reported a record $20.1bn in profits from record revenues of $88.3bn for the last three months of 2017, up 13% compared with the previous year, despite a drop in iPhones sales.

Although iPhone sales were down 1% compared with the previous year to 77.3 million and below analysts’ expectations of 80 to 82 million, revenue was up 13% because of price increases and the $1,000 iPhone X, which Apple said was the top-selling model since its launch.

Overall revenues were driven by growth in Japan, China and Europe. Sales in Japan were up 26% compared with the same period a year ago, and up 88% compared with the previous quarter.

Sales in China were up just 11% year-on-year, but up 84% on the previous quarter, while sales in Europe were up 14% year-on-year and 62% compared with the previous quarter.

“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup,” said Apple chief executive Tim Cook.

“The iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November 2017,” he said.

Cook also announced Apple had reached 1.3 billion active devices around the world in January, representing a 30% increase in two years.

Luca Maestri, Apple’s chief financial officer said cash flow from operations was very strong at $28.3bn, adding that the company returned $14.5bn to investors through its capital return program.

But Apple issued a lower-than-expected sales forecast for the current quarter of $60bn to $62bn, which in combination with the iPhone sales dip in the last quarter sparked a dip in the share price, but it recovered quickly, climbing more than 3% in after-hours trade, according to the BBC.

Apple reported revenue from services of $8.5bn for the quarter, an 18% increase compared with the previous year. Analysts predict this figure could continue to grow in the light of Apple’s landmark figure of 1.3 billion active devices.

Apple reported a slight growth in iPad sales of 1% in units and 6% in revenue for the quarter, while sales of the Apple Mac computer were down 5%.

However, Apple reported that revenues from “other products” – which include the Apple Watch and AirPods – were up 36% year-on-year and up 70% on the previous quarter. Analysts said that with the soon-to-be-launched HomePod speaker, this could grow even further this quarter, but noted pre-orders ahead of its launch on 9 February indicate fairly low demand.

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