SAN FRANCISCO (AFP) - Apple on Thursday (Feb 1) reported a US$20 billion profit in the crucial final three months of 2017, breaking its own record set two years ago and said sales of its newest iPhone X smartphone were better than expected.

Revenue for what is traditionally Apple's biggest quarter increased 13 per cent to US$88.3 billion, according to the technology giant and world's bigegst company.

"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.

"iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November."

However, Apple reported that overall iPhone sales in the quarter 77.3 million from were about a million fewer than the same period a year earlier. But iPhone revenues rose 13 percent from a year ago, suggesting its newer models were gaining traction.

The earnings come amid concerns over weak demand for the newest and most expensive iPhone X, the 10th anniversary edition of the iconic smartphone.

Apple also forecast that revenue in the current quarter would be between $60 billion and $62 billion in an outlook less rosy than analysts had expected.

Related Story Analysts cut iPhone X forecasts, citing lukewarm demand

Apple shares dipped and then rose two per cent to US$171.08 in after-market trades that followed release of the earnings figures.

Despite Apple's spectacular trajectory in the decade since the introduction of the iPhone, the California technology titan is facing challenges on whether it can continue growth.

Apple's image meanwhile has been bruised by revelations that the company updated its mobile software to slow the performance of old iPhones as batteries weaken from age.

The latest earnings report showed gains for Apple in all its regions including "Greater China," where it has faced challenges.

While the iPhone delivered the bulk of its revenues at US$61.6 billion in the quarter, the key segment of services saw revenue growth of 18 per cent to US$8.5 billion and "other product" which include the Apple Watch and Apple TV, increased 36 per cent to US$5.5 billion.

Apple said its cash pile grew to US$285 billion, which much of that stashed overseas.

The company said last month it would bring back most of its profits from abroad to take advantage of a favorable tax rate in legislation approved by Congress last year.

The repatriation will result in a tax bill of some US$38 billion, but also would free up big chunks of money for investment.

For the latest quarter - the fiscal first quarter for the three months to December 30 - Apple set aside US$6.97 billion for taxes.