Don't Overlook KLA (KLAC) International Revenue Trends While Assessing the Stock

Have you evaluated the performance of KLA's (KLAC) international operations for the quarter ending September 2025? Given the extensive global presence of this maker of equipment for manufacturing semiconductors, analyzing the patterns in international revenues is crucial for understanding its financial strength and potential for growth.

In the current global economy, which is more interconnected than ever, a company's success in penetrating international markets is crucial for its financial health and growth journey. Investors must understand a company's dependence on overseas markets, as this offers a window into the company's earnings stability, its ability to benefit from varied economic cycles and its potential for long-term growth.

Being present in foreign markets serves as protection against local economic declines and helps benefit from more rapidly expanding economies. Yet, such expansion also introduces challenges related to currency fluctuations, geopolitical uncertainties and varied market behaviors.

While analyzing KLAC's performance for the last quarter, we found some intriguing trends in revenues from its overseas segments that Wall Street analysts commonly model and monitor.

For the quarter, the company's total revenue amounted to $3.21 billion, experiencing an increase of 13% year over year. Next, we'll explore the breakdown of KLAC's international revenue to understand the importance of its overseas business operations.

Unveiling Trends in KLAC's International Revenues

Europe & Israel generated $150.98 million in revenues for the company in the last quarter, constituting 4.7% of the total. This represented a surprise of +6.29% compared to the $142.05 million projected by Wall Street analysts. Comparatively, in the previous quarter, Europe & Israel accounted for $125.06 million (3.9%), and in the year-ago quarter, it contributed $144.82 million (5.1%) to the total revenue.

During the quarter, Korea contributed $299.37 million in revenue, making up 9.3% of the total revenue. When compared to the consensus estimate of $473.45 million, this meant a surprise of -36.77%. Looking back, Korea contributed $478.17 million, or 15.1%, in the previous quarter, and $238.67 million, or 8.4%, in the same quarter of the previous year.

Of the total revenue, $793.61 million came from Taiwan during the last fiscal quarter, accounting for 24.7%. This represented a surprise of -6.85% as analysts had expected the region to contribute $851.99 million to the total revenue. In comparison, the region contributed $873.72 million, or 27.5%, and $461.99 million, or 16.3%, to total revenue in the previous and year-ago quarters, respectively.

Japan accounted for 9.2% of the company's total revenue during the quarter, translating to $295.21 million. Revenues from this region represented a surprise of -6.44%, with Wall Street analysts collectively expecting $315.54 million. When compared to the preceding quarter and the same quarter in the previous year, Japan contributed $377.17 million (11.9%) and $188.57 million (6.6%) to the total revenue, respectively.

China generated $1.27 billion in revenues for the company in the last quarter, constituting 39.5% of the total. This represented a surprise of +27.45% compared to the $994.21 million projected by Wall Street analysts. Comparatively, in the previous quarter, China accounted for $958.85 million (30.2%), and in the year-ago quarter, it contributed $1.2 billion (42.2%) to the total revenue.

During the quarter, Rest of Asia contributed $105.47 million in revenue, making up 3.3% of the total revenue. When compared to the consensus estimate of $110.49 million, this meant a surprise of -4.54%. Looking back, Rest of Asia contributed $80.58 million, or 2.5%, in the previous quarter, and $108.24 million, or 3.8%, in the same quarter of the previous year.

Revenue Projections for Overseas Markets

The current fiscal quarter's total revenue for KLA, as projected by Wall Street analysts, is expected to reach $3.24 billion, reflecting an increase of 5.4% from the same quarter last year. The breakdown of this revenue by foreign region is as follows: Europe & Israel is anticipated to contribute 4.4% or $142.73 million, Korea 14.7% or $475.67 millionTaiwan 26.4% or $855.7 millionJapan 9.8% or $316.89 millionChina 30.8% or $998.82 million and Rest of Asia 3.4% or $111.03 million.

Analysts expect the company to report a total annual revenue of $13.04 billion for the full year, marking an increase of 7.2% compared to last year. The expected revenue contributions from Europe & Israel, Korea, Taiwan, Japan, China and Rest of Asia are projected to be 4.8% ($628.53 million), 14.6% ($1.9 billion)27.4% ($3.57 billion)9.5% ($1.24 billion)30% ($3.9 billion) and 3.8% ($499.91 million) of the total revenue, in that order.

Final Thoughts

KLA's reliance on international markets for revenues offers both opportunities and risks. Hence, keeping an eye on its international revenue trends could significantly help forecast the company's prospects.

In an era of growing international interdependencies and escalating geopolitical disputes, Wall Street analysts are vigilant in tracking these trends for businesses with a global reach, in order to refine their predictions of earnings. It should be noted, however, that a multitude of other elements, such as a company's domestic position, also play a significant role in shaping the earnings forecasts.

Emphasizing a company's shifting earnings prospects is a key aspect of our approach at Zacks, especially since research has proven its substantial influence on a stock's price in the short run. This correlation is positively aligned, meaning that improved earnings projections tend to boost the stock's price.

Our proprietary stock rating tool, the Zacks Rank, with its externally validated exceptional track record, harnesses the power of earnings estimate revisions to serve as a dependable measure for anticipating the short-term price trends of stocks.

KLA currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

Exploring Recent Trends in Stock Price

Over the past month, the stock has gained 7% versus the Zacks S&P 500 composite's 2.1% increase. The Zacks Computer and Technology sector, of which KLA is a part, has risen 5.5% over the same period. The company's shares have increased 33.9% over the past three months compared to the S&P 500's 10.3% increase. Over the same period, the sector has risen 18.8%

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This article originally published on Zacks Investment Research (zacks.com).

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