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

Have you evaluated the performance of KLA's (KLAC) international operations during the quarter that concluded in March 2025? Considering the extensive worldwide presence of this maker of equipment for manufacturing semiconductors, analyzing the patterns in international revenues is crucial for understanding its financial resilience and potential for growth.

The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become essential for investors to comprehend how much a company relies on these foreign markets, as this understanding reveals the firm's potential for consistent earnings, its capacity to harness different economic cycles, and its overall growth prospects.

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.

Our review of KLAC's last quarterly performance uncovered some notable trends in the revenue contributions from its international markets, which are commonly analyzed and tracked by Wall Street experts.

The company's total revenue for the quarter stood at $3.06 billion, increasing 29.8% year over year. Now, let's delve into KLAC's international revenue breakdown to gain insights into the significance of its operations beyond home turf.

Unveiling Trends in KLAC's International Revenues

Rest of Asia generated $100.44 million in revenues for the company in the last quarter, constituting 3.28% of the total. This represented a surprise of +11.6% compared to the $90 million projected by Wall Street analysts. Comparatively, in the previous quarter, Rest of Asia accounted for $96.61 million (3.14%), and in the year-ago quarter, it contributed $84.35 million (3.57%) to the total revenue.

During the quarter, Korea contributed $378.55 million in revenue, making up 12.36% of the total revenue. When compared to the consensus estimate of $420.01 million, this meant a surprise of -9.87%. Looking back, Korea contributed $357.43 million, or 11.62%, in the previous quarter, and $201.29 million, or 8.53%, in the same quarter of the previous year.

Of the total revenue, $988.47 million came from Taiwan during the last fiscal quarter, accounting for 32.27%. This represented a surprise of +9.83% as analysts had expected the region to contribute $900.01 million to the total revenue. In comparison, the region contributed $881.21 million, or 28.64%, and $433.92 million, or 18.39%, to total revenue in the previous and year-ago quarters, respectively.

Japan accounted for 11.06% of the company's total revenue during the quarter, translating to $338.65 million. Revenues from this region represented a surprise of +12.88%, with Wall Street analysts collectively expecting $300 million. When compared to the preceding quarter and the same quarter in the previous year, Japan contributed $228.61 million (7.43%) and $267.05 million (11.32%) to the total revenue, respectively.

China generated $792.88 million in revenues for the company in the last quarter, constituting 25.89% of the total. This represented a surprise of -11.9% compared to the $900.01 million projected by Wall Street analysts. Comparatively, in the previous quarter, China accounted for $1.09 billion (35.51%), and in the year-ago quarter, it contributed $996.89 million (42.24%) to the total revenue.

During the quarter, Europe & Israel contributed $170.06 million in revenue, making up 5.55% of the total revenue. When compared to the consensus estimate of $120 million, this meant a surprise of +41.71%. Looking back, Europe & Israel contributed $134.27 million, or 4.36%, in the previous quarter, and $129.35 million, or 5.48%, in the same quarter of the previous year.

Anticipated Revenues in Overseas Markets

Wall Street analysts expect KLA to report a total revenue of $3.07 billion in the current fiscal quarter, which suggests an increase of 19.5% from the prior-year quarter. Revenue shares from Rest of Asia, Korea, Taiwan, Japan, China and Europe & Israel are predicted to be 3.9%, 13.8%, 27.5%, 9.8%, 29.5% and 3.9%, corresponding to amounts of $120.68 million, $422.37 million, $844.74 million, $301.69 million, $905.08 million and $120.68 million, respectively.

For the entire year, the company's total revenue is forecasted to be $12.04 billion, which is an improvement of 22.7% from the previous year. The revenue contributions from different regions are expected as follows: Rest of Asia will contribute 3.5% ($416.65 million), Korea 12% ($1.44 billion), Taiwan 25.7% ($3.09 billion), Japan 8.4% ($1.02 billion), China 34.1% ($4.11 billion) and Europe & Israel 4.2% ($505.83 million) to the total revenue.

Closing Remarks

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 environment where global interconnections and geopolitical skirmishes are intensifying, Wall Street analysts keep a keen eye on these trends, particularly for firms with overseas operations, to adjust their earnings predictions. Moreover, a range of other aspects, including how a company fares in its home country, significantly affects these projections.

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.

The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.

KLA, bearing a Zacks Rank #2 (Buy), is expected to outperform the broader market's movements in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Reviewing KLA's Recent Stock Price Trends

The stock has increased by 13.5% over the past month compared to the 9.1% rise of the Zacks S&P 500 composite. Meanwhile, the Zacks Computer and Technology sector, which includes KLA, has increased 11.9% during this time frame. Over the past three months, the company's shares have experienced a gain of 1.3% relative to the S&P 500's 3.1% decline. Throughout this period, the sector overall has witnessed a 6.8% decrease.

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

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