Have you assessed how the international operations of IBM (IBM) performed in the quarter ended December 2024? For this technology and consulting company, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.

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 international markets serves as a counterbalance to domestic economic challenges while offering chances to engage with more rapidly evolving economies. However, this kind of diversification introduces challenges like currency fluctuations, geopolitical uncertainties and varying market trends.

Upon examining IBM's recent quarterly performance, we noticed several interesting patterns in the revenue generated from its international segments, which are commonly analyzed and observed by Wall Street experts.

The company's total revenue for the quarter amounted to $17.55 billion, showing rise of 1%. We will now explore the breakdown of IBM's overseas revenue to assess the impact of its international operations.

A Look into IBM's International Revenue Streams

During the quarter, Asia Pacific contributed $3.2 billion in revenue, making up 18.23% of the total revenue. When compared to the consensus estimate of $3.44 billion, this meant a surprise of -6.86%. Looking back, Asia Pacific contributed $2.9 billion, or 19.37%, in the previous quarter, and $3.2 billion, or 18.41%, in the same quarter of the previous year.

Of the total revenue, $5.8 billion came from Europe, Middle East and Africa during the last fiscal quarter, accounting for 33.04%. This represented a surprise of +8.83% as analysts had expected the region to contribute $5.33 billion to the total revenue. In comparison, the region contributed $4.6 billion, or 30.73%, and $5.3 billion, or 30.49%, to total revenue in the previous and year-ago quarters, respectively.

Anticipated Revenues in Overseas Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that IBM will report a total revenue of $14.45 billion, which reflects a decline of 0.1% from the same quarter in the previous year. The revenue contributions are expected to be 19.9% from Asia Pacific ($2.87 billion) and 30.9% from Europe, Middle East and Africa ($4.47 billion).

For the full year, the company is expected to generate $64.87 billion in total revenue, up 3.4% from the previous year. Revenues from Asia Pacific and Europe, Middle East and Africa are expected to constitute 19.7% ($12.8 billion) and 30.7% ($19.92 billion) of the total, respectively.

Wrapping Up

Relying on international markets for revenues, IBM faces both prospects and perils. Thus, tracking the company's international revenue trends is essential for accurately projecting its future trajectory.

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.

Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.

Boasting a remarkable track record that's been externally verified, the Zacks Rank, our unique stock rating system, leverages changes in earnings projections to function as a reliable gauge for predicting short-term stock price movements.

Currently, IBM holds a Zacks Rank #2 (Buy), signifying its potential to outperform the overall market's performance in the forthcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Assessing IBM's Stock Price Movement in Recent Times

The stock has increased by 14.8% over the past month compared to the 2.1% rise of the Zacks S&P 500 composite. Meanwhile, the Zacks Computer and Technology sector, which includes IBM, has decreased 0.8% during this time frame. Over the past three months, the company's shares have experienced a gain of 23.1% relative to the S&P 500's 1.2% increase. Throughout this period, the sector overall has witnessed a 0.6% increase.

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