Have you assessed how the international operations of IBM (IBM Quick QuoteIBM - Free Report) performed in the quarter ended September 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.

In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

While delving into IBM's performance for the past quarter, we observed some fascinating trends in the revenue from its foreign segments that are commonly modeled and observed by analysts on Wall Street.

The company's total revenue for the quarter stood at $14.97 billion, increasing 1.5% year over year. Now, let's delve into IBM's international revenue breakdown to gain insights into the significance of its operations beyond home turf.

A Dive into IBM's International Revenue Trends

Asia Pacific generated $2.9 billion in revenues for the company in the last quarter, constituting 19.4% of the total. This represented a surprise of -1.92% compared to the $2.96 billion projected by Wall Street analysts. Comparatively, in the previous quarter, Asia Pacific accounted for $3.1 billion (19.7%), and in the year-ago quarter, it contributed $2.8 billion (19%) to the total revenue.

Europe, Middle East and Africa accounted for 30.7% of the company's total revenue during the quarter, translating to $4.6 billion. Revenues from this region represented a surprise of +2.01%, with Wall Street analysts collectively expecting $4.51 billion. When compared to the preceding quarter and the same quarter in the previous year, Europe, Middle East and Africa contributed $4.7 billion (29.8%) and $4.2 billion (28.5%) to the total revenue, respectively.

Prospective Revenues in International Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that IBM will report a total revenue of $17.66 billion, which reflects an increase of 1.6% from the same quarter in the previous year. The revenue contributions are expected to be 19.8% from Asia Pacific ($3.49 billion) and 30.3% from Europe, Middle East and Africa ($5.35 billion).

For the full year, a total revenue of $62.88 billion is expected for the company, reflecting an increase of 1.7% from the year before. The revenues from Asia Pacific and Europe, Middle East and Africa are expected to make up 19.7% and 30.1% of this total, corresponding to $12.37 billion and $18.89 billion respectively.

In Conclusion

IBM's leaning on foreign markets for its revenue stream presents a mix of chances and challenges. Therefore, a vigilant watch on its international revenue movements can greatly aid in projecting the company's future direction.

In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' 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.

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.

IBM, bearing a Zacks Rank #3 (Hold), is expected to mirror 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 >>>>

IBM's Recent Stock Market Performance

Over the past month, the stock has lost 2.8% versus the Zacks S&P 500 composite's 2% increase. The Zacks Computer and Technology sector, of which IBM is a part, has risen 2.2% over the same period. The company's shares have increased 13.5% over the past three months compared to the S&P 500's 7.9% increase. Over the same period, the sector has risen 7.7%.