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    HAL
    Earnings call· Sep 2025(Q3 FY25)

    HALLIBURTON CO HAL

    Oct 21, 2025 Source

    Executive summary

    Halliburton Q3 FY25 — Strong International Performance & Strategic Cost Actions

    Halliburton delivered solid Q3 FY25 results, driven by better-than-expected North America performance and strong international growth engines, despite a challenging and volatile commodity price environment. The company implemented significant cost reductions and capital expenditure resets for 2026, while strategically investing in differentiated technologies and expanding its partnership with VoltaGrid for international data center power solutions, aiming to maximize shareholder value and prepare for future market recovery.

    Highlights

    5

    • Total company revenue reached $5.6 billion, with an adjusted operating margin of 13%.

    • Generated $276 million of free cash flow in the quarter.

    • Implemented cost reduction actions expected to save approximately $100 million per quarter going forward.

    • North America revenue exceeded expectations with 5% sequential growth.

    • Over half of the active North America frac fleet is now ZEUS electric, demonstrating technology leadership.

    Concerns

    5

    • International revenue decreased 2% year-over-year.

    • North America is expected to see approximately 12% to 13% lower sequential revenue in Q4 due to white space and seasonal slowdowns.

    • Recorded severance and asset write-offs totaling $284 million.

    • Incurred an additional valuation allowance expense of $125 million due to changes in U.S. tax laws.

    • Tariffs impacted business by $31 million in Q3, with an expected increase to $60 million in Q4.

    Guidance & targets

    16
    CategoryTargetConfidence
    International revenue
    increase 3% to 4%
    medium materiality
    High
    North America revenue
    approximately 12% to 13% lower sequential revenue
    high materiality
    High
    Capital expenditures
    around $1 billion
    high materiality
    High
    Cash operational savings
    $100 million per quarter
    high materiality
    High
    Corporate and other expense
    increase about $5 million
    low materiality
    High
    SAP expenses
    about $40 million
    low materiality
    High
    Net interest expense
    increase about $5 million
    low materiality
    High
    Other net expense
    about $45 million
    low materiality
    High
    Effective tax rate
    approximately flat
    low materiality
    High
    Capital expenditures
    about 6% of revenue
    medium materiality
    High
    Tariffs impact
    about $60 million
    low materiality
    High
    Completion and Production division sequential revenue
    decrease 4% to 6%
    medium materiality
    High
    Completion and Production division margins
    down 25 to 75 basis points
    medium materiality
    High
    Drilling and Evaluation division sequential revenue
    flat to down 2%
    medium materiality
    High
    Drilling and Evaluation division margins
    increase 50 to 100 basis points
    medium materiality
    High
    Free cash flow
    about $1.7 billion
    high materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Total Company
    Solid third quarter performance with sequential revenue increase and strong adjusted operating margin.
    		$5.6 billion—2%13% adjusted operating margin
    International
    Revenue was roughly flat sequentially but decreased year-over-year. Growth engines are performing well.
    		$3.2 billion-2%flat—
    North America
    Revenue was above expectations due to less-than-anticipated completions white space and strong activity in the Gulf of America.
    		$2.4 billionflat5%—
    Completion and Production
    Increased completion tool sales and higher artificial lift activity in North America, partially offset by international declines.
    		$3.2 billion—2%$514 million operating income (16% margin)
    Drilling and Evaluation
    Primarily driven by higher project management and wireline activity in Latin America, increased drilling services in North America and Europe-Africa, and higher software sales in Europe-Africa.
    		$2.4 billion—2%$348 million operating income (16% margin)
    Europe-Africa
    Improved completion tool sales in Norway and increased drilling-related services in Namibia were offset by declines in the Caspian Area and fluid services across Europe.
    		$828 million—flat—
    Middle East Asia
    Primarily driven by lower activity across multiple product service lines in Saudi Arabia.
    		$1.4 billion—-3%—
    Latin America
    Primarily driven by higher project management activity across the region and increased drilling services in Argentina.
    		$996 million—2%—

    Operational metrics

    13
    Adjusted net income per diluted share
    $0.58
    Q3 FY25

    Reported net income per diluted share was $0.02.

    Common stock repurchased
    $250 million
    Q3 FY25

    Approximately $250 million of common stock repurchased during Q3.

    Severance and asset write-offs
    $284 million
    Q3 FY25

    Recorded to address near-term market conditions and reset cost structure.

    Valuation allowance expense
    $125 million
    Q3 FY25

    Recorded due to changes to U.S. tax laws, expected to result in a lower effective tax rate on U.S. taxable income going forward.

    Corporate and other expense
    $64 million
    Q3 FY25

    Reported for Q3.

    SAP S4 migration expense
    $50 million
    Q3 FY25

    Included milestone payments.

    Net interest expense
    $88 million
    Q3 FY25

    Reported for Q3.

    Other net expense
    $49 million
    Q3 FY25

    Reported for Q3.

    Normalized effective tax rate
    21.5%
    Q3 FY25

    Reported for Q3.

    Capital expenditures
    $261 million
    Q3 FY25

    Reported for Q3.

    Tariffs impact
    $31 million
    Q3 FY25

    Impacted business in Q3.

    ZEUS electric fleets
    over half
    Q3 FY25

    An important milestone, reflecting strong demand for technology.

    VoltaGrid ownership
    approximately 20%
    Q3 FY25

    Halliburton invested early and increased ownership over time.

    Industry KPIs

    3
    MetricValueDetails
    FCF CAPEX leverageFCF $276M; CapEx $261MUSD
    Segment adjusted EBITDA margin16%%
    Data center new energy revenue capacity2.3 GWGW

    Deals & partnerships

    4
    VoltaGridInternational partnership to deliver distributed power solutions for data centers outside of North America.

    This agreement leverages Halliburton's industrial global scale and market knowledge with VoltaGrid's technical expertise in executing power projects for data centers.

    ConocoPhillipsMajor 5-year contract for production services in the North Sea.5 years

    Halliburton will transform a conventional offshore service vessel into an advanced stimulation platform, deploying OCTIV automation offshore for the first time.

    Kuwait Oil CompanyMultiyear ESP contract.multiyear

    Further strengthens Halliburton's position in Kuwait for artificial lift services.

    EcopetrolESP contracts in 9 of 11 fields in Colombia.

    Strengthens Halliburton's position in Colombia for artificial lift services.

    Risks & headwinds

    4
    Volatile commodity pricesNear term

    volatile commodity prices

    Mitigation: Halliburton took cost reduction actions, reset 2026 capital expenditures, and actively manages deployed capital by idling uneconomic equipment.

    North America market softnessQ4 FY25

    approximately 12% to 13% lower sequential revenue

    Mitigation: Executing strategy to maximize value, prioritizing returns, technology leadership, and working with leading operators; idling uneconomic frac fleets.

    Tariffs impactQ3 FY25, Q4 FY25

    $31 million in Q3 FY25, expected $60 million in Q4 FY25

    Mitigation: Impacts are included in guidance.

    Market uncertaintyNear term

    timing and shape remain uncertain

    Mitigation: Maintaining cost and capital discipline, investing in differentiated technologies, and remaining focused on returning cash to shareholders.

    What to watch in Q4 FY25

    5

    International Revenue Growth

    Q4 FY25
    CurrentFlat QoQ in Q3 FY25
    TargetIncrease 3% to 4%

    Why it matters

    Indicates continued strength and outperformance of international growth engines, which are a key strategic focus.

    For the fourth quarter, we expect international revenue to increase 3% to 4% on roughly flat activity levels with typical seasonal software and completion tool sales.

    Q&A highlights

    7

    Could you elaborate on the evolution of the distributed power generation market and the strategic collaboration with VoltaGrid for international projects, specifically regarding project-level economics?

    Jeff Miller highlighted the unprecedented demand for AI power and the global opportunity. He explained that Halliburton will co-invest in project economics with VoltaGrid, leveraging Halliburton's global presence, execution skills, and manufacturing capabilities, combined with VoltaGrid's technical expertise in scaling these projects.

    “this is where Halliburton invests in project economics. So we are sharing the economic value of projects together.”

    asked by Arun Jayaram · answered by Jeffrey Miller

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Cost and Capital Discipline

    Halliburton implemented significant cost reduction actions, including rightsizing operations and overhead, which are expected to yield approximately $100 million in quarterly cash operational savings starting in Q4 FY25. The company also reset its capital expenditures target for 2026 to $1 billion, representing a nearly 30% reduction from 2025 levels. Management emphasized actively managing deployed capital by idling, relocating, or retiring equipment that does not meet return thresholds, while maintaining focus on technology development and growth engines.

    02

    International Growth Engines Performance

    The company's international growth engines—production services, artificial lift, unconventionals, and drilling—are performing well and gaining traction. Key achievements include a 5-year contract win with ConocoPhillips in the North Sea for production services, multi-year ESP contracts awarded by Kuwait Oil Company and Ecopetrol in Colombia for artificial lift, and setting a new continuous pumping record in the Vaca Muerta for international unconventionals. The iCruise Force technology was introduced in the UAE and Qatar, delivering strong results in drilling.

    03

    North America Market Dynamics and Technology Adoption

    North America revenue of $2.4 billion in Q3 FY25 exceeded expectations, growing 5% sequentially due to less-than-anticipated completions white space. Despite a challenging market, technology demand remains strong. Over half of Halliburton's active North America frac fleet is now ZEUS electric, with two additional ZEUS fleets introduced year-to-date. The company also sees strong demand for its ZEUS IQ closed-loop fracturing offering and introduced the 7-7/8 iCruise CX in the Permian Basin with outstanding results.

    04

    VoltaGrid Partnership and Data Center Opportunity

    Halliburton, which holds approximately 20% ownership in VoltaGrid, announced an international partnership to deliver distributed power solutions for data centers outside North America. This collaboration leverages Halliburton's global reach and operational capabilities with VoltaGrid's distributed power expertise. This follows VoltaGrid's recent agreement to deploy 2.3 gigawatts of generation capacity for Oracle's AI data centers, which expands VoltaGrid's contracted backlog and validates its market position, presenting a significant long-term growth opportunity for both companies.

    05

    Shareholder Returns and Financial Discipline

    The company repurchased approximately $250 million of common stock during Q3 FY25 and reiterated its commitment to returning cash to shareholders. Management highlighted the importance of maintaining cost and capital discipline, including idling uneconomic equipment, while continuing to invest in differentiated technologies that drive long-term performance. The full year 2025 free cash flow target remains at approximately $1.7 billion.

    AI-generated summary of the company’s earnings call. Not investment advice.