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    SLB
    Earnings call· Sep 2025(Q3 FY25)

    SLB LIMITED/NV SLB

    Oct 17, 2025 Source

    Executive summary

    SLB N.V. Q3 FY25 — Digital and Production Recovery Drive Resilient Performance

    SLB delivered resilient Q3 FY25 results, driven by strong performance in its newly established Digital division and the successful integration of ChampionX, which bolsters its production recovery offerings. Despite sequential headwinds from APS divestitures and an Ecuador pipeline disruption, the company is strategically expanding its digital capabilities, including data center solutions, and positioning for an international-led market rebound, with a focus on capital discipline and shareholder returns.

    Highlights

    5

    • Digital revenue increased 11% sequentially, with Digital Operations growing 39% and annual recurring revenue (ARR) reaching $926 million, up 7% YoY.

    • Data center solution business revenue more than doubled year-on-year, with expansion planned beyond the U.S. and new customers onboarding.

    • ChampionX integration delivered revenue growth and margin contribution ahead of expectations, contributing $579 million revenue and $108 million pretax income in Q3.

    • Generated $1.7 billion cash flow from operations and $1.1 billion free cash flow in Q3, while repurchasing $114 million of stock.

    • Confirmed second half revenue within the midpoint of $18.2 billion to $18.8 billion previous guidance range.

    Concerns

    4

    • Sequential revenue decrease of approximately $200 million due to a pipeline disruption in Ecuador ($100 million) and divestiture of the Palliser APS project ($100 million).

    • Company-wide adjusted EBITDA margin declined 92 basis points sequentially to 23.1%, with the Ecuador pipeline disruption negatively impacting EBITDA margin by 60 bps.

    • U.S. land activity declined as shale operators focused on efficiency and cash preservation, leading to muted activity in North America.

    • Pretax operating margin for Production Systems declined 66 basis points sequentially due to unfavorable geographic mix in completions and lower subsea margins.

    Guidance & targets

    11
    CategoryTargetConfidence
    Q4 FY25 Revenue Growth
    high single-digit top line growth
    high materiality
    High
    H2 FY25 Revenue
    midpoint of $18.2 billion to $18.8 billion
    high materiality
    High
    Q4 FY25 Adjusted EBITDA Margin Expansion
    50 to 150 bps sequentially
    medium materiality
    High
    FY25 Digital Division EBITDA Margin
    35%
    high materiality
    High
    FY25 Digital Division Revenue Growth
    double-digit growth year-on-year
    high materiality
    High
    FY25 Capital Investments
    $2.4 billion
    medium materiality
    High
    ChampionX Synergies Realization
    70% to 80% of $400 million annual pretax synergies
    high materiality
    High
    Q4 FY25 Free Cash Flow
    increase
    medium materiality
    Medium
    Q4 FY25 Annual Recurring Revenue (ARR) Growth
    high single-digit growth
    medium materiality
    Medium
    Deepwater Rig Activity
    strengthening
    medium materiality
    Medium
    Saudi Arabia Activity
    increased activity
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Digital
    New stand-alone division. Sequential revenue growth driven by robust sales of Digital Exploration and increased Digital Operations. Includes 2 months of ChampionX activity contributing $20 million Digital revenue.
    Digital Operations growth: 39% sequentialAnnual Recurring Revenue (ARR): $926 millionARR YoY growth: 7%Net revenue retention rate: 103%
    		$658 million—11%32.7% adjusted EBITDA margin
    Reservoir Performance
    Higher activity in Europe and Africa offset by lower revenue in Middle East and Asia, primarily Saudi Arabia. Margins essentially flat sequentially.
    		$1.7 billion—-1%18.5% pretax operating margin
    Well Construction
    Higher revenue in offshore Guyana and North America offset by lower drilling activity in Saudi Arabia and Argentina. Margins essentially flat sequentially.
    		$3 billion—flat18.8% pretax operating margin
    Production Systems
    Includes 2 months of ChampionX activity contributing $575 million revenue. Margin declined 66 bps sequentially due to unfavorable geographic mix in completions and lower subsea margins, partially offset by ChampionX contribution. Pro forma revenue was flat sequentially with lower completion sales offset by increased sales of valves and production chemicals.
    		$3.5 billion—18%16.1% pretax operating margin

    Operational metrics

    16
    EPS, excluding charges and credits
    $0.69down $0.05 sequentially; down $0.20 YoY
    Q3 FY25

    Reported on a diluted basis.

    Charges and credits
    $0.19
    Q3 FY25

    Items excluded from adjusted EPS.

    Total Revenue
    $8.9 billionup $382 million or 4% sequentially
    Q3 FY25

    Company-wide revenue.

    Pretax segment operating margin
    18.2%declined 32 basis points sequentially
    Q3 FY25

    ChampionX contribution was accretive to these margins.

    Company-wide adjusted EBITDA margin
    23.1%decreased 92 basis points sequentially
    Q3 FY25

    Company-wide adjusted EBITDA margin.

    ChampionX revenue contribution
    $579 million
    Q3 FY25

    Contribution from acquired ChampionX businesses.

    ChampionX pretax income contribution
    $108 million
    Q3 FY25

    Contribution from acquired ChampionX businesses.

    APS revenue loss (Ecuador pipeline disruption)
    $100 million
    Q3 FY25

    Due to production interruption arising from a pipeline disruption in Ecuador.

    APS revenue loss (Palliser divestiture)
    $100 million
    Q3 FY25

    Following the divestiture of interest in the Palliser APS project in Canada at the end of Q2.

    Automated drilling footage growth
    more than 50%year-on-year
    Q3 FY25

    Part of Digital Operations growth.

    Connected assets deployed
    more than 20,000
    Q3 FY25

    Combined total following ChampionX integration, providing additional digital insights and optimization.

    Acquisition-related payments
    $153 million
    Q3 FY25

    Included in free cash flow.

    Stock repurchases (Q3)
    $114 million
    Q3 FY25

    Repurchased during the quarter.

    Stock repurchases (YTD)
    $2.4 billion
    YTD FY25

    Total stock repurchases year-to-date.

    Dividend commitment (FY25)
    $1.6 billion
    FY25

    Total dividend commitment for the year.

    Total shareholder distributions (FY25)
    $4 billion
    FY25

    Combined dividend and buybacks for the full year.

    Industry KPIs

    8
    MetricValueDetails
    Rpo backlog—
    FCF CAPEX leverage$1.1 billion FCF; $581 million CapExUSD
    M a integration progress$400 millionUSD
    Digital recurring revenue$926 millionUSD
    Aftermarket installed basemore than 20,000assets
    Orders bookings by segment—
    Segment adjusted EBITDA margin32.7%%
    Data center new energy revenue capacitymore than doubled%

    Deals & partnerships

    4
    ChampionXAcquisition of production chemicals and artificial lift businesses.

    Strengthens SLB's production recovery offerings.

    RESMAN Energy TechnologyAcquisition of tracer technology for enhanced recovery development.

    Strategic investment to enhance production recovery portfolio.

    Stimline DigitalAcquisition of digital technology and cloud application.

    Helps plan and execute well intervention for customers; strategic investment to enhance production recovery portfolio.

    AIQ (for ADNOC)Collaboration to deploy ENERGYai agentic AI solution.

    Powered by SLB Lumi data and AI platform.

    Risks & headwinds

    6
    Challenging commodity prices and demand-supply uncertaintynear-term

    increasingly challenging commodity prices and uncertainty on the demand-supply balance

    Mitigation: Industry discipline, long-cycle and international activity resilience. Expect demand-supply rebalance in future.

    Natural production declineannual

    nearly 90% of annual upstream investment needed to offset

    Mitigation: Increased focus on production recovery solutions, technology, and reinvestment.

    Pipeline disruption in EcuadorQ3 FY25

    Approximately $100 million revenue loss; 60 basis points negative impact on company-wide adjusted EBITDA margin.

    Mitigation: Fully restored operations on APS Ecuador assets expected to contribute to Q4 EBITDA margin expansion.

    Divestiture of Palliser APS projectQ3 FY25 (divestiture end of Q2)

    Approximately $100 million revenue loss; 30 basis points negative impact on company-wide adjusted EBITDA margin.

    Muted activity in U.S. landnear to midterm

    decline in U.S. land activity

    Mitigation: U.S. shale operators focus on efficiency and cash preservation; SLB's global footprint and broad portfolio help navigate regional uncertainties.

    Short-term scheduling uncertainties in deepwaternear-term

    Resulted in white space, particularly in Sub-Sahara Africa

    Mitigation: Expected to progressively disappear as FIDs are planned for 2026 and early 2027; strengthening of rig activity expected late 2025 and into 2027.

    What to watch in Q4 FY25

    5

    Q4 FY25 Revenue Growth

    Q4 FY25
    CurrentQ3 FY25 revenue up 4% sequentially
    TargetHigh single-digit sequential growth

    Why it matters

    Indicates overall business momentum and successful integration of ChampionX and seasonal strength.

    We expect that we'll achieve a sequential step-up in results in the fourth quarter of high single-digit top line growth as we report a full quarter of ChampionX and generate seasonally higher year-end digital and product sales.

    Q&A highlights

    7

    How does SLB see the production-focused part of its business growing, especially with deepwater ramping up, and will it outpace the upstream-driven portfolio through the end of the decade?

    Olivier Le Peuch stated that customers are increasingly focused on production recovery due to natural declines. ChampionX positions SLB to address both OpEx and CapEx markets, offering a broader portfolio (lift, intervention, chemistry) and digital integration for differentiated solutions. This market is expected to expand long-term, and SLB aims for leadership.

    “This presents an exciting growth opportunity for companies who can offer solutions and technology to optimize production and maximize recovery from maturing assets and technology will be the key.”

    asked by John Anderson · answered by Olivier Le Peuch

    2 min read6 chapters

    Detailed Narrative

    01

    Digital Division Restructuring and Growth

    SLB has restructured its reporting to feature Digital as a stand-alone division, comprising Platforms & Applications, Digital Operations, Digital Exploration, and Professional Services. This move aims to increase transparency and highlight the strategic value of Digital, which is expected to grow faster than the Core business with highly accretive margins. Digital revenue increased 11% sequentially in Q3, driven by a 39% increase in Digital Operations and supported by new connected assets from ChampionX.

    02

    ChampionX Integration and Production Recovery Focus

    The integration of ChampionX is progressing ahead of expectations, contributing $579 million in revenue and $108 million in pretax income in Q3. This acquisition significantly enhances SLB's production recovery offerings, combining subsurface expertise with a broad portfolio of lift, intervention, and chemical technologies. The company views production recovery as a strategic growth area, addressing customer needs to unlock additional barrels with capital efficiency amidst tighter industry economics and natural production declines.

    03

    Data Center Solutions Expansion

    SLB's data center solution business has more than doubled its revenue year-on-year, marking its first disclosure as a significant growth area. The strategy involves expanding beyond the current U.S. footprint, with planned expansion into Asia and onboarding new hyperscaler and co-locator customers. This business leverages SLB's manufacturing, engineering, and logistics capabilities, and is characterized by low capital intensity, driven by the AI boom rather than oil and gas customers.

    04

    International Market Resilience and Deepwater Outlook

    International markets demonstrated resilience, with revenue rising 1% sequentially, particularly in the Middle East, Asia, Guyana, Sub-Saharan Africa, and Scandinavia. Deepwater markets are expected to strengthen, with white space dissipating and rig activity anticipated to bottom in Q4 2025, followed by a gradual uptick in late 2025 and further strengthening in 2027. This is supported by a healthy pipeline of FIDs planned for 2026 and early 2027, particularly in the Atlantic and Asia.

    05

    Oil Macro Rebalancing and Activity Outlook

    Management anticipates that the oil market, currently experiencing some oversupply, will rebalance in the coming months⏳, driven by moderating supply releases and growing demand. Under these rebalanced conditions, international markets are expected to lead the future activity rebound, contrasting with North America where activity is likely to remain muted due to efficiency gains, challenging economics in some basins, and ongoing consolidation. Saudi Arabia is expected to see increased activity in H1 2026 for both gas and oil.

    06

    Financial Performance and Shareholder Returns

    SLB reported Q3 revenue of $8.9 billion, up 4% sequentially, with adjusted EPS of $0.69. The company generated $1.7 billion in cash flow from operations and $1.1 billion in free cash flow. For the full year, capital investments are expected to be approximately $2.4 billion. SLB repurchased $114 million of stock in Q3, bringing year-to-date repurchases to $2.4 billion, and plans to return a total of $4 billion to shareholders for the full year through buybacks and dividends.

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