Skip to content
    SLB
    Earnings call· Dec 2025(Q4 FY25)

    SLB LIMITED/NV SLB

    Jan 23, 2026 Source

    Executive summary

    SLB Q4 FY25 — Strong Q4 Performance Driven by International Growth and Digital

    SLB concluded FY25 with robust fourth-quarter performance, marked by strong sequential revenue growth and significant cash flow generation, driven by international market stabilization and digital segment strength. The company anticipates a seasonal dip in Q1 FY26, followed by a rebound led by international markets and continued expansion in its Data Center Solutions business, positioning for a stronger FY27 outlook. Strategic investments in production and recovery, digital, and new energy solutions are central to its long-term growth strategy.

    Highlights

    5

    • Sequential revenue increased by 9% to $9.7 billion, with international growth in high single digits and North America in mid-teens.

    • Digital annual recurring revenue (ARR) surpassed $1 billion, reflecting 15% year-on-year growth.

    • Generated $3 billion of cash flow from operations and $2.3 billion of free cash flow in Q4 FY25.

    • Net debt reduced by $1.8 billion during the quarter to $7.4 billion.

    • Announced an increased dividend and plan to return more than $4 billion to shareholders in 2026.

    Concerns

    5

    • Adjusted EPS decreased by $0.14 compared to Q4 FY24.

    • Recorded $0.23 of net charges in Q4, including $0.11 goodwill impairment for carbon capture and $0.08 for merger/integration.

    • Q1 FY26 revenue anticipated to decline by high single digits sequentially due to seasonality.

    • Q1 FY26 adjusted EBITDA margin expected to decrease by 150 to 200 basis points sequentially.

    • Near-term oversupply may continue to exert downward pressure on commodity prices throughout H1 FY26.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $36.9 billion to $37.7 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $8.6 billion to $9.1 billion
    high materiality
    High
    Full-year 2026 Shareholder Returns
    more than $4 billion
    high materiality
    High
    Q1 FY26 Revenue Sequential Change
    decline by high single digits
    medium materiality
    High
    Q1 FY26 Adjusted EBITDA Margin Sequential Change
    decrease by 150 to 200 basis points
    medium materiality
    High
    Full-year 2026 Total Capital Investments
    approximately $2.5 billion
    high materiality
    High
    Dividend Increase
    3.5%
    medium materiality
    High
    Full-year 2026 Share Repurchase Target
    same $2.4 billion as 2025
    medium materiality
    High
    ChampionX Synergies Achievement
    approximately half of the $400 million total synergies
    medium materiality
    High
    Data Center Solutions Quarterly Revenue Run Rate
    $1 billion per year
    high materiality
    High
    Full-year 2026 Adjusted EBITDA Margin
    in line with full year 2025 levels
    high materiality
    High
    Full-year 2026 Effective Tax Rate
    approximately 20%
    low materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    International
    Led sequential revenue growth for the company, with Latin America and Middle East and Asia leading the rebound in 2026. Europe and Africa is anticipated to decline slightly in 2026.
    		——high single-digit growth—
    North America
    Contributed to sequential revenue growth. Will benefit from 7 months of ChampionX activity, stronger offshore activity, and accelerated data center growth in 2026, while upstream land activity will decline year-on-year.
    		——mid-teens growth—
    Production Systems
    Led divisional growth, reflecting a full quarter of ChampionX activity. Excluding ChampionX, revenue increased 11% sequentially, driven by strong sales of Completions and artificial lift, and project milestones. Profitability improved in Completions and Production Chemicals. Expected to increase in 2026, mostly benefiting from a full year of ChampionX revenue.
    Pretax operating margin increase: 20 basis points
    		$4.1 billion—17%16% pretax operating margin
    Digital
    Led divisional growth, driven by strong year-end sales in Digital Exploration and increased revenue in Digital Operations and Platforms & Applications. Full year Digital revenue of $2.7 billion grew 9%, with a 35% EBITDA margin, exceeding the Rule of 40. Expected to grow at the same pace as 2025 in 2026, driven by Digital Operations, with margins increasing slightly.
    Pretax operating margin expansion: 557 basis pointsAnnual recurring revenue (ARR): >$1 billionARR year-on-year growth: 15%Full year revenue growth: 9%Full year EBITDA margin: 35%Trailing 12-month net recurring revenue: 103%
    		$825 million—25%34% pretax operating margin
    Reservoir Performance
    Sequential growth driven by strong international activity, particularly in Saudi Arabia, East Asia, Qatar, Indonesia, and Guyana. Margin improvement due to a favorable activity mix in the Middle East. Expected to be flattish in 2026, with margins down year-on-year due to activity mix and pricing headwinds.
    Pretax operating margin increase: 105 basis points
    		$1.7 billion—4%19.6% pretax operating margin
    Well Construction
    Revenue decreased sequentially, primarily driven by declines in Middle East and Asia, offset by higher offshore drilling activity in North America and Europe & Africa. Pretax operating margin was slightly down. Expected to decline slightly in 2026, with margins down year-on-year due to activity mix and pricing headwinds.
    		$2.9 billion—-1%18.7% pretax operating margin

    Operational metrics

    13
    Adjusted EPS
    $0.78down $0.14 YoY, up $0.09 QoQ
    Q4 FY25

    Earnings per share, excluding charges and credits.

    Net Charges
    $0.23
    Q4 FY25

    Net charges recorded during the fourth quarter.

    Adjusted EBITDA Margin
    23.9%up 83 bps QoQ
    Q4 FY25

    Adjusted EBITDA margin for the fourth quarter, primarily driven by strong digital performance.

    Net debt
    $7.4 billionreduced by $1.8 billion QoQ
    Q4 FY25

    Net debt balance at the end of the year, following a significant reduction during the quarter.

    Capital investments
    $716 million
    Q4 FY25

    Capital investments for the fourth quarter. Full year capital investments were $2.4 billion.

    Stock repurchases
    $2.4 billion
    FY25

    Total stock repurchases for the full year 2025.

    Dividends
    $1.6 billion
    FY25

    Total dividends paid for the full year 2025.

    ChampionX incremental revenue
    $1.8 billion
    FY26

    Expected incremental revenue contribution from a full year of ChampionX in 2026.

    Divested businesses revenue impact
    $350 million
    FY25

    Combined revenue from divested businesses in 2025, which will partially offset ChampionX incremental revenue in 2026.

    ChampionX synergies achieved
    $30 million
    FY25

    Synergies achieved from the ChampionX acquisition in 2025.

    ChampionX synergies distribution
    75%
    FY26

    Distribution of ChampionX synergies across divisions.

    Corporate costs increase
    $70 million
    FY26

    Expected year-on-year increase in corporate costs due to a full year of ChampionX intangible asset amortization.

    Capital intensity (CapEx as % of revenue)
    low end of 5% to 7% range
    Future

    SLB's capital efficiency has improved, allowing them to operate with less capital. While CapEx may increase with high growth rates, it will remain at the low end of the guided range.

    Industry KPIs

    5
    MetricValueDetails
    FCF CAPEX leverage$2.3 billionUSD
    M a integration progress$30 millionUSD
    Digital recurring revenue$1 billionUSD
    Segment adjusted EBITDA margin35%%
    Data center new energy revenue capacity$1 billionUSD

    Orderbook & backlog

    1
    OneSubsea bookings$4 billionFY25

    Cumulative bookings expected to exceed $9 billion over the next 2 years, supported by tendering activity.

    Deals & partnerships

    5
    ADNOCLaunch of an AI-powered Production System Optimization platform

    Partnership to launch an AI-powered Production System Optimization platform, underscoring the opportunity for AI in the upstream energy sector.

    OrmatCollaboration on geothermal development, including a pilot project for enhanced geothermal

    Partnership to combine expertise in subsurface geothermal and power plant development, aiming to optimize and scale unconventional geothermal through science, technology, and digital modeling. A pilot project is planned for later this year.

    ChampionXAcquisition of ChampionX businesses

    Acquisition of ChampionX businesses, significantly expanding SLB's production portfolio and contributing to revenue and synergy targets.

    Palliser APS projectDivestiture of interest in Palliser APS project in Canada

    Divestiture of SLB's interest in the Palliser APS project in Canada.

    Rig business in Middle EastDivestiture of rig business in the Middle East

    Divestiture of SLB's rig business in the Middle East.

    Risks & headwinds

    6
    Near-term oversupply and commodity price pressureH1 2026

    downward pressure

    Mitigation: Elevated geopolitical uncertainties should provide a price floor; E&P operators expected to backload 2026 budgets, leading to a gradual recovery in upstream investments as supply and demand rebalance into 2027.

    E&P operators backloading 2026 budget2026

    expected to backload

    Mitigation: SLB's strategy focuses on technology, integration, and digital solutions to capture efficiencies, aligning with operator priorities for performance assurance and optimization.

    Seasonal decline in Q1 FY26Q1 FY26

    revenue decline by high single digits sequentially; adjusted EBITDA margin decrease by 150 to 200 basis points sequentially

    Mitigation: This seasonal dip will be followed by a rebound in activity during Q2 with further expansion into H2, driven primarily by international markets.

    Loss in carbon capture projectQ4 FY25

    negatively impacted margins by approximately 50 basis points

    Mitigation: Not explicitly stated, but the company continues to invest in carbon capture, suggesting ongoing strategic focus despite short-term setbacks.

    Pricing headwinds in select marketsFY26

    margins will be down year-on-year

    Mitigation: Leveraging ChampionX synergies, digital growth margin accretion, and using technology performance as a differentiator to protect margins.

    Unfavorable technology mix within Production SystemsFY26

    partially offset by

    Mitigation: Offset by the positive effect of ChampionX synergies on Production Systems margins.

    What to watch in Q1 FY26

    5

    Saudi Arabia rig count recovery

    by end of 2026
    Currentrebound in drilling and workover activity
    Targetreturning to early 2025 levels

    Why it matters

    Saudi Arabia's activity rebound is a key driver for international market recovery and SLB's Middle East performance.

    In 2026, the Middle East market will be characterized by rebounds in drilling and workover activity in Saudi Arabia, with rig counts potentially returning to early 2025 levels by the end of 2026, and this has already begun.

    Q&A highlights

    6

    Can you provide context on the CapEx trend line and how the capital intensity of your forward business differs from the past?

    SLB increased CapEx slightly to $2.5 billion for 2026 to capture new opportunities as activity recovers. Capital efficiency has improved, allowing more to be done with less. Capital intensity varies by division, with Reservoir Performance being highest, followed by Well Construction, and Production Systems (especially with ChampionX) having lower intensity. CapEx will increase if growth rates are high but will remain at the low end of the 5-7% of revenue range.

    “We can do more with less, basically. But clearly, we will not miss any opportunity if activity recovers faster. We want to be ready for the ramp-up, and we'll bring more equipment and tools as needed.”

    asked by Stephen Richardson · answered by Stephane Biguet

    3 min read8 chapters

    Detailed Narrative

    01

    Q4 Performance Highlights

    SLB concluded 2025 with strong operational and financial performance in Q4, achieving 9% sequential revenue growth and margin expansion. This was driven by high single-digit growth internationally and mid-teens growth in North America. Key drivers included strong year-end product sales in Production Systems, higher exploration data sales, and robust demand for Digital Operations. The quarter also saw a return to growth in Saudi Arabia and Sub-Saharan Africa, with flat revenue in Mexico, markets that previously contributed to organic revenue decline in FY25.

    02

    Market Environment and Demand Drivers

    The company expects near-term oversupply to pressure commodity prices in H1 2026, with E&P operators backloading budgets. However, supply and demand are projected to rebalance into 2027, supporting a gradual recovery in upstream investments. Economic growth, population increase, and large-scale manufacturing (including AI-related investments) are expected to drive oil and gas demand. Operators are prioritizing efficiency, technology, and digital solutions to deliver lowest-cost incremental barrels, aligning with SLB's integrated offerings.

    03

    International Market Dynamics

    International markets are stabilizing and trending upwards, led by Latin America and the Middle East and Asia in 2026. The Middle East remains the largest international market, with a positive investment outlook and a resurgence of oil production. Saudi Arabia is expected to see a rebound in drilling and workover activity, potentially returning rig counts to early 2025 levels by year-end 2026. Other growth areas include Libya, Algeria, Egypt offshore, and Iraq, with international companies increasing investments.

    04

    Offshore and Subsea Opportunities

    Offshore, particularly deepwater, presents compelling long-term growth opportunities, with activity expected to inflect towards the end of 2026. OneSubsea is uniquely positioned to capitalize on this with its processing capabilities and integrated expertise. Over 500 subsea trees are expected to be awarded across 2026 and 2027, a 20% increase from 2025. OneSubsea secured approximately $4 billion in bookings in 2025 and aims for cumulative bookings exceeding $9 billion over the next two years.

    05

    Data Center Solutions Expansion

    SLB's Data Center Solutions business has shown strong progress since its launch less than two years ago. The company plans to expand its offerings, customer base, and geographies in 2026, with an expectation to exit the year at a quarterly revenue run rate of $1 billion. This opportunity is growing faster than anticipated, with plans for international expansion into Asia and the Middle East, leveraging modular manufacturing capabilities and hyperscaler relationships.

    06

    Venezuela Opportunity

    SLB is currently the only international service company operating in Venezuela, providing diverse services under license. With a century of experience, active facilities, equipment, and local personnel, SLB is prepared to rapidly ramp up activities if appropriate licensing, safety, and compliance measures are in place. Historically, SLB had over $1 billion in revenue and 3,000 employees in Venezuela, and sees significant potential for re-engagement with the industry.

    07

    Production and Recovery Strategy

    The company views production and recovery as a new strategic chapter, driven by the acquisition of ChampionX and its digital platform additions. This focus addresses customer priorities to extract more from existing assets at lower costs. Integrated solutions, including lift solutions, digital production optimization, and chemistry for reservoir performance, are gaining traction. This strategy aims to improve existing asset performance, transform assets for enhanced recovery, and bring digital solutions to the production landscape.

    08

    Geothermal Initiative

    SLB has partnered with Ormat to combine their respective leadership in subsurface geothermal characterization and power plant development. This partnership aims to provide integrated offerings for conventional geothermal and explore unconventional geothermal. The collaboration will focus on optimizing and scaling unconventional geothermal through science, technology, and digital modeling, with plans to develop assets and offer integrated solutions to the market in the near future, starting with a pilot project.

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