FTI Q2 2025: $2.6B subsea inbound orders support $10B annual target
- Robust subsea order momentum: Management highlighted a strong order book with substantial direct awards and a growing opportunity list, supporting the goal of exceeding $10,000,000,000 in subsea inbound this year and targeting similar levels in 2026.
- Sustainable subsea services growth: With over 80% of business coming through direct awards, the recurring revenue from an expanding installed base and a long lifecycle for subsea assets offers durable earnings and future cash flow visibility.
- Innovative technology initiatives: The company’s advancement in all electric subsea systems and hybrid flexible pipe is set to reduce cycle times, lower installation costs, and improve project economics, thus driving potential margin expansion over the longer term.
- Reliance on emerging technologies: The company is aggressively pursuing innovative solutions such as all‐electric systems and hybrid flexible pipe, but these technologies are still in the development/qualification phase and face execution risks that could delay benefits or increase costs.
- Dependence on direct awards: With over 80% of the business coming through direct awards, any shift in customer sentiment or competitive dynamics could erode this advantage and lead to lower future order inflows.
- Margin and execution uncertainties: Despite guidance improvements, the ability to sustain strong margins hinges on flawless project execution and efficient cost management. Any operational missteps or delays—especially in complex, integrated subsea projects—could pressure future margins.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Up about 9% (from $2,325.6M in Q2 2024 to $2,534.7M in Q2 2025) | Overall revenue growth reflects improved global performance driven by robust Subsea activity and balanced contributions from other segments, building on solid results from the previous quarter. |
Subsea Revenue | Up roughly 10% (from $2,009.1M in Q2 2024 to $2,216.3M in Q2 2025) | Subsea performance strengthened due to higher conversion of backlog and increased project volumes, continuing an upward trend observed in prior periods. |
Subsea Services Revenue | Up approximately 32% (from $50.4M in Q2 2024 to $66.8M in Q2 2025) | The Services segment surged as a result of increased field activity and higher iEPCI™ and service orders, markedly improving upon lower levels seen in Q2 2024. |
Subsea Products Revenue | Down about 8% (from $224.5M in Q2 2024 to $206.6M in Q2 2025) | A decline in Products revenue indicates challenges in the mature product lines or a deliberate shift in the product mix, contrasting with earlier periods when higher backlog conversion drove revenue gains. |
Subsea Lease Revenue | Up roughly 8% (from $41.6M in Q2 2024 to $45.0M in Q2 2025) | Lease revenue increased due to improved fleet utilization and contract adjustments, reinforcing positive trends from prior quarters. |
Surface Technologies Revenue | Largely flat (from $316.5M in Q2 2024 to $318.4M in Q2 2025) | The minimal change in Surface Technologies revenue reflects offsetting dynamics – lower domestic activity balanced by growth in selective international markets, consistent with values seen in Q2 2024. |
Latin America Revenue | Up roughly 44% (from $611.9M in Q2 2024 to $879.8M in Q2 2025) | Robust growth in Latin America is driven by strong offshore project performance and increased local activity, building on momentum from previous periods. |
Middle East Revenue | Up approximately 83% (from $106.8M in Q2 2024 to $195.2M in Q2 2025) | Exceptional growth in the Middle East reflects a significant ramp-up in project activity and regional investments, contrasting sharply with the prior period’s lower baseline. |
North America Revenue | Down about 37% (from $572.9M in Q2 2024 to $359.9M in Q2 2025) | North American revenue declined due to lower domestic activity and high development costs, highlighting a shift away from traditionally strong markets compared to Q2 2024. |
Europe and Central Asia Revenue | Up roughly 7% (from $653.8M in Q2 2024 to $701.9M in Q2 2025) | Modest growth in this region indicates stability and gradual improvement in market conditions, continuing a subdued trend from the previous period. |
Africa Revenue | Up about 11% (from $235.9M in Q2 2024 to $261.7M in Q2 2025) | Africa’s revenue increase is the result of moderate gains in local project activity and improved service delivery, building on the prior period’s performance. |
Asia Pacific Revenue | Down around 6% (from $144.3M in Q2 2024 to $136.2M in Q2 2025) | A decline in Asia Pacific revenue suggests a reduction in project activity or seasonal factors impacting the region, marking a downturn compared to Q2 2024. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EBITDA | FY 2025 | $1.76 billion | $1,800,000,000 | raised |
Free Cash Flow | FY 2025 | $1 billion to $1.15 billion | Near top end of $1,000,000,000 to $1,150,000,000 | no change |
Shareholder Distributions | FY 2025 | At least 70% of free cash flow | Reiterated commitment to distribute at least 70% of free cash flow | no change |
Subsea Revenue | FY 2025 | no prior guidance | Expected to come in near the midpoint of the guidance range | no prior guidance |
Surface Technologies Revenue | FY 2025 | no prior guidance | Expected to come in near the midpoint of the guidance range | no prior guidance |
Subsea Adjusted EBITDA Margin | FY 2025 | no prior guidance | Expected to be near the top end of the guidance range | no prior guidance |
Surface Technologies Adj. EBITDA Margin | FY 2025 | no prior guidance | Expected to be near the top end of the guidance range | no prior guidance |
Corporate Expense | FY 2025 | no prior guidance | Estimated at €120,000,000 | no prior guidance |
Subsea Revenue | Q3 2025 | no prior guidance (previous quarterly guidance was for Q2 2025 ) | Expected to grow low to mid-single digits sequentially | no prior guidance |
Subsea Adjusted EBITDA Margin | Q3 2025 | no prior guidance (previous quarterly guidance was for Q2 2025 ) | Expected to be similar to the 21.8% reported in Q2 | no prior guidance |
Surface Technologies Revenue | Q3 2025 | no prior guidance (previous quarterly guidance was for Q2 2025 ) | Anticipated to increase low single digits sequentially | no prior guidance |
Surface Technologies Adj. EBITDA Margin | Q3 2025 | no prior guidance (previous quarterly guidance was for Q2 2025 ) | Expected to be approximately 16% | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Subsea Revenue | Q2 2025 | "Expected to grow low double digits sequentially" | Grew approximately 14.5% sequentially from $1,936.2Million in Q1 2025 to $2,216.3Million in Q2 2025 | Surpassed |
Surface Technologies Revenue | Q2 2025 | "Expected to increase approximately 5% sequentially" | Grew approximately 7.1% sequentially from $297.4Million in Q1 2025 to $318.4Million in Q2 2025 | Surpassed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Robust subsea order backlog and long-term pipeline | Q1 2025 details showed a growing backlog at $15.8B with $2.8B subsea orders , Q4 2024 emphasized a $14.4B backlog with strong subsea order guidance , Q3 2024 reported a record backlog of $14.7B and robust subsea opportunities | Q2 2025 highlighted a total backlog of $16.6B with $2.6B in subsea orders and expansion into new regions beyond traditional areas | Consistent strength with incremental growth and confidence in the long‐term pipeline. |
Dependence on direct awards for order intake | Q1 2025 noted over 80% of inbound orders via direct awards and iEPCI success , Q4 2024 detailed that direct awards contributed to over 80% of subsea inbound , Q3 2024 underscored clients’ preference for iEPCI direct awards | Q2 2025 emphasized that over 80% of business is directly awarded, reinforcing unique market positioning | Steady focus on direct awards with consistent sentiment as a strategic advantage. |
Innovative subsea technology initiatives | Q1 2025 discussed adoption of Subsea 2.0 and iEPCI with improved manufacturing efficiency , Q4 2024 dwelled on strong growth in Subsea 2.0 orders and introduced all-electric systems and hybrid flexible pipe , Q3 2024 focused on Subsea 2.0, iEPCI and flexible pipe technology | Q2 2025 provided a comprehensive update covering all-electric subsea systems, hybrid flexible pipe, Subsea 2.0 and iEPCI, expanding on previous initiatives | Expanded technological emphasis in the current period with new solutions (all-electric systems, hybrid flexible pipe) augmenting established platforms. |
Execution and margin uncertainties in complex integrated projects | Q1 2025 emphasized strong execution and managed margins despite lower activity , Q4 2024 detailed confidence in executing complex projects with improved margins nearing 20% , Q3 2024 mentioned improved EBITDA margins and operational efficiency without explicit uncertainties | Q2 2025 highlighted strong execution with subsea adjusted EBITDA margin up to 21.8% (an improvement of 450 bps) while not explicitly detailing uncertainties | Consistent positive outlook on execution with a shift toward highlighting margin improvements rather than uncertainties. |
Competitive risks and evolving market dynamics | Q1 2025 did not specifically address competitive risks, Q4 2024 discussed the Saipem merger and customer design preferences with an integration strategy , Q3 2024 did not specifically mention these risks | Q2 2025 did not explicitly mention competitive risks but focused on the value of direct awards and improved project returns | Reduced focus in the current period compared to earlier detailed discussions, suggesting a lesser emphasis on external competitive risks now. |
Capital expenditure pressures and ERP upgrade impact on cash flow | Q1 2025 mentioned $62M capex and healthy cash flow without ERP details , Q4 2024 provided detailed discussion on increased capex driven by an ERP upgrade (guiding $340M for 2025) and its future cash flow impact , Q3 2024 did not address this topic | Q2 2025 noted capital expenditures of €84M and referenced timing of ERP upgrade expenses that could increase in the second half | Ongoing focus with consistent monitoring; however, the current discussion is less detailed than in Q4 2024, indicating that the ERP impact is being tracked but may be stabilizing. |
Expansion of customer base and geographic revenue diversification | Q1 2025 emphasized a global reach with 95% international revenue and strategic alliances (e.g., with Cairn) , Q4 2024 noted an increase from 12 to 30–40 clients per quarter and growth in the Middle East , Q3 2024 highlighted diversification across regions such as Asia Pacific, Latin America, and Canada | Q2 2025 continued to stress international expansion with new collaborations (e.g., with Var Energi) and focus on offshore markets, reinforcing strong customer relationships | Consistent and proactive expansion with steadily increasing geographic and client diversification. |
Reliance on FID timing for future order realization | Q1 2025 placed notable emphasis on FID timing for realizing future orders, especially for 2026 , Q3 2024 downplayed FID timing delays as “white space” concerns , Q4 2024 did not mention this topic | Q2 2025 clarified that future order realization is supported by a private list from iEPCI and Subsea 2.0 initiatives, reducing reliance solely on FID timing | Shift away from dependency on FID timing by leveraging direct awards and exclusive early-stage opportunities. |
Shareholder returns through robust capital allocation strategies | Q1 2025 detailed $250M in share repurchases plus dividends totaling $271M, committed to distributing at least 70% of free cash flow , Q4 2024 highlighted nearly $486M returned and a commitment to boost distributions by at least 30% , Q3 2024 announced an additional $1B repurchase authorization and rising distributions | Q2 2025 reported $271M in distributions with 85% of free cash flow shared over the first half of 2025, reaffirming commitment to returning cash to shareholders | Consistent and growing focus on robust shareholder returns, with increasing distribution levels and strong free cash flow support. |
Realignment of market focus from traditional U.S. land exposure to offshore subsea opportunities | Q1 2025 emphasized that 95% of revenue is derived outside the U.S. land market and highlighted deepwater opportunities , Q4 2024 implied a focus on offshore markets with Middle East growth and expanded subsea initiatives , Q3 2024 concentrated on strong subsea execution in international regions though not expressly discussing U.S. land realignment | Q2 2025 explicitly discussed the strategic shift towards offshore subsea opportunities, citing new collaborations and expanding orders in offshore markets | Consistent strategic focus with clearer and more explicit reaffirmation in the current period toward offshore opportunities over traditional U.S. land exposure. |
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Subsea Orders
Q: Explain subsea order mix and composition?
A: Management stressed a robust order book built on $2.6bn inbound orders driven largely by direct awards, supporting a sustainable pathway to exceed a $10bn annual target, underscoring a repeatable business model. -
Services Revenue
Q: Is services revenue sustainable or a one-off?
A: Management confirmed that strong subsea services performance is sustainable—stemming from an expanding installed base and repeat orders—aligning with guidance near $1.8bn for the year. -
Future 2026 Orders
Q: Will 2026 orders hit the $10bn mark?
A: Leadership expressed confidence that the current momentum, bolstered by both public opportunity lists and exclusive direct awards, makes another $10bn in subsea orders for 2026 a reasonable assumption. -
Margin Outlook
Q: What are the prospects for subsea margin improvement?
A: Management expects subsea EBITDA margins to improve in 2026 due to efficient integrated project execution and a robust backlog, highlighting the benefits of their technology-driven, direct-award approach. -
All Electric Retrofit
Q: How significant is the all-electric retrofit opportunity?
A: Management outlined a transformative plan to retrofit existing hydraulic systems with all-electric solutions, enabling faster project turnarounds and improved economics, particularly in carbon capture and mature fields. -
Global Markets
Q: How are opportunities evolving outside the traditional basins?
A: Management noted that while traditional regions remain strong, emerging markets in East Africa and Asia Pacific are gaining traction due to favorable technology applications and expanding project pipelines. -
Brazil Market
Q: How is the Brazil market and Petrobras relationship evolving?
A: Management emphasized a longstanding, strong relationship with Petrobras, exemplified by integrated awards like the HiSET project, while remaining selective in non-integrated projects to capitalize on Brazil’s dynamic market. -
Pricing Dynamics
Q: What about cost depreciation versus scope upsizing?
A: Management reassured that with over 80% of business won on a direct-award basis, pricing pressures are largely offset by improved project returns and expedited time-to-first-oil, making unit cost less of a concern. -
Surface Transformation
Q: What is the impact of changes in Surface business?
A: Management described a disciplined transformation in Surface Technologies through a focused footprint reduction in North America and strategic digital investments, ensuring competitiveness even amid evolving market transactions in the Middle East.
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