Executive Summary

Q3 FY25 revenue beat with $1.041B vs ~$0.999B S&P Global consensus; adjusted EPS was in line at $0.22 while GAAP EPS was a loss of $1.64 due to a $173M non‑cash goodwill impairment tied to the KCAD acquisition . Revenue consensus: $0.999B*; EPS consensus: $0.223*.
North America Solutions delivered industry‑leading direct margin of $266M and margin/day of $19,860, essentially flat QoQ despite slightly lower average rigs (147), underscoring strong performance contracts and cost controls .
International direct margin improved to $34M as all eight FlexRigs in Saudi commenced operations; however, GAAP results include a $128M goodwill impairment within International, driving consolidated GAAP losses .
FY25 guidance tweaks: capex range raised at the low end to $380–$395M (from $360–$395M), cash taxes trimmed to $190–$220M (from $190–$240M), and Q4 interest expected at ~$25M; management increased 2025 term‑loan repayment target to $200M (from $175M) .
Near‑term stock reaction catalysts: revenue beat vs consensus, GAAP loss from impairment (non‑cash), resilient NAS margins and Q4 direct margin guidance, plus heightened confidence on cost synergies and deleveraging targets .

What Went Well and What Went Wrong

What Went Well
- NAS margins/day reached $19,860 and direct margin held ~$266M QoQ despite fewer rigs; ~50% of rigs on performance contracts, supporting differentiated outcomes . “Our digital applications are now at all time highs for adoption and value creation… automation working on essentially every rig in the US Lower 48” .
- International operating momentum: all eight FlexRigs in Saudi now active; direct margin improved to ~$34M vs ~$27M in Q2 as integration with KCAD progresses . “All eight unconventional FlexRigs in Saudi Arabia have now commenced operations with margins continuing to improve” .
- Cost and balance sheet progress: G&A down ~$15M QoQ; ~$50M of cost savings identified toward the $50–$75M target; YE25 term‑loan paydown target lifted to $200M (from $175M) .
What Went Wrong
- GAAP loss from non‑cash goodwill impairment: $(163)M net loss and $(1.64) diluted EPS due primarily to $173M goodwill impairment recognized at KCAD close; International segment recorded $(128)M of this charge .
- International headwinds: rig suspensions in Saudi conventional operations and startup costs in Saudi unconventional continue to weigh; International operating loss $(167)M in the quarter before impairment adjustments .
- Pricing and churn pressures in Lower 48 persist, requiring churn management and high‑grading; management notes industry‑wide pricing pressure though super‑spec market remains tight .

Financial Results

Overall performance and comparisons

Metric	Q3 2024	Q2 2025	Q3 2025 (Actual)
Operating Revenues ($M)	$697.7	$1,016.0	$1,040.9
Diluted EPS (GAAP)	$0.88	$0.01	$(1.64)
Adjusted EPS ($)	—	$0.02	$0.22
Adjusted EBITDA ($M)	$220.7	$241.5	$268.1

Q3 vs. S&P Global consensus

Metric	Consensus	Actual	Delta
Revenue ($M)	998.7*	1,040.9	+42.2 (Beat)
Primary EPS ($)	0.223*	0.22	~Inline

Segment breakdown

Segment	Q2 2025: Direct Margin ($M)	Q2 2025: Segment Op Inc ($M)	Q2 2025: Avg Active Rigs	Q3 2025: Direct Margin ($M)	Q3 2025: Segment Op Inc ($M)	Q3 2025: Avg Active Rigs	Notes
North America Solutions	265.6	151.9	149	266.2	157.6	147	Margin/day ~$19,860 in Q3
International Solutions	26.9	(35.0)	69	34.1	(166.5)	72	Q3 includes $128M goodwill impairment
Offshore Solutions	26.2	17.4	3	22.8	8.8	3	Low capex, steady cash flows

Key KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
NAS Direct Margin/Day ($)	—	—	19,860
NAS Average Active Rigs	150	149	147
NAS End‑Period Active Rigs	146	150	141
International Avg Active Rigs	12	69	72
Offshore Avg Active Rigs	3	3	3
Adjusted EBITDA ($M)	220.7	241.5	268.1

Notes: Q3 GAAP diluted EPS $(1.64) largely reflects the $173M non‑cash goodwill impairment; adjusted EPS excludes this and other select items .

Guidance Changes

Metric	Period	Previous Guidance (Q2 release)	Current Guidance (Q3 release)	Change
NAS Direct Margin ($M)	Q4 FY25	—	230–250	New
NAS Avg Contracted Rigs	Q4 FY25	—	138–144	New
International Direct Margin ($M)	Q4 FY25	—	22–32	New
International Avg Operating Rigs	Q4 FY25	—	62–66	New
Offshore Direct Margin ($M)	Q4 FY25	—	22–30	New
Offshore Mgmt Contracts/Platform Rigs	Q4 FY25	—	30–35	New
Gross Capex ($M)	FY25	360–395	380–395	Raised low end
Depreciation ($M)	FY25	~595	~595	Maintained
R&D ($M)	FY25	~32	~32	Maintained
G&A ($M)	FY25	~280	~280	Maintained
Cash Taxes ($M)	FY25	190–240	190–220	Lowered top end
Interest Expense ($M)	Q4 FY25	~50 (Q3–Q4 total)	~25 (Q4)	Maintained (quarterly frame)
Term Loan Repayment Target ($M)	CY25	175	200	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY25, Q2 FY25)	Current Period (Q3 FY25)	Trend
KCAD integration & cost synergies	Targeting $50–$75M combined cost reductions; synergies expected to build into FY26	~$50M identified; full benefit expected in 2026; further savings possible	Improving; execution progressing
Saudi Arabia operations	8 FlexRigs exported; start‑up costs; rig suspensions in conventional segment	All 8 FlexRigs commenced; margins improving; rig suspensions continue; growth opportunities tilted to 2026	Operational ramp with medium‑term growth
North America performance contracts & tech	Performance contracts and technology integral to strategy	~50% performance contracts; digital apps at all‑time highs; margin/day $19,860	Sustained strength
Pricing/churn & market share	Expect modestly lower rig count; churn management emphasized	Competitively tight super‑spec (>80% utilization); pricing pressure industry‑wide; strong churn management	Mixed; tight high‑end market offsets pressure
Capex & FCF/deleveraging	Capex front‑loaded; debt paydown planned; $175M 2025 repayment target	Capex narrowed 380–395; YE25 repayment target raised to $200M; Q4 interest ~$25M	More conservative capex; faster deleveraging
Gas vs oil mix	International and South America activity building; domestic rig count stable	Slight rotation to gas basins (Haynesville/Marcellus); global gas opportunity discussed	Gradual shift toward gas where economic

Management Commentary

CEO: “Our FlexRig unconventional startup has gained momentum [in Saudi], and we’re enthusiastic about showcasing our combined capabilities throughout our global operations… Our Offshore Solutions segment continues to generate steady cash flows” .
CFO: “The company generated quarterly revenues of just over $1,000,000,000… overall, the company generated $268,000,000 in EBITDA versus $242,000,000 last quarter” .
CFO on synergies and deleveraging: “We set a goal to reduce G&A and R&D costs by $50–$75 million… we have identified $50 million… we now anticipate by the end of this calendar year, we will have paid $200 million on the $400 million term loan” .
SVP Global Commercial: “Digital applications and automation [are] working on essentially every rig in the US Lower 48… app count growing 20% YoY” .
CEO on Saudi growth timeline: tenders progressing; most growth likely “a 2026 type timing” amid budget planning .

Q&A Highlights

Saudi and Middle East outlook: Growth opportunities active across the region with tenders in motion; timeline skewed to 2026; suspended rigs remain a budgeting issue near term .
Performance contracts: ~50% of rigs on performance contracts for 8+ quarters; international customers beginning to adopt similar models; aligned incentives support margin resilience .
NAS rig count guidance: Lower 48 rig count expected to hold relatively better than market given customer mix and high‑grading; top of guide requires strong churn management and incremental wins .
Pricing landscape: Industry‑wide pricing pressure acknowledged; super‑spec capacity remains tight (>80% utilization), enabling value‑based pricing where performance is differentiated .
FCF and capex cadence: Additional term‑loan paydown fully funded from organic cash flows; capital spend moderating into 2026 toward pre‑COVID maintenance levels .

Estimates Context

Q3 FY25: Revenue beat vs S&P Global consensus (~$1.041B vs ~~$0.999B), adjusted/primary EPS in line (~~$0.22). Q2 FY25 revenue exceeded consensus while EPS was well below given integration and start‑up/suspension headwinds; Q1 FY25 modest top‑line miss with primary EPS above consensus.*

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($M)	692.0*	955.4*	998.7*
Revenue Actual ($M)	677.3	1,016.0	1,040.9
Primary EPS Consensus Mean ($)	0.674*	0.616*	0.223*
Primary EPS Actual ($)	0.71*	0.02*	0.22*

*Values retrieved from S&P Global.

Key Takeaways for Investors

Revenue outperformance with resilient NAS margin/day suggests HP’s performance contracts and digital solutions continue to differentiate; watch for Q4 NAS direct margin delivery vs $230–$250M guide .
GAAP loss was driven by a non‑cash goodwill impairment from KCAD; underlying operations (Adj. EBITDA $268M) strengthened QoQ, easing concerns about integration drag .
Medium‑term upside hinges on international recovery: Saudi FlexRig margins improving; tenders and activity likely to inflect into 2026; near‑term international margins should continue to improve sequentially .
Deleveraging is accelerating: YE25 term‑loan paydown target raised to $200M; capex moderated to the top of the $380–$395M range with further reduction expected in 2026 .
Super‑spec scarcity (>80% utilization) provides pricing floor for top rigs despite pockets of pressure; churn management and high‑grading should sustain NAS margins .
Estimate revisions: Expect modest top‑line upward adjustments given beats and Q4 direct margin guidance; EPS paths likely hinge on non‑GAAP uplift vs GAAP headwinds from non‑cash items .
Tactical: Near‑term stock moves may key off the impairment headline vs underlying strength; medium‑term narrative should be driven by synergy realization, deleveraging, and international margin ramp .

Additional citations for data and statements:

Q3 FY25 press release (8‑K 2.02 attachment): results, segment metrics, guidance, impairment details .
Q3 FY25 earnings call transcript: qualitative commentary on NAS margins, performance contracts, Saudi/international outlook, capex and deleveraging .
Prior quarters for trend analysis: Q2 FY25 press release/8‑K ; Q1 FY25 press release .

Helmerich & Payne, Inc. (HP)·Q3 2025 Earnings Summary