Executive Summary

Q1 2025 was a soft start: revenue $8.49B (-3% YoY, -9% QoQ), GAAP EPS $0.58 (-22% YoY), and EPS ex-charges $0.72 (-4% YoY), amid sharp slowdowns in Mexico, Saudi Arabia and Russia offset by strength in North America digital and Production Systems; adjusted EBITDA margin held at 23.8% (+18 bps YoY) despite revenue pressure .
Results missed S&P Global consensus: EPS ex-charges $0.72 vs $0.73*, revenue $8.49B vs $8.59B*, and adjusted EBITDA $2.02B vs $2.03B*, with a ~$0.01 EPS headwind from a temporary APS pipeline disruption in Ecuador .
Management guided Q2 revenue roughly flat sequentially (ex-ChampionX) with 50–100 bps adjusted EBITDA margin expansion; H2 revenue flat to mid-single-digit vs H1 (ex-ChampionX), while reiterating a minimum $4B shareholder returns in 2025 (dividends + buybacks) .
Strategic catalysts: continued high-teens digital growth decoupled from upstream cycles; major offshore contract wins (Woodside Trion) and debt exchange execution; ChampionX regulatory progress (UK CMA remedies) supports portfolio resilience and production-recovery focus .

What Went Well and What Went Wrong

What Went Well

Digital revenue grew 17% YoY and D&I margin expanded 380 bps YoY to 30.4%, underscoring accretive digital/AI momentum decoupled from upstream cycles: “our quarterly digital revenue grew 17% year on year” and digital is “leading the second phase of revenue expansion” .
Production Systems posted revenue +4% YoY with pretax margin up 197 bps YoY to 16.2% on improved mix, execution and price backlog conversion; subsea margins expanded materially YoY .
Cash generation improved: cash flow from operations $660M (+$333M YoY) and positive FCF $103M, supporting a commitment to return at least $4B to shareholders in 2025 .

What Went Wrong

International softness: revenue -5% YoY led by sharp drilling reductions in Mexico and Saudi Arabia, lower offshore Africa activity, and steep decline in Russia; Q1 revenue -3% YoY overall .
Reservoir Performance margin compressed 311 bps YoY (to 16.6%) on lower evaluation activity and startup/operational cost overruns in several new projects .
Seasonality and absence of year-end product/software sales drove sequential declines across divisions with adjusted EBITDA -15% QoQ and pretax segment margin -232 bps QoQ .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$9.159	$9.284	$8.490
Income Before Taxes Margin (GAAP)	16.5%	14.9%	12.5%
GAAP Net Income ($USD Billions)	$1.186	$1.095	$0.797
GAAP Diluted EPS ($)	$0.83	$0.77	$0.58
EPS ex-Charges ($)	$0.89	$0.92	$0.72
Adjusted EBITDA ($USD Billions)	$2.343	$2.382	$2.020
Adjusted EBITDA Margin (%)	25.6%	25.7%	23.8%
Pretax Segment Operating Margin (%)	20.8%	20.7%	18.3%

Revenue by Geography ($USD Billions)	Q3 2024	Q4 2024	Q1 2025
North America	$1.687	$1.752	$1.719
Latin America	$1.689	$1.634	$1.495
Europe & Africa	$2.434	$2.472	$2.235
Middle East & Asia	$3.302	$3.376	$2.997

Division Revenue ($USD Billions)	Q3 2024	Q4 2024	Q1 2025
Digital & Integration	$1.088	$1.156	$1.006
Reservoir Performance	$1.823	$1.810	$1.700
Well Construction	$3.312	$3.267	$2.977
Production Systems	$3.103	$3.197	$2.938

Division Pretax Operating Income ($USD Millions)	Q3 2024	Q4 2024	Q1 2025
Digital & Integration	$386	$442	$306
Reservoir Performance	$367	$370	$282
Well Construction	$714	$681	$589
Production Systems	$519	$506	$475

KPIs	Q3 2024	Q4 2024	Q1 2025
Cash Flow from Operations ($USD Millions)	$2,449	$2,390	$660
Free Cash Flow ($USD Millions)	$1,805	$1,631	$103
Net Debt ($USD Millions)	$(8,461)	$(7,405)	$(10,105)
Shares Outstanding (Billions)	1.412 (9/30/24)	1.401 (12/31/24)	1.360 (3/31/25)
Quarterly Dividend per Share ($)	$0.275	$0.285	$0.285

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue (sequential)	Q2 2025	n/a	Flat vs Q1 (ex-ChampionX)	Issued
Adjusted EBITDA Margin Expansion	Q2 2025	n/a	+50–100 bps vs Q1	Issued
Revenue H2 vs H1	FY 2025	n/a	Flat to mid-single-digit growth (ex-ChampionX)	Issued
Capital Investment (capex + exploration data + APS)	FY 2025	~$2.3B (Q4 guide)	~$2.3B (maintained)	Maintained
Dividend per share	Ongoing	$0.275 (Q3)	$0.285 (approved 4/17/25)	Raised
Total Shareholder Returns	FY 2025	Minimum $4B (Q4)	Minimum $4B (reiterated)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Digital/AI momentum	Digital revenue +25% YoY; platform launches incl. Lumi; strong accretive margins	Digital revenue +21% YoY; strong adoption; D&I margin up 430 bps YoY	Digital revenue +17% YoY; D&I margin +380 bps YoY; decoupled from upstream cycle	Accelerating
Production Systems	Record revenue; margin expansion YoY for 9th straight quarter	Margin 15.8%; strong backlog conversion	Revenue +4% YoY; margin +197 bps YoY; subsea margin improved	Positive
Macro/tariffs	Cautious capex; oversupply; short-cycle softness	Macro headwinds but consistent performance	Tariff uncertainty; cost actions; margin protection focus	Mixed/uncertain
Regional trends (Saudi/Mexico)	Lower drilling activity impacting Well Construction	Saudi/Mexico weaker; Middle East & Asia strong in UAE, Kuwait	Meaningful reductions in Saudi; Mexico drilling decline drove Latin America down	Weak in near term
New Energy & adjacencies	CCS/geothermal/lithium initiatives; early wins	CCS milestones, FEED awards	New Energy on pace to visibly exceed $1B; data center infra scaling	Building

Management Commentary

“First-quarter adjusted EBITDA margin was slightly up year on year despite softer revenue as we continued to navigate the evolving market dynamics.” — CEO Olivier Le Peuch .
“It was a subdued start to the year… higher activity in parts of the Middle East… and strong growth in our data center infrastructure solutions and digital businesses in North America, were more than offset by a sharper-than-expected slowdown in Mexico, a slow start… in Saudi Arabia and offshore Africa, and steep decline in Russia.” — CEO .
“This is translating into highly accretive revenue growth… quarterly digital revenue grew 17% year on year… we will continue to enhance our leadership in AI, cloud computing and digital operations.” — CEO .
“We remain committed to… return a minimum of $4 billion to shareholders through dividends and share repurchases this year.” — CEO .
“We recorded $0.14 of charges… $0.11 cost-out program… $0.03 merger/integration related to ChampionX and Aker subsea.” — CFO Stephane Biguet .
“We expect revenue to be flat sequentially [Q2], excluding ChampionX, with adjusted EBITDA margin expansion between 50 to 100 basis points.” — CEO .

Q&A Highlights

Outlook split by region: management expects more downside exposure in North America short-cycle vs relatively resilient Middle East/Asia; portfolio mix (offshore, digital, production recovery, data center) supports resilience .
Saudi Arabia trajectory: worst of decline likely past; gas-led growth expected to help rebound into 2026; near-term stabilization with many moving parts .
Margin defense: ambition to approximate 25% adjusted EBITDA for full year excluding ChampionX, subject to tariff outcomes; cost-out and digital leverage to support H2 expansion .
Digital cadence: secular adoption supports mid-to-high teens growth even in lower capex environment .
ChampionX closing confidence: UK CMA accepted Phase 1 remedies consideration; active engagement with remaining regulators; aiming end Q2/early Q3 close .
Cash flow confidence: stress-tested scenarios still support minimum $4B returns in 2025; working capital tailwinds in lower activity case .
APS update: Ecuador pipeline disruption reduced EPS by ~$0.01 in quarter; Palliser divestiture expected to close Q2; residual APS in Ecuador structured as service-like contracts .

Estimates Context

Q1 2025 Consensus vs Actual	Consensus*	Actual	Surprise
EPS ex-Charges ($)	0.730*	0.72	-$0.01 (miss)
Revenue ($USD Billions)	8.592*	8.490	-$0.10B (miss)
Adjusted EBITDA ($USD Billions)	2.031*	2.020	-$0.01B (miss)

Values retrieved from S&P Global*.
Drivers: seasonal revenue decline and absence of year-end product/software sales; lower drilling/evaluation activity (Mexico, Saudi, offshore Africa) and Russia; APS pipeline disruption in Ecuador (~$0.01 EPS) offset by strong North America digital and Production Systems mix .

Key Takeaways for Investors

Near-term setup: modest estimate resets likely after slight Q1 miss; management’s Q2 margin expansion guide and H2 seasonal uptick provide a bridge to second-half improvement even amid tariff uncertainty .
Portfolio resilience: digital/AI growth decoupling (30%+ D&I margin) and Production Systems margin expansion underpin profitability even as Well Construction softens; focus on production recovery reduces short-cycle sensitivity .
Capital returns: execution of $2.3B ASR (completed April 7) and dividend increase to $0.285 support the minimum $4B 2025 return commitment; shares outstanding fell to 1.360B by quarter-end .
Regional watch items: monitor Mexico/Latin America normalization and Saudi gas-led activity ramp; UAE/Kuwait strength and North America offshore/digital demand remain offsets .
Contract pipeline: Woodside Trion ultra-deepwater award and continued subsea/customer wins bolster late-cycle visibility; subsea margins improving with cost synergies .
Balance sheet: net debt rose to $(10.1)B largely due to ASR; liquidity intact with CFFO improvement; FY 2025 capital investment maintained at ~$2.3B .
Risk factors: evolving tariff framework and lower commodity prices could pressure margins/throughput; management pursuing supply chain optimization and customer recovery mechanisms .

Additional Q1 2025 Press Releases (Context)

Debt exchange offer launched (Feb 27) and early tender accepted/amended sizing (Mar 13) — execution supports liability management and liquidity .
Woodside Trion ultra-deepwater drilling contract (Mar 31) — 18 wells over ~3 years with AI-enabled drilling; services begin early 2026 .

Non-GAAP and Charges & Credits

Q1 pretax charges & credits: $206M (Restructuring $158M; Merger & Integration $48M) leading to GAAP EPS $0.58 vs EPS ex-charges $0.72; adjusted EBITDA $2.020B and margin 23.8% reconciled in supplementary tables .

Disclosures

Dividend approved: $0.285 per share payable July 10, 2025 (record date June 4) .
ASR completion: total 56.8M shares at average price $40.51; net shares outstanding reduced from 1.401B to 1.360B in Q1 .
CMA remedies consideration for ChampionX; aiming close in late Q2/early Q3 2025 .

SCHLUMBERGER LIMITED/NV (SLB)·Q1 2025 Earnings Summary