Sign in

You're signed outSign in or to get full access.

SL

SCHLUMBERGER LIMITED/NV (SLB)·Q2 2025 Earnings Summary

Executive Summary

  • SLB delivered a slight beat on Q2 2025 EPS and revenue versus consensus, with GAAP EPS $0.74 (+28% q/q, -4% y/y) and revenue $8.55B (+1% q/q, -6% y/y); adjusted EBITDA margin expanded 21 bps sequentially to 24.0% . Versus S&P Global consensus, EPS ($0.74 vs $0.728*) and revenue ($8.55B vs $8.50B*) were modest beats; EBITDA also came in ahead ($2.05B vs $2.02B*) (see Estimates Context).
  • Mix shift favored Production Systems (+3% q/q; 17th straight y/y growth) and Digital margin expansion (+240 bps q/q), offset by Well Construction margin compression amid softer drilling in Saudi Arabia, Namibia, and North America .
  • Management guided H2 revenue to $18.2–$18.8B (back-end loaded in Q4 with ChampionX consolidation and year-end digital/product sales), and company-wide adjusted EBITDA margin “flat” versus Q2 (20–40 bps tariff headwind) .
  • Strategic catalyst: closing of the ChampionX acquisition (July 16), with targeted $400M pre-tax synergies within three years and at least half realized within 18 months; digital to be reported as a separate segment beginning Q3 2025 .

What Went Well and What Went Wrong

What Went Well

  • Production Systems executed: revenue +3% q/q to $3.04B and pretax margin +79 bps y/y, driven by artificial lift, midstream solutions, valves, completions, and data center infrastructure; marked the 17th consecutive quarter of y/y growth .
  • Digital resilience and margin expansion: Digital & Integration margin rose to 32.8% (+240 bps q/q), supported by double‑digit sequential growth across platforms, applications, and digital operations; CEO: “steady revenue and slightly higher adjusted EBITDA and margins sequentially…resilience amidst softer upstream spending” .
  • International pockets of strength: +2% q/q international revenue (+$6.85B) with robust growth in parts of Middle East, Asia, Europe, and North Africa offsetting declines in select markets .

What Went Wrong

  • Well Construction under pressure: revenue flat q/q but margin fell to 18.6% (-119 bps q/q, -315 bps y/y) amid broad drilling activity reductions in Namibia, Saudi Arabia, North America, Argentina and Mexico .
  • Middle East & Asia and Latin America y/y declines: Middle East & Asia revenue down 9% y/y (Saudi slowdown) and Latin America down 14% y/y (Mexico land drilling pullback; Guyana production systems), partially offset by UAE, Kuwait, Iraq and Argentina .
  • North America sequential decline (-4% q/q to $1.65B) from APS divestiture (Palliser) and Canadian seasonal breakup; offshore exploration data sales also lower; only partially offset by U.S. land and data center infrastructure growth .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$9.139 $9.284 $8.490 $8.546
Diluted EPS - GAAP ($)$0.77 $0.77 $0.58 $0.74
Diluted EPS, excl. charges & credits ($)$0.85 $0.92 $0.72 $0.74
Adjusted EBITDA ($USD Billions)$2.288 $2.382 $2.020 $2.051
Adjusted EBITDA Margin (%)25.0% 25.7% 23.8% 24.0%
Pretax Segment Operating Income ($USD Billions)$1.854 $1.918 $1.556 $1.584
Pretax Segment Operating Margin (%)20.3% 20.7% 18.3% 18.5%

Segment Revenue and Pretax Operating Income

DivisionQ2 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q1 2025 Revenue ($MM)Q2 2025 Revenue ($MM)
Digital & Integration1,050 1,156 1,006 995
Reservoir Performance1,819 1,810 1,700 1,691
Well Construction3,411 3,267 2,977 2,963
Production Systems3,025 3,197 2,938 3,036
Other(166) (146) (131) (139)
DivisionQ2 2024 Pretax OI ($MM)Q4 2024 Pretax OI ($MM)Q1 2025 Pretax OI ($MM)Q2 2025 Pretax OI ($MM)
Digital & Integration325 442 306 327
Reservoir Performance376 370 282 314
Well Construction742 681 589 551
Production Systems473 506 475 499
Other(62) (81) (96) (107)

Geographic Revenue

GeographyQ2 2024 ($MM)Q4 2024 ($MM)Q1 2025 ($MM)Q2 2025 ($MM)
International7,452 7,483 6,727 6,847
North America1,644 1,752 1,719 1,655
Europe & Africa2,442 2,472 2,235 2,369
Middle East & Asia3,268 3,376 2,997 2,986
Latin America1,742 1,634 1,495 1,492

KPIs

KPIQ4 2024Q1 2025Q2 2025
Cash Flow from Operations ($MM)2,390 660 1,142
Free Cash Flow ($MM)1,631 103 622
Net Debt ($MM)(7,405) (10,105) (9,951)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital Investment (Capex + exploration data + APS)FY 2025~$2.3B (ex‑ChampionX) ~$2.4B (reflecting ChampionX) Raised
Company RevenueH2 2025n/a$18.2–$18.8B; back-end loaded (Q4) with ChampionX and year-end digital/product sales New
Adjusted EBITDA MarginH2 2025n/a“Flat” vs Q2; 20–40 bps tariff impact New
DividendQuarterly$0.285 (raised Jan 16) $0.285 (approved July 17; payable Oct 9, 2025) Maintained
Digital Segment ReportingFrom Q3 2025Digital within D&IDigital to be reported as a separate segment Reporting change
ChampionX ConsolidationFrom Aug 1, 2025Pending2 months consolidated in Q3; reported under Production Systems (digital portion under new Digital segment) Implementation

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
Digital & AI initiatives2024: Digital revenue +20% y/y; launch of Lumi data & AI platform; strong partnerships (NVIDIA, AWS); Q4 Digital margin 38.3% Double‑digit sequential growth across platforms/apps/operations; D&I margin +240 bps q/q; Digital to be a separate segment from Q3 Accelerating growth; margin accretive
Offshore deepwater pipelineQ4: multiple deepwater awards (bp Murlach, Petrobras Atapu/Sepia); continued backlog Near-term pushouts in Sub-Saharan Africa (Namibia); still constructive; sees uptick by mid‑2026 (Americas, Mozambique, Indonesia) Temporarily softer; constructive medium-term
Middle East & Asia vs SaudiQ4: ME&A grew sequentially (+2%); Saudi mixed ME&A flat q/q; declines in Saudi Arabia offset by UAE, Kuwait, Iraq, Asia; y/y -9% Resilient ex‑Saudi; Saudi a headwind
North America short-cycle & DC infrastructureQ1: NA revenue +8% y/y; DC infrastructure growth NA -4% q/q due to APS divestiture & seasonal breakup; y/y slightly higher on DC infrastructure Mixed; short-cycle weaker, DC infra stronger
Production & recovery focus; ChampionXQ4: production & recovery emphasis; plan to acquire ChampionX ChampionX closed (July 16); $400M synergies (75% cost); half within 18 months; expands production chemicals & artificial lift footprint Strategic expansion; less cyclical mix

Management Commentary

  • CEO: “SLB reported solid second‑quarter results…steady revenue and slightly higher adjusted EBITDA and margins sequentially…resilience amidst softer upstream spending and macroeconomic uncertainty” .
  • CEO on Production Systems: “Production Systems revenue climbed 3% sequentially and marked the 17th consecutive quarter of y/y growth…driven by strong sales of artificial lift and midstream production systems” .
  • CEO on macro: “Assuming commodity prices stay range bound, we remain constructive for the second half…supported by…our diversified portfolio and increased exposure to the growing production and recovery market through the acquisition of ChampionX” .
  • CFO on H2 outlook: “Second‑half revenue $18.2–$18.8B…company‑wide adjusted EBITDA margin essentially flat vs Q2; 20–40 bps tariff impact” .
  • CFO on synergies: “$400M annual pre‑tax synergies within three years; ~75% from cost; at least half within 18 months; accretive to margins and EPS in 2026” .

Q&A Highlights

  • Deepwater cadence: Management acknowledged pushouts (Namibia) but emphasized rich “advantaged projects” pipeline (Suriname, Brazil, Guyana, Gulf of Mexico) and potential rebound by 2026 .
  • Short-cycle dynamics: International adjustments largely done; short-cycle (North America) most reactive to lower prices; mix shift toward Production Systems and Digital to offset drilling softness .
  • ChampionX integration: Faster supply chain synergy capture (granular by product/supplier/geography), revenue synergies via broader international reach and integrated digital/chemicals/artificial lift offering; reporting under Production Systems; digital under new Digital segment .
  • Segment margin trajectory: Digital margins to continue rising in H2 (year‑end sales); Production Systems margins at least maintained and accretive with ChampionX; Reservoir Performance and Well Construction flattish vs Q2 .
  • Mexico and regional color: Awaiting Pemex restructuring path; expecting activity bottom and rebound opportunities (e.g., Woodside deepwater Trion) while continuing to work with independents .

Estimates Context

  • Q2 2025 vs consensus: EPS $0.74 vs $0.728* (beat); revenue $8.55B vs $8.50B* (beat); EBITDA $2.05B vs $2.02B* (beat).
  • Q1 2025 vs consensus: EPS $0.72 vs $0.730* (miss); revenue $8.49B vs $8.59B* (miss).
  • Q2 2024 vs consensus: EPS $0.85 vs $0.829* (beat); revenue $9.14B vs $9.09B* (beat).
MetricQ2 2024 Estimate*Q2 2024 ActualQ1 2025 Estimate*Q1 2025 ActualQ2 2025 Estimate*Q2 2025 Actual
Revenue ($USD Billions)$9.093*$9.139 $8.592*$8.490 $8.496*$8.546
Primary EPS ($)$0.829*$0.85 $0.730*$0.72 $0.728*$0.74
EBITDA ($USD Billions)$2.219*$2.288 $2.031*$2.020 $2.017*$2.051

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • SLB posted a modest beat on Q2 revenue/EPS and sequential margin expansion, driven by Production Systems and Digital, despite drilling softness; the mix shift to production & recovery is cushioning cyclicality .
  • H2 set-up: revenue guided to $18.2–$18.8B and back-end loaded in Q4; margins “flat” vs Q2 as tariff headwind offsets underlying accretion—look for ChampionX consolidation and year-end digital/product uplift to drive Q4 prints .
  • Strategic pivot: ChampionX adds less‑cyclical production chemicals/artificial lift scale and North America presence; $400M synergy plan underpins margin/EPS accretion in 2026—monitor synergy realization cadence and segment disclosures (Digital standalone from Q3) .
  • Near-term risks: Saudi drilling reductions, Namibia deepwater timing, North America short-cycle deceleration, and 20–40 bps tariff drag; management sees international adjustments largely complete and macro resilience if prices remain range-bound .
  • Cash generation improving: FCF lifted to $622M in Q2 with seasonality tailwinds expected in H2; net debt increased ytd with ASR and strategic actions but remains manageable given strong EBITDA and liquidity .
  • Trading implications: Q3 will include ~2 months of ChampionX; expect investors to focus on segment margin trajectories (Digital up, PS accretive, core divisions flat), synergy progress, and any updates on tariffs/deepwater timing .
  • Estimate revisions: Modest beats in Q2 support near-term estimate stability; watch for sell-side adjustments to Well Construction and Saudi exposure, and incorporation of ChampionX contributions into H2/Q4 models .