BKR · Q2 2026 Earnings

Bullish

Baker Hughes

Reported July 27, 2026

30-second summary

Revenue of $6.74B beat consensus by 3.2% and prior-quarter guide by $242M, with adjusted EBITDA of $1.231B clearing the high end of the guide range as OFSE delivered $3.45B revenue and 17.5% margins despite the Middle East drag that forced last quarter's OFSE cut. IET orders printed $7.1B (2.2x book-to-bill) driving total RPO to $40.1B — a record — and management raised the Horizon 2 (2026-2028) IET orders outlook from ">$40B" to ">$45B." The Middle East narrative shifted from "conflict-driven cut" to "managing through uncertainty while beating"; the FY EBITDA midpoint is now framed with confidence rather than the qualitative "slightly below midpoint" hedge of Q1.

Headline numbers

EPS

Q2 FY2026

$0.64

Revenue

Q2 FY2026

$6.74B

-2.4% YoY

+3.2% vs est.

Gross margin

Q2 FY2026

23.3%

Free cash flow

Q2 FY2026

$1.11B

Operating margin

Q2 FY2026

12.9%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$6.74B	$6.91B	-2.4%	$6.59B	+2.4%
EPS	$0.64	$0.63	+1.6%	$0.58	+10.3%
Gross margin	23.3%	23.4%	-10bps	22.8%	+50bps
Operating margin	12.9%	—	—	10.8%	+210bps
Free cash flow	$1.11B	$0.24B	+364.0%	$0.21B	+428.1%

Guidance

Strong Q2 beats across revenue, EBITDA, and earnings with aggressive full-year IET order guidance raised to >$45B, signaling confidence in demand despite Middle East headwinds.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q2 FY2026	$6.5 billion	$6.742 billion	+$0.242 billion above guide	Beat
Adjusted EBITDA	Q2 FY2026	$1.13 billion	$1.231 billion	+$0.101 billion above guide	Beat
IET Adjusted EBITDA	Q2 FY2026	$670 million	$670 million	in-line	Met
OFSE Adjusted EBITDA	Q2 FY2026	$540 million	$568.875 million	+$28.875 million above guide	Beat
OFSE Revenue	Q2 FY2026	$3.2 billion	$3.451 billion	+$0.251 billion above guide	Beat
EPS (non-GAAP)	Q2 FY2026	—	$0.64	+$0.15 vs consensus estimate of $0.49	Beat

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
IET Full-Year Order Guidance	FY2026	At least $14.5 billion (midpoint guidance implied)	More than $45 billion	Raised; now targeting >$45B (Horizon 2 IET orders)	Raised

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Oilfield Services & Equipment	$3.451B	—	-5.1%
Industrial & Energy Technology	$3.291B	—	—
Well Construction	$0.899B	—	-2.4%
Completions, Intervention, and Measurements	$0.944B	—	+1.0%
Production Solutions	$0.93B	—	-4.0%
Subsea & Surface Pressure Systems	$0.678B	—	-14.5%
Gas Technology	$2.355B	—	-1.0%
Industrial Technology	$0.731B	—	-4.0%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
North America	$0.933B	—	+1.0%
Latin America	$0.732B	—	+14.5%
Europe/CIS/Sub-Saharan Africa	$0.568B	—	-13.0%
Middle East/Asia	$1.218B	—	-12.9%
Orders (consolidated)	$10.5B	—	—
IET Orders	$7.1B	—	—
Remaining Performance Obligations (RPO)	$40.1B	$34.0B	—
IET RPO (record)	$37.1B	—	—
Book-to-Bill Ratio	1.6x	—	—
IET Book-to-Bill Ratio	2.2x	—	—
Adjusted EBITDA	$1,231M	—	—
OFSE EBITDA Margin	17.5%	18.7%	—

Management tone

Note: no transcript available for this quarter; tone read is based on press release language against prior-quarter transcript context.

Q2 FY2025 "margin over share, IET diversifies" → Q3 FY2025 "age of gas, AI power" → Q4 FY2025 "industrialized energy solutions, power as the bottleneck" → Q1 FY2026 "geopolitical risk as structural catalyst" → Q2 FY2026 "managing through Middle East, raising the ceiling."

The Middle East frame moved from downside risk driver to managed variable. Last quarter the phrase was "we anticipate being able to achieve the low end of our EBITDA guidance range" with FY EBITDA guided "slightly below midpoint" as Middle East logistics disrupted OFSE product sales. This quarter the press release language is "favorable underlying fundamentals support our confidence in achieving the midpoint of our full-year guidance as we continue to manage through the Middle East uncertainty" — the qualitative downward hedge has been withdrawn and the midpoint restored, while the ME risk factor is acknowledged but no longer sized as a cut. OFSE printed $605M EBITDA vs the $540M guide, so the operating reality validated the tonal firming.

Horizon 2 conviction escalated a third time in three quarters. Q4 FY2025 framed the 2026-2028 IET order target at ~$40B; Q1 FY2026 raised confidence to "will exceed $40B"; this quarter management "raised full-year IET order guidance and increased Horizon 2 IET orders outlook to more than $45 billion." A $5B increase to a three-year floor after a single quarter that printed $7.1B of IET orders (book-to-bill 2.2x, IET RPO record $37.1B) is the most aggressive forward commitment of the cycle. The pattern — target set, then raised, then raised again — suggests management is running behind demand rather than pulling forward orders.

OFSE narrative shifted from "resilience" to "outperformance despite headwinds." Q1 language was defensive ("continued resilience against a difficult backdrop"); this quarter the press release states "OFSE delivered an impressive quarter, with EBITDA exceeding the high end of our guidance range despite a complex operating environment." The segment beat both revenue guide (+$251M) and EBITDA guide (+$65M) with a 17.5% margin that held only 30bps below Q4 FY2025's 18.1% peak. The complex operating environment framing preserves Middle East as a legitimate variable while removing the guide-cut mechanism from the narrative.

Answers to last quarter's watch list

Whether Q2 OFSE Middle East decline lands at the >20% sequential guide or worse — Middle East/Asia revenue was -12.9% YoY at $1.218B, and OFSE overall beat the $3.2B revenue guide by $251M and the $540M EBITDA guide by $65M. The company didn't disclose the specific sequential ME decline for OFSE, but the aggregate OFSE beat and 17.5% EBITDA margin (only 30bps below Q4 FY2025's cycle high) indicate the impact was manageable and non-ME strength offset it.

Resolved positively

IET book-to-bill at or above 1.3x — IET book-to-bill printed 2.2x on $7.1B of Q2 orders (vs Q1's 1.5x on $4.9B), the highest reading of the cycle. IET RPO rose to a record $37.1B (+$4.0B QoQ). This validates and extends the ">$40B" Horizon 2 framing — which management has now raised to ">$45B.".

Resolved positively

Chart close confirmation — The press release does not disclose Chart-specific close timing or regulatory status. Without transcript commentary this quarter, no update on the mid-2026 working assumption.

Continue monitoring

Whether the FY total EBITDA "slightly below midpoint" language tightens to a specific number or widens further — Management removed the "slightly below midpoint" qualifier entirely and now expresses "confidence in achieving the midpoint of our full-year guidance." This is qualitative firming — the target restored, not a widening or a new point estimate.

Resolved positively

Power systems Q2 order print vs Q1's $1.4B — The press release discloses aggregate IET orders of $7.1B but does not break out the power systems sub-line specifically. The 2.2x IET book-to-bill and $5B uplift to the Horizon 2 order target imply power systems remained a major contributor, but without segment-level disclosure or transcript detail, the specific Q1-to-Q2 power systems trajectory can't be confirmed.

Continue monitoring

What to watch into next quarter

Whether Q3 IET book-to-bill holds above 1.5x — Q2's 2.2x is a very high bar; sustaining above 1.5x with $4.5B+ of IET orders in Q3 validates the >$45B Horizon 2 uplift as sustained demand rather than lumpy award timing. Below 1.3x reopens pull-forward questions.

OFSE EBITDA margin trajectory — Q2 held at 17.5% on $3.45B revenue despite Middle East. Watch whether H2 2026 delivers the "measured ramp" that underpins the reaffirmed FY $4.85B midpoint; sustained margin above 17% on flat-to-declining OFSE revenue is the tell.

Chart close date confirmation and any synergy uplift — no update this quarter. Q3 needs an explicit close date or a slippage disclosure; further push past year-end 2026 begins to compress the 2028 margin bridge mechanics that depend on Chart synergies.

Whether FY EBITDA framing sharpens from "midpoint" to a specific point estimate above $4.85B — Q2 restored the midpoint after Q1's downgrade. If Q3 layers a point estimate at or above $4.9B, that signals cycle momentum; a return to qualitative language signals renewed caution.

2027 OFSE inflection setup — management called 2027 the likely up-cycle catalyst three quarters ago and hasn't re-anchored it since. Watch Q3 commentary on international short-cycle activity, OPEC+ supply behavior, and whether FY2027 OFSE guidance framing begins to enter the narrative.

Sources

Baker Hughes Q2 FY2026 Earnings Release, SEC Filing: https://www.sec.gov/Archives/edgar/data/1701605/000170160526000021/earningsreleaseex991063020.htm
Tapebrief Q1 FY2026 Baker Hughes brief (prior watch list and trend context).
Tapebrief Q4 FY2025 Baker Hughes brief (Horizon 2 and FY2026 guide baseline).

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