HAL · Q3 2025 Earnings

Cautious

Halliburton

Reported October 21, 2025

30-second summary

Halliburton printed $5.60B revenue (-1.7% YoY, +1.6% QoQ) and $0.58 non-GAAP EPS, with adjusted operating margin holding at 13% — a cleaner result than Q2's guide implied, with C&P margins beating the 150-200bps compression management had set. The forward signals dominate: Q4 North America guided down 12-13% sequentially on "greater-than-typical white space," 2026 capex cut by ~30% to ~$1B, and a $100M/quarter structural cost takeout now run-rating. Management is escalating the defensive playbook flagged last quarter — preserving returns, not chasing share — and explicitly admits "the timing and shape" of recovery is uncertain.

Headline numbers

EPS

Q3 FY2025

$0.58

Revenue

Q3 FY2025

$5.60B

-1.7% YoY

Free cash flow

Q3 FY2025

$0.28B

Operating margin

Q3 FY2025

6.0%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$5.60B	-1.7%	$5.51B	+1.6%
EPS	$0.58	—	$0.55	+5.5%
Operating margin	6.0%	—	13.2%	-720bps
Free cash flow	$0.28B	—	$0.58B	-52.6%

Guidance

Management introduced forward Q4 division-level and geographic guidance with cautious tone, announced significant cost restructuring ($100M/quarter run-rate), and signaled sharp capex reduction for 2026 (~30% decline to ~$1B) amid softer oilfield services market.

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

New guidance

Metric	Period	Guide	YoY
Completion and Production sequential revenue change	Q4 FY2025	down 4% to 6%	—
Completion and Production margins change	Q4 FY2025	down 25 to 75 basis points	—
Drilling and Evaluation sequential revenue change	Q4 FY2025	flat to down 2%	—
Drilling and Evaluation margins change	Q4 FY2025	up 50 to 100 basis points	—
International revenue growth	Q4 FY2025	3% to 4%	3% to 4% (stated as YoY%)
North America sequential revenue change	Q4 FY2025	down 12% to 13%	—
2025 capital expenditures as % of revenue	FY 2025	approximately 6% of revenue	—
2026 capital spending target	FY 2026	around $1 billion	—
Quarterly cost savings from restructuring	FY 2025	$100 million per quarter	—

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
Completion and Production	$3.223B	+2.0%
Drilling and Evaluation	$2.377B	+2.0%
Completion and Production Operating Income	$514 million	—
Drilling and Evaluation Operating Income	$348 million	—

Other KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
North America	$2.364B	+5.0%
Middle East/Asia	$1.412B	-3.0%
Adjusted Operating Margin	13%	—
Cash Flow from Operations	$488 million	—
Share Repurchases	$250 million	—
Dividend Per Share	$0.17	—

Management tone

Q2 ("softer than previously expected") → Q3 (retrenchment escalates: capex cut 30%, $100M/quarter cost reset, "tough market" language).

In Q2, management framed the response as "stack uneconomic fleets" and a "~1% structural cost reduction" — a calibrated, returns-focused playbook. In Q3, the same posture has hardened into a much larger operating reset: a $100M/quarter run-rate cost takeout (~$400M annualized) and a ~30% capex cut for 2026 to ~$1B. The verbatim anchor from the call: "I expect capital spending in 2026 to decline by almost 30% to around $1 billion." This is no longer a cycle to be worked through with cost trims — it is being framed as a structurally lower-capex, higher-return business going forward.

The second tonal shift is the explicit admission of visibility loss. Q2 framing was that the next few quarters would be "softer." Q3 is more candid: "while I firmly believe a recovery in activity is inevitable, the timing and shape remain uncertain." Combined with Jeff Miller calling North America "a tough market today" — notably plain language for an earnings call — management is no longer signalling a near-term turn. The 2026 verbal characterization in Q&A was "flattish with some bright spots," which sets a low bar but also removes the option of an early-2026 recovery narrative.

The third shift is the introduction of distributed power (VoltaGrid partnership) as a new diversification leg — entirely absent from the Q2 narrative. Management is now positioning Halliburton as a partner for AI/data-center power infrastructure, leveraging the 70-country operational footprint. This is the first quarter HAL has framed itself as having a non-oilfield growth story, and the timing — alongside the capex cut and cost reset — suggests management knows it needs a new growth narrative for 2026.

Fourth, tariff exposure escalated meaningfully: $31M gross impact in Q3 stepping to ~$60M expected in Q4 from Section 232. This wasn't material in Q2 commentary and is now a quantified quarterly headwind.

Recurring themes management leaned on this quarter:

Technology leadership as value differentiator in weak marketInternational growth engines performing resilientNorth America market contraction requiring cost disciplineCapital deployment optimization and equipment rationalizationStrategic positioning for long-term recovery despite near-term volatilityNew diversification opportunity in distributed power for data centers

Risks management surfaced:

Oil price volatility and OPEC Plus spare capacity returningTrade concerns persisting and impacting North AmericaTiming and shape of activity recovery remains uncertainGreater-than-typical white space expected in Q4Escalating tariff impacts quarter-over-quarter (Section 232)

Q&A highlights

Arun Jayaram · JP Morgan

Inquiry about evolution of distributed power generation market over recent months and details on strategic collaboration with VoltaGrid announced, including investment in project-level economics internationally.

Management described unprecedented AI-driven power demand globally. VoltaGrid partnership involves shared project economics. Halliburton contributes boots on ground in 70 countries, execution capabilities, manufacturing, and global industrial scale. VoltaGrid brings technical execution expertise. Also discussed North American outperformance: less white space than expected in Q3, strong customer programs, and confidence in 2026 positioning from new Zeus fleets and Zeus IQ technology.

Operations in 70 countriesVoltaGrid partnership involves shared economic value of projectsNorth American revenue up 5% sequentiallyNorth American revenue relatively flat year-over-year

Neil Netto · Goldman Sachs

Questions about Middle East focus for power/AI opportunity, regional constraints, and 2026 outlook given uncertain North American macro environment.

Management identified Middle East as attractive due to developing economy capabilities, available energy, and available capital. Regarding 2026, characterized outlook as 'flattish with some bright spots.' Cited structural factors: OPEC Plus barrels entering market, North America below maintenance spending, Mexico production decline creating inflection point. Expected strong snapback when market tightens.

Middle East selected as initial focus region beyond North America2026 expected 'flattish with some bright spots'Some fleets stacked in Q3 unlikely to return to workNorth America spending below maintenance level

David Anderson · Barclays

Questions on margin outperformance in Q3, $100 million quarterly cost reduction targets, and VoltaGrid partnership details including project size, timeline, and funding model.

About half of margin beat came from earlier-than-expected labor cost reductions; remainder from less white space in North America and strong Gulf of Mexico and international performance. On VoltaGrid: Halliburton brings industrial scale and international execution. Projects aligned with VoltaGrid's scale (2.3GW announced projects). Supply chain positioned well. Halliburton provides boots on ground, project management, customer relationships for international scaling.

Half of margin beat from labor cost reductions realized earlier than expected$100 million quarterly cost reduction targetStrong Gulf of Mexico performanceStrong Latin America project management business performance

Sarv Pandit · Bank of America

Questions on CapEx intensity of power business, funding approach for VoltaGrid internationally and Middle East expansion, and North American market positioning strategy.

2025 CapEx budget $1 billion; VoltaGrid power investments funded separately on project-by-project basis outside baseline oil & gas CapEx. Total project economics shared with VoltaGrid. North American strategy: deliberate focus on efficiency and technology, targeting sophisticated large customers valuing technology (electric fleets, Zeus IQ). Not competing in spot market; idling non-profitable dual-fuel equipment.

2025 CapEx budget: $1 billionVoltaGrid funding separate from baseline CapExProject-by-project funding incremental to $1B baselineFocus on electric fleets and Zeus IQ subsurface technology

Derek Budheiser · Piper Sandler

Questions on fleet idling details (quantity, permanent impairment, redeployment), market attrition dynamics, and Q3 free cash flow headwinds with 2026 expectations.

Management idles uneconomical equipment with no redeployment to shore up underperforming assets. Disciplined on horsepower per location (~65K vs competitors at 100-120K). Real pricing tightness expected with minimal market recovery. 2025 FCF target $1.7B maintained; Q3 lower due to collections and charge timing; Q4 strong collections expected. 2026: $400M cost reduction and $400M lower CapEx provide ~$800M additional liquidity, but may be conservative on buybacks given macro volatility.

2025 FCF target: $1.7 billionQ3 FCF impacted by slightly lower collections and cash charge~65,000 horsepower per simulfrac location (vs. competitors 100-120K)2026: $400 million cost reduction benefit

Answers to last quarter's watch list

Q3 C&P margin landing point — Q2 had guided 150-200bps sequential compression off the Q2 base. C&P operating income came in at $514M with adjusted operating margin holding at 13%, well above the implied compression — roughly half of the beat attributed to earlier-than-expected labor cost reductions per management Q&A. Status: Resolved positively

Jafura tender outcome and Saudi frack reactivation — Middle East/Asia revenue fell another 3% sequentially to $1.41B, and management did not quantify Jafura share or Saudi reactivation timing on the call. The drag continues with no resolution. Status: Not resolved

North American frac fleet stacking actions — Management confirmed in Q&A that diesel dual-fuel fleets were stacked in Q3 due to uneconomical returns and that some stacked fleets are "unlikely to return to work," but did not disclose a specific stacked-fleet count. Discipline confirmed; quantification not provided. Status: Continue monitoring

Structural cost reduction execution — The ~1% Q2 target has been replaced and escalated to a $100M/quarter run-rate (~$400M annualized), already showing up in Q3 margins per management's Q&A attribution. Status: Resolved positively

Chemicals divestiture decision — The company didn't address chemicals divestiture status on this call or in the press release. Status: Continue monitoring

2026 customer budget commentary — Management characterized 2026 as "flattish with some bright spots" and cut 2026 capex ~30% to ~$1B, signalling no recovery in the base case. Customer-level budget granularity wasn't provided beyond the "cautious posture" framing. Status: Resolved negatively

What to watch into next quarter

Q4 North America revenue landing point — management guided -12% to -13% QoQ, implying NA revenue of ~$2.05-2.08B. Watch whether the actual print lands inside that band, and whether management still describes it as "white space" (cyclical) or shifts the language toward structural impairment.

C&P Q4 margin trajectory — guided -25 to -75bps QoQ, far milder than Q2→Q3's implied compression. If C&P holds margins inside this band despite NA revenue falling 12-13%, the cost reset is real; if margins fall by more, the $100M/quarter savings claim needs scrutiny.

VoltaGrid partnership milestones — first concrete project deployment, dollar contribution, and any quantification of HAL's project economics share. This is the new growth narrative; it needs evidence by Q1 2026 or it becomes a credibility issue.

2026 capex execution against the $1B target — quarterly capex run-rate should fall to ~$250M starting Q1 2026. Any drift above implies the ~30% cut is aspirational.

Tariff gross impact — Q3 $31M stepping to Q4 ~$60M. Watch whether the Section 232 step-up plateaus or continues escalating into 2026, and what mitigation actions get quantified.

Buyback pace into 2026 — Derek Podhaizer's Q&A flagged management may be "conservative" on buybacks given macro volatility. Track whether the $250M/quarter pace holds or steps down — a step-down would be the first meaningful crack in the capital returns framework.

Sources

Halliburton Q3 2025 press release / 10-Q filing, SEC EDGAR — https://www.sec.gov/Archives/edgar/data/45012/000004501225000068/livemastererdocument.htm
Halliburton Q3 2025 earnings call commentary and Q&A (JP Morgan, Goldman Sachs, Barclays, Bank of America, Piper Sandler)

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