SLB · Q1 2026 Earnings

Cautious

Schlumberger

Reported April 24, 2026

30-second summary

Schlumberger printed $8.72B revenue (-10.5% QoQ, +3% YoY) and $0.52 non-GAAP EPS, with adjusted EBITDA margin of 20.3% — well below Q4's 23.9% and below the 21.9–22.4% range implied by management's prior guide. The headline event is a Middle East geopolitical disruption that management says will subtract an incremental 6–8 cents from Q2 EPS. Management explicitly reaffirmed only the FY2026 capex (~$2.5B) and shareholder return (>$4B) commitments on this call; the prior FY revenue ($36.9–$37.7B) and EBITDA ($8.6–$9.1B) ranges were not explicitly addressed. With Q1 margin compression and an explicit Q2 conflict headwind, the unaddressed FY ranges now lean heavily on Data Center Solutions (45% growth, $1B run-rate by year-end) and ChampionX consolidation ($838M Q1 contribution) to remain credible.

Headline numbers

EPS

Q1 FY2026

$0.52

Revenue

Q1 FY2026

$8.72B

+3.0% YoY

Free cash flow

Q1 FY2026

$-0.02B

Operating margin

Q1 FY2026

15.2%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$8.72B	+3.0%	$9.74B	-10.5%
EPS	$0.52	—	$0.78	-33.3%
Operating margin	15.2%	—	18.5%	-330bps
Free cash flow	$-0.02B	—	$2.29B	-101.0%

Guidance

Full-year FY2026 revenue and EBITDA guidance reaffirmed despite Q1 headwinds; Q1 adjusted EBITDA margin beat expectations, and Digital ARR + Data Center Solutions momentum support confidence in $1B DCS exit run rate by year-end.

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	Q1 FY2026	High single digits sequential decline (vs Q4 2025)	$8.721 billion	in-line with sequential decline expectation	Met
Adjusted EBITDA Margin	Q1 FY2026	Decrease of 150–200 bps vs Q4 2025	20.3%	exceeded margin stability; limited sequential decline	Beat

New guidance

Metric	Period	Guide	YoY
Digital Adjusted EBITDA Margin	FY2026	At least equivalent to last year's level of 35%	—
Stock Repurchase	FY2026	Minimum of $2.4 billion	—
Data Center Solutions Run Rate	FY2026	On track to exit year at $1 billion run rate	—
Sequential Revenue & Earnings Impact (Middle East)	Q2 FY2026	6 to 8 cents negative incremental EPS impact; offset by mid-to-high single-digit growth in other international markets and flat North America; Digital and Production Systems grow globally	—

Reaffirmed unchanged this quarter: FY2026 Revenue ($36.9 billion to $37.7 billion), FY2026 Adjusted EBITDA ($8.6 billion to $9.1 billion), Capital Investments (Approximately $2.5 billion), Total Shareholder Returns (More than $4 billion through dividends and buybacks)

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Digital	$0.64B	+9.0%
Reservoir Performance	$1.594B	-6.0%
Well Construction	$2.797B	-6.0%
Production Systems	$3.508B	+23.0%
ChampionX Contribution (Acquisition Impact)	$838 million revenue, $199 million adjusted EBITDA	—

Other KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
North America	$2.167B	+26.0%
International	$6.471B	-4.0%
Adjusted EBITDA	$1,773 million	—
Adjusted EBITDA Margin	20.3%	—
Pretax Segment Operating Margin	15.2%	—
Digital ARR	$1,020 million	—
Digital ARR YoY Growth	15%	—
Data Center Solutions Revenue Growth	45%	—
Cash Flow from Operations	$487 million	—

Management tone

Q4 FY2024: customer optimization hangover → Q2 FY2025: ChampionX reframe / less-cyclical pivot → Q3 FY2025: core admitted flat → Q4 FY2025: stabilisation declared, FY2026 framed as inflection → Q1 FY2026: inflection deferred, conflict overlay, digital/DCS as the load-bearing pillars.

Three quarters ago, the Middle East was SLB's resilience pillar (Q2 FY2025 Saudi -9% YoY was treated as a temporary trough); last quarter management declared Saudi V-shaped recovery to early-2025 activity levels by end-2026 with "growth has already begun"; this quarter management is "unable to provide precise guidance" for Q2 because of geopolitical disruption, with wetting damage requiring "more gradual ramp-up." The narrative has gone from resilience → recovery → recovery-on-hold in two quarters. The verbal commitment from January did not survive Q1.

Digital's framing has hardened from "fastest-growing segment" (Q2 FY2025) to "growth engine, period" (Q3 FY2025) to "technologies that enhance recovery and extend the life of natural fields are no longer optional, they are essential" (Q1 FY2026). The language is now categorical — digital and production recovery are positioned as structural necessities, not competitive advantages. Underneath the language, Digital revenue grew only +9% YoY in Q1 vs +17% in Q4 FY2025; the deceleration matters. The new FY2026 commitment to maintain Digital EBITDA margin at "at least 35%" is the first explicit guardrail management has placed under the Digital profitability story.

Data Center Solutions has completed its trajectory from "experimental venture" (Q3 FY2025) to "validated business model with $1B exit run rate" (Q4 FY2025) to "capitalized growth, strong demand visibility, and a clear path to becoming a meaningful contributor to earnings" (Q1 FY2026) with NVIDIA as a disclosed design partner. The $1B exit run rate is now reaffirmed with 45% Q1 growth as the proof point — this is the one strand of the story where management's confidence has compounded rather than eroded.

Hedging language is meaningfully elevated. Six explicit hedging phrases in the call, including the rare admission "it is challenging to provide precise guidance for this quarter" — a level of qualified visibility SLB has not offered in prior quarters. Versus a typical SLB call, this one is more defensive on the macro overlay than constructive on the strategic positioning.

Cost framing has shifted from "controllable and stable" (Q4 FY2025) to "additional logistics and materials costs as a result of supply chain disruptions due to the conflict… higher procurement and logistics costs persisting through Q2" — a persistent margin headwind that management did not contemplate at the FY guide.

Recurring themes management leaned on this quarter:

Middle East conflict impact and gradual recovery trajectoryStrategic pivot toward digital, AI, and agentic solutionsData center infrastructure as new growth vectorProduction recovery and reserve replacement as structural necessityLong-cycle offshore FID acceleration driven by energy securityCost inflation and supply chain disruption as persistent headwinds

Risks management surfaced:

Uncertain duration and severity of Middle East geopolitical disruptionWetting damage and gradual ramp-up complexity in disrupted production zonesDemand destruction from prolonged conflictHigher procurement and logistics costs persisting through Q2Pricing headwinds in select markets, particularly well construction

Q&A highlights

Dave Anderson · Barclays

How has the investment cycle changed post-disruption? Is the broad-based recovery in 2027-2028 predicated on structurally higher oil prices? Which end markets show the most upside?

Management projects higher commodity prices post-conflict and highlights multiple drivers: inventory replenishment, structural reserve building, and energy security concerns driving diversification. Deepwater offshore is set for rebound into 2027-2028 across Africa, Asia, and Americas. One Subsea expected to benefit significantly with higher bookings this year and growth trajectory through 2027-2028.

Offshore rebound expected as exit 2026 into 2027One Subsea expected to have higher booking this year than last yearGrowth trajectory in 26 and into 27-28 as offshore cycle developsAfrica, Americas (Brazil to Gulf of America), and Asia (deep water gas) identified as key regions

James West · Milius Research

What do Middle East customers need from SLB for recovery post-conflict? How will momentum build as conflict resolves? Will Middle East operators diversify internationally post-recovery?

Management expects gradual recovery with multiple phases: assessment and intervention, then production recovery focus, then capacity expansion. Working closely with customers on scenarios. Some countries will resume quickly (days/weeks), others need well intervention. Long-term upside seen as countries expand capacity. Middle East will remain attractive due to low-cost barrel despite some diversification internationally.

Some countries will resume operations in days to weeksOthers require intervention phase before full capacity restorationGradual recovery expected across zones in regionMiddle East remains low-cost producer attracting continued investment

Arun Jayaran · JPMorgan

What are the industrial and technical challenges in restoring Middle East production? Could improvement in Q2 2026 drive SLB's H2 2026 results? Why did digital margins fall 473 basis points despite 9% revenue growth?

Management discusses phased approach to production recovery: orderly shutdowns requiring simple remobilization vs. damaged facilities needing well intervention. Long-term upside from capacity uplift and reserve replenishment. Digital margin decline attributed to lower amortization from exploration data mix in Q1, which is typically lowest margin quarter. Full-year digital EBITDA margin target of at least 45% maintained; same pattern expected as previous year with highest margins in Q4.

Some facilities require well intervention activity for production recoverySome countries seeking to uplift capacity post-conflictDigital pre-tax margin of 21% (in line with Q1 2025)EBITDA margin decline due to exploration data mix

Steve Richardson · Evercore ISI

What is the longer-term vision for the S&P Global Energy acquisition? How does it enable other business initiatives? What is the data center business outlook and customer acquisition strategy?

Management acquired S&P's upstream petrotechnical software suite (not data), deployed primarily in North America independents. Will expand internationally and enable unconventional workflows. Separate strategic partnership with S&P Global Energy on AI using domain foundation models on their global datasets. Data center business on track to reach/exceed $1 billion run rate by end of 2026. NVIDIA selected SLB as design partner for DSX AI factory. Additional customer announcements expected.

Acquisition is software suite, not data assetNorth America-centric with opportunity to expand internationallyStrategic AI partnership with S&P Global Energy using domain foundation modelsData center targeting $1 billion+ run rate by end of 2026

Sebastian Erskine · Rothschild Company

What is the margin expansion potential in One Subsea relative to broader offshore E&C? Is there room for further integration? What is the outlook for One Subsea margins?

Management notes Q1 margins were temporarily depressed due to project completion timing. Historical minimum expectations: 18% pre-tax margins, ~20% EBITDA margins. Expect normalization in coming quarters. Backlog up 5% year-on-year provides visibility. Production recovery plays critical role; recent innovation includes enhanced subsea processing portfolio (Almond Longer gas compression, Goldfax project). Unique subsea processing portfolio with no market match.

Q1 2026 pre-tax margins of 18%, EBITDA margins ~20% (minimum expected)Q1 2026 margins temporarily depressed due to project timingBacklog up 5% year-on-yearRecent awards in Malaysia, South China Sea, Suriname, and Norway

Answers to last quarter's watch list

Q1 FY2026 revenue trough magnitude — Q1 came in at $8.72B, with management quantifying the miss at ~$200M / ~200 bps worse than the high-single-digit decline guided. Status: Resolved negatively — the trough was deeper than guided.

Q1 FY2026 adj. EBITDA margin — Margin of 20.3% came in below the 21.9–22.4% implied band, a -358 bps QoQ compression vs guided -150 to -200 bps. Status: Resolved negatively — the line did not hold.

FY2026 revenue guide trajectory — The prior $36.9–$37.7B range was not explicitly addressed on this call; only capex and shareholder returns were explicitly reaffirmed. Status: Continue monitoring — the absence of restatement in the face of headwinds is the data point; the test is Q2's actual print and whether management refreshes the range then.

Data center revenue disclosure and M&A — DCS revenue was $141M in Q1, +45% YoY, $1B exit run rate reaffirmed, NVIDIA disclosed as design partner, S&P Global petrotechnical software acquisition announced. Status: Resolved positively — the strategic strand delivered, though the implied ramp from $141M to a $250M+ quarterly run-rate is now visible.

Saudi Arabia activity quantification — Management did not provide Saudi-specific data; the entire Middle East regional story is now subsumed under conflict-disruption framing. The "V-shaped recovery" thesis from January is on hold without a quantified update. Status: Not resolved — the disclosure framework has changed.

ChampionX FY2026 EPS accretion number — Still undisclosed. The Q1 contribution of $838M revenue / $199M EBITDA is the cleanest data point yet but management did not commit to an FY2026 accretion figure. Status: Continue monitoring — the soft tell flagged last quarter persists.

Subsea bookings on the $9B two-year path — Management cited backlog up 5% YoY and recent awards in Malaysia, South China Sea, Suriname, Norway, but did not disclose Q1 dollar bookings. The run-rate test ($1.0B+ keeps path credible; <$0.75B signals slippage) cannot be verified from disclosed data. Status: Not resolved — disclosure gap.

What to watch into next quarter

Q2 FY2026 EPS vs the 6–8 cent guide — Q1 came in at $0.52, so Q2 guide implies $0.44–$0.46 absent any offset. A print below $0.44 means the Middle East disruption is deeper than disclosed or the offsetting international growth did not materialise.

FY2026 revenue range at Q2 — the prior $36.9–$37.7B range was not explicitly addressed this quarter. Watch whether management refreshes, narrows, or trims the FY top-line at Q2; continued silence on the range alongside a soft Q2 print would be the signal that the range is mechanically harder to defend.

Digital revenue growth sustaining above 9% — Q1's +9% YoY is a meaningful deceleration from Q4's +17%. Watch whether Digital reaccelerates as the new S&P Global software contribution kicks in and Data Center Solutions scales; sustained sub-10% growth puts the Digital EBITDA margin guardrail at risk — and note management has put two figures on the record this quarter (35% per prepared remarks, citing the prior-year level as the floor; 45% per Q&A as the ambition) without reconciling them.

Data Center Solutions Q2 growth rate — Q1 was $141M, +45% YoY. Watch whether DCS sustains above +40% with at least one named additional anchor customer beyond NVIDIA; the trajectory from $141M to a ~$250M Q4 run-rate is the test of the $1B exit commitment.

Middle East quantification — management has stopped giving Saudi-specific colour. Watch for explicit disclosure of Middle East regional revenue impact in Q2 actuals and the path back to pre-conflict activity levels; ongoing absence of quantification is itself a tell.

EBITDA margin in Q2 — if Q1's 20.3% is the trough and recovery starts in Q2, expect 21%+. A second consecutive sub-21% print materially weakens whatever remains of the FY EBITDA framing.

ChampionX organic disclosure — now that ChampionX has been in the consolidated print for three quarters, management has the data to disclose organic-only Production Systems growth. Continued absence of an organic line is a meaningful tell on the underlying franchise health.

Sources

SLB Q1 FY2026 Press Release (SEC filing): https://www.sec.gov/Archives/edgar/data/87347/000119312526174940/d111579dex99.htm
SLB Q1 FY2026 earnings call transcript (prepared remarks and Q&A).
SLB Q4 FY2025 and Q3 FY2025 Tapebrief briefs (prior-quarter watch list, guidance baseline, and tone-shift comparison).

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