tapebrief
SLB · Q3 2025

SLB · Q4 2025 Earnings

Neutral

Schlumberger

Reported January 23, 2026

30-second summary

Schlumberger printed $9.745B revenue (+5% YoY, +9% QoQ) and $0.78 non-GAAP EPS, with adjusted EBITDA margin recovering to 23.9% — clearing the 50-150 bps Q4 expansion guide and silencing the immediate "margin slippage" thesis. Management's FY2026 revenue guide of $36.9–$37.7B implies +3.3% to +5.6% YoY growth (midpoint ~+4.5%) versus FY2025's $35.708B — but CFO Stéphane Biguet flagged ~$1.8B of incremental ChampionX revenue from a full year of consolidation, partially offset by ~$350M lost to the Palliser APS and Middle East rig divestitures. Net of those items, the organic core is guided roughly flat. Q1 is pre-announced down high-single-digits sequentially with 150–200 bps of margin compression; the recovery is back-loaded with a Q4 FY2026 exit rate explicitly above Q4 FY2025.

Headline numbers

EPS

Q4 FY2025

$0.78

Revenue

Q4 FY2025

$9.74B

+5.0% YoY

Gross margin

Q4 FY2025

17.7%

Free cash flow

Q4 FY2025

$2.29B

Operating margin

Q4 FY2025

18.5%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$9.74B+5.0%$8.93B+9.2%
EPS$0.78—$0.69+13.0%
Gross margin17.7%———
Operating margin18.5%—18.2%+30bps
Free cash flow$2.29B—$1.10B+108.1%

Guidance

Company guides FY2026 revenue of $36.9–$37.7 billion with adjusted EBITDA of $8.6–$9.1 billion, margins in line with FY2025; Q4 FY2025 actuals met/beat prior guidance with 9% sequential revenue growth and expanded EBITDA margins.

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

MetricPeriodPrior guideActualΔResult
RevenueQ4 FY2025high single-digit sequential growth$9.745 billionin-line (9% QoQ matches high single-digit guidance)Met
Adjusted EBITDA MarginQ4 FY202550 to 150 basis points sequential expansion23.9%+40-140 bps above the low end; within or above guide range depending on Q3 margin baselineBeat
Digital Revenue GrowthQ4 FY2025double-digit year-on-year15% YoY+5 pts above minimum double-digit thresholdBeat
Digital EBITDA MarginFY202535% on a full-year basis35% full-year target—Met

New guidance

MetricPeriodGuideYoY
RevenueFY2026$36.9 billion to $37.7 billion-3.4% to -2.6% YoY vs FY2025 actual $35.708B
Adjusted EBITDAFY2026$8.6 billion to $9.1 billion—
Shareholder ReturnsFY2026More than $4 billion through dividends and buybacks—
Sequential Revenue DeclineQ1 FY2026High single digits decline—
Adjusted EBITDA MarginQ1 FY2026Decrease of 150 to 200 basis points vs Q4 FY2025—
Oil Price AssumptionFY2026High 50s to low 60s per barrel—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Capital Investments
FY2026
approximately $2.4 billionapproximately $2.5 billion+$0.1 billionRaised

Segment KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Digital$0.825B+17.0%
Reservoir Performance$1.748B-3.0%
Well Construction$2.949B-10.0%
Production Systems$4.078B+30.0%
ChampionX Revenue Contribution Q4$879 million—

Other KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
International$7.453B—
North America$2.212B+26.0%
Digital ARR$1.0 billion—
Digital ARR Growth YoY15%—
Adjusted EBITDA Margin23.9%—
Pretax Segment Operating Margin18.5%—
Data Center Solutions Growth YoY121%—
Operating Cash Flow$3.01 billion—
Shareholder Returns 2026 Guidance>$4.0 billion—

Management tone

Q3 FY2024: organic growth narrative → Q2 FY2025: ChampionX reframe / less-cyclical pivot → Q3 FY2025: core admitted flat, growth wholly inorganic → Q4 FY2025: stabilisation declared, FY2026 framed as inflection.

The most consequential tonal shift is the explicit pivot from "headwinds persist" to "headwinds may become tailwinds." Last quarter management hedged on Saudi Arabia ("activity has likely bottomed"); this quarter management said "this quarter also marked the return of growth in Saudi Arabia… recounts potentially returning to early 2025 levels by the end of 2026. And this has already begun." The "supply-demand rebalance" — described in Q3 FY2025 as a future condition — is now positioned as actively underway. Management explicitly committed to a higher Q4 FY2026 revenue exit rate vs Q4 FY2025, with Q1 FY2026 marking the trough.

Digital's narrative has evolved sharply. Q3 FY2025 framed Digital as "the only business that can carry the consolidated growth number" with a $1B ARR target for 2026; in Q4 FY2025 Digital ARR hit $1.0B a year early (+15% YoY), Digital revenue grew +17% YoY in the quarter and +9% for the full year, and management added a new strand: "The combination of his growth rate and the full year EBITDA margin of 35% well exceeded the widely recognized rule of 40." This is the first quarter where the Digital story has actually delivered the proof points the equity story required. The watch list test from last quarter (8% Digital revenue growth as the credibility threshold) was cleared with significant room.

The data center business has been re-rated within management's own framing — from "emerging opportunity" (Q3 FY2025) to "the opportunity is growing faster than anticipated… we expect to exceed the year at the quarterly revenue run rate of $1 billion per year" with 121% YoY growth, doubled capacity, and inorganic M&A explicitly on the table. Management is now signalling potential acquisitions to accelerate this business — a clear shift from organic-only language in prior quarters.

The subsea inflection — pushed from 2026 to 2027 in Q3 FY2025 — gained quantification this quarter: "more than 500 subsea trees are expected to be awarded across 2026 and 2027, about 20% higher than 2025 run rate… cumulative bookings exceeding $9 billion over the next two years." This is the strongest forward signal on the long-cycle book in several quarters.

Hedging remained elevated on commodity assumptions (high-$50s to low-$60s oil range, "could increase as the year unfolds"), but the cycle-trough defensiveness of Q3 FY2025 has clearly lifted. Versus a typical SLB cycle-trough call, this one is more constructive than expected.

Recurring themes management leaned on this quarter:

International market stabilization and rebound trajectory (Latin America, Middle East, Asia)AI and digital operations transforming upstream value capture (Tela platform, AI optimization partnerships)Production systems expansion via ChampionX integration driving scale efficienciesSubsea and deep-water offshore inflection expected late 2026Data center solutions accelerating beyond internal forecastsCommodity price floor from geopolitical uncertainty offsetting near-term oversupply

Risks management surfaced:

Near-term commodity price oversupply pressure through H1 2026Elevated geopolitical uncertainties creating price volatilityOperator budget conservatism and backlog behavior in 2026Margin headwinds in reservoir performance and well construction from activity mix and pricingCarbon capture business losses (11-cent goodwill impairment, 50 bps margin drag Q4)

Q&A highlights

Steve Richardson · Evercore ISI

CapEx outlook for 2026 and capital intensity of forward business compared to historical levels; Middle East customer mix expectations between national companies and IOCs driving optimism.

CapEx increased slightly to $2.5B to support gradual activity recovery and capture opportunities. Capital efficiency has improved significantly, allowing more output with less input. By division, reservoir performance has highest capital intensity, followed by well construction and production systems. Added context on Middle East rebounds: Saudi rig activity V-shaped recovery expected, strong momentum in Kuwait/UAE, Libya attracting international investment, Algeria and Egypt rebounding, Iraq continuing growth, UAE unconventional gas entering development phase.

$2.5 billion CapEx for 2026Improved capital efficiency over past few yearsSaudi Arabia V-shaped recovery expected from 2025 dip to end-2025 levels by 20262027 expected to be stronger year

James West · Amelius Research

Exit rate for Q4 2026 versus Q4 2025 given improving headwinds in Saudi, Mexico, deep water, and sub-Saharan Africa; digital adoption rates for Lumi and Delphi cloud platforms.

Q4 2026 expected higher than Q4 2025 led by international rebounds. Q1 marked decline versus prior year before gradual recovery throughout 2026 driven by international markets, setting stage for strong 2027. International recovery: Middle East (Saudi rebound + other momentum), Asia (continued momentum), Latin America (Mexico deep water pickup, Argentina), sub-Saharan deep water (Namibia, Mozambique, Angola FIDs, Nigeria early pickup) to accelerate visibly in 2027-2028. Digital: Lumi achieved 50+ customers in ~4-5 quarters post-launch; Tela (launched <3 months ago) has 12+ customers co-creating foundation model for GeoScience workflows and autonomous asset optimization.

Q4 2026 exit rate higher than Q4 2025Q1 2026 marked decline versus prior yearGradual recovery throughout 2026 led by international markets2027 expected to be favorable year

Aaron Giroirio · JPMorgan

Venezuela opportunity framing: product lines that could benefit from revitalization, required conditions for investment resumption. Data center infrastructure business: solutions provided, $1B run rate by year-end, organic and inorganic growth strategy.

Venezuela: Historical presence (3,000+ employees, $1B+ revenue 10 years ago) provides foundation. If right conditions materialize (licensing, payments, operating license), can redeploy across drilling services (10+ production sets), rig operations, intervention, infield drilling, production optimization. Have 80+ nationals in country, 1,000+ Venezuelan/African employees, 2,000 alumni in network. Currently receiving incoming calls exploring options. Data center: Reaching ~$1B run rate by year-end 2026. Built modular manufacturing capability and co-engineering for cooling solutions in <18 months. Doubling capacity announced. Adding new customers, expanding internationally in 2026. 2027 expected significantly above $1B. Growth continues through rest of decade. Exploring inorganic opportunities to complement organic capability and accelerate market penetration for integrated solutions covering construction and operation.

Venezuela: historical $1B+ revenue, 3,000+ employees, now 80+ nationals in-country, 1,000+ Venezuelan/African employeesVenezuela: 2,000 alumni available to rejoinData center: ~$1B run rate by end-2026Data center: doubled capacity announced last quarter

David Anderson · Barclays

Production and recovery segment growth opportunity over next few years: One Subsea backlog conversion, Venezuela/Guiana engines, chemicals and artificial lift in Middle East. Geothermal partnership with Ormat: process/technique validation needed (analogous to shale 2000s), confidence in scaling to 100+ MW plants.

Production and recovery is strategic new chapter with significant value creation opportunity through technology, integration, digital. Integrated portfolio (ChampionX chemistry, artificial lift, One Subsea, digital) addresses customer priority of getting more from existing assets at lower cost. Positive customer response across lift solutions, digital production, chemistry for production assurance and reservoir recovery. One Subsea benefits from deep water, backlog conversion accelerating. Chemistry addresses production assurance and enhanced recovery. Geothermal: Partnership with Ormat combines SLB's subsurface leadership in geothermal characterization/well development with Ormat's power plant expertise and lifecycle understanding. First: conventional geothermal for data center baseload power. Second: optimize and develop unconventional geothermal through asset development, aiming to get science/technology/digital modeling right before scaling economically and safely. Goal is joint integrated offering to market in near future in U.S. and beyond.

Production and recovery is new strategic chapterIntegrated portfolio includes ChampionX chemistry, artificial lift, One Subsea, digitalOne Subsea backlog conversion acceleratingCustomer priority: more oil from existing assets at lower cost

Neil Mehta · Goldman Sachs

OPEC spare capacity assessment and implications for oil curve; Mexico market normalization and outlook for reinvestment.

OPEC+ unwinding 2.2M barrels; market will tighten in 2027 as existing imbalances subside. Limited spare capacity available beyond what's been released. Non-Middle East OPEC members struggling to sustain production. Positions production recovery and intervention investment as beneficiary, with strong SLB exposure. No significant spare capacity beyond released volumes bodes well for higher activity and investment backdrop 2027+. Mexico: Market normalized after significant drop; now at level requiring confidence

Answers to last quarter's watch list

Q4 FY2025 revenue print vs H2 commitment — Q4 came in at $9.745B; combined with Q3's $8.93B, H2 landed at $18.67B, above the $18.5B midpoint of the $18.2B–$18.8B range. Status: Resolved positively — guidance kept, no quiet trim required.
Digital YoY growth in Q4 FY2025 — Digital revenue grew +17% YoY in Q4 against the 8% credibility threshold, and Digital ARR hit $1.0B (+15% YoY) a year ahead of target. Status: Resolved positively — Digital cleared the bar with room.
Q4 FY2025 adjusted EBITDA margin vs 24% — Q4 came in at 23.9%, ~+80 bps QoQ, within the 23.6%-24.6% range and just below the 24% line. Technically the "structural slippage" thesis is not fully refuted (still sub-24%), but the directional recovery is real. Status: Resolved positively — margin trajectory restored.
Middle East & Asia YoY trajectory — Q4 international flat at 0% YoY, with Saudi Arabia returning to sequential growth and management quantifying a V-shaped recovery to early-2025 activity levels by end-2026. Status: Resolved positively — the supply-demand rebalance thesis has new evidence.
ChampionX FY2026 accretion quantification — Management did not provide a specific EPS accretion number for FY2026 in the materials available. The $400M synergy framework was reaffirmed with "approximately half by end of 2026" (~$30M achieved in FY2025). Status: Continue monitoring — the accretion number remains undisclosed.
Digital ARR path to $1B — Q4 ARR hit $1.0B (+15% YoY), achieving the 2026 signpost a year early. Status: Resolved positively — exceeded pace.

What to watch into next quarter

Q1 FY2026 revenue trough magnitude — high-single-digit sequential decline from $9.745B implies ~$8.9–$9.0B. Watch whether the actual print holds the implied band; a print well below $8.8B would force a harder look at the back-half ramp required to hit the FY2026 guide.

Q1 FY2026 adj. EBITDA margin — 150-200 bps decompression from 23.9% lands at 21.9-22.4%. Watch whether the actual print falls inside this band or below; below 21.9% reactivates the structural margin question.

FY2026 revenue guide trajectory — the $36.9-$37.7B range is wide ($800M). Watch whether Q1 commentary narrows the range and in which direction; narrowing to the low end mid-year would suggest the organic core is contracting rather than holding flat as currently framed.

Data center revenue disclosure and M&A — management has signalled inorganic intent and a $1B+ run rate. Watch for either a quantified FY2026 data center revenue contribution or an announced acquisition — both reshape the segment mix narrative materially.

Saudi Arabia activity quantification — management said the recovery "has already begun." Watch Q1 international and Middle East geographic disclosures for specific Saudi revenue or rig-count progress; verbal confidence needs print-level confirmation.

ChampionX FY2026 EPS accretion number — still undisclosed. The Q1 print is the natural moment for management to commit to a specific accretion figure now that ChampionX is fully integrated; absence of a number would be a soft tell.

Subsea bookings on the $9B two-year path — management committed to "cumulative bookings exceeding $9 billion over the next two years" from a 2025 base of ~$4B. Watch Q1 bookings disclosure for the run-rate test — a Q1 booking of $1.0B+ keeps the path credible; below $0.75B signals slippage.

Sources

  1. SLB Q4 FY2025 Press Release (SEC filing): https://www.sec.gov/Archives/edgar/data/87347/000119312526020133/d59412dex99.htm
  2. SLB Q4 FY2025 earnings call (prepared remarks and analyst Q&A).
  3. SLB Q3 FY2025 and Q2 FY2025 Tapebrief briefs (prior-quarter watch list and guidance baseline).

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