NOV Q2 2025 presentation: Sequential growth amid challenging year-over-year comparisons

Introduction & Market Context

NOV Inc. (NYSE:NOV) presented its second quarter 2025 earnings results on July 29, showcasing sequential revenue growth despite year-over-year pressure in a challenging energy market environment. The company reported consolidated revenue of $2.2 billion, representing a 4% sequential increase but a 1% year-over-year decline, as the energy services provider navigates mixed global market conditions.

The presentation comes as NOV’s stock faces downward pressure, with shares trading at $12.50 in pre-market activity on October 14, down 1.65%. This follows a period of volatility, with the stock having traded between $10.84 and $16.86 over the past 52 weeks.

Quarterly Performance Highlights

NOV’s Q2 2025 results revealed an Adjusted EBITDA of 11.5% of revenue, with net income of $108 million, or $0.29 per diluted share. The company’s revenue mix demonstrates its global footprint, with international markets accounting for 62% of revenue compared to 38% from North America. Additionally, the company maintains a balanced exposure between land (53%) and offshore (47%) operations.

The company generated $108 million in free cash flow during the quarter, enabling continued execution of its shareholder return program. NOV reported returning $536 million to shareholders over the trailing twelve months, underscoring its commitment to capital returns despite market headwinds.

During the quarter, NOV secured several significant contracts that highlight its technological capabilities and market position. These include a multi-year contract to provide instrumentation and digital services across a major land drilling contractor’s US fleet, a contract to deliver a Submerged Swivel and Yoke system for an FLNG project in Argentina, and the installation of four high-profile automation packages on offshore rigs, including one featuring the ATOM RTX robotic system.

Segment Analysis

The Energy Products and Services segment generated $1.025 billion in revenue, reflecting a 3% sequential increase but a 2% year-over-year decline. Adjusted EBITDA for this segment was $146 million, representing 14.2% of segment revenue. NOV attributed the year-over-year pressure to lower global activity levels affecting demand for consumable products, partially offset by higher sales of capital equipment. The segment’s profitability was impacted by sales mix, tariffs, and inflationary pressures, as well as certain charges in Latin America.

Meanwhile, the Energy Equipment segment delivered $1.207 billion in revenue, up 5% sequentially and flat year-over-year. This segment generated Adjusted EBITDA of $158 million, or 13.1% of segment revenue. While profitability improved year-over-year due to strong execution on higher-margin backlog, it declined sequentially by 4%. The segment’s backlog stood at $4.3 billion at quarter-end, down 3% sequentially and 1% year-over-year, with new orders of $420 million resulting in a book-to-bill ratio of 66%.

Capital Allocation & Strategy

NOV’s capital allocation strategy emphasizes maintaining a strong balance sheet while investing in growth opportunities and returning capital to shareholders. The company reported a net debt leverage ratio below 1x and a gross debt leverage ratio below 2x as of Q2 2025, positioning it well to navigate market uncertainties.

Year-to-date capital expenditures reached $167 million, reflecting ongoing investment in the business. The company has committed to returning at least 50% of excess free cash flow to shareholders, having returned $536 million over the past twelve months through dividends and share repurchases. According to the earnings article, NOV repurchased 10.9 million shares for $150 million in the first half of 2025.

Outlook & Forward Guidance

Looking ahead to Q3 2025, NOV provided a cautious outlook, projecting consolidated revenue to decline by 1-3% year-over-year with Adjusted EBITDA expected to range between $230 million and $250 million. The Energy Products and Services segment is forecasted to see flat to 2% lower revenue year-over-year, while Energy Equipment revenue is expected to decline 1-3%.

The company faces several challenges, including a declining North American rig count and project delays in offshore markets. Additionally, tariff expenses are projected to increase to $25-30 million in Q4, according to the earnings article. Despite these headwinds, management remains optimistic about accelerating offshore activity in 2026 and growth opportunities in international unconventional and deepwater markets.

NOV’s mission statement emphasizes delivering technology-driven solutions to empower the global energy industry, with a focus on pioneering innovations for safe energy production while minimizing environmental impact. This strategic direction aligns with customer demands for solutions that improve recovery rates, lower costs, enhance safety, and reduce environmental footprint, as highlighted in executive commentary from the earnings call.

As NOV navigates a complex market environment, its ability to balance growth in digital and international sectors with challenges in traditional markets will be crucial in determining its trajectory in the coming quarters. Investors will be closely watching whether the company can maintain its capital return program while addressing the margin pressures and market headwinds outlined in its presentation.

Full presentation:

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