Earnings call transcript: SLB Q3 2025 results show EPS beat, revenue miss

Schlumberger NV (SLB) reported its financial results for the third quarter of 2025, revealing a slight earnings per share (EPS) beat but a revenue miss against forecasts. The company posted an EPS of $0.69, surpassing the expected $0.68, while revenue came in at $8.9 billion, falling short of the anticipated $8.97 billion. Despite the mixed results, SLB’s stock showed a modest pre-market increase of 0.58% to $33.11, after closing at $32.92 the previous day. According to InvestingPro data, the stock is currently trading near its 52-week low of $31.11, suggesting potential value opportunity for investors. The company maintains a solid P/E ratio of 11.06, below industry averages.

Key Takeaways

• SLB’s Q3 EPS of $0.69 beat the forecast by 1.47%.
• Revenue of $8.9 billion missed expectations by 0.45%.
• The stock saw a slight pre-market rise despite the revenue miss.
• Digital business launched as a standalone division, showing significant growth.
• Global upstream investment remains resilient, with international markets showing growth potential.

Company Performance

SLB’s performance in the third quarter of 2025 was marked by a mixed financial outcome. While the company managed to exceed EPS expectations, its revenue fell short of forecasts. The sequential revenue growth of 4% indicates a positive trend, though the decline in pretax segment operating margin and adjusted EBITDA margin suggests some operational challenges. InvestingPro analysis reveals the company maintains a moderate debt level with a debt-to-equity ratio of 0.67, while demonstrating strong cash generation with a free cash flow yield of 9%. The company’s strategic focus on digital transformation and expansion in international markets underscores its efforts to navigate the evolving energy landscape. For deeper insights into SLB’s financial health and growth prospects, subscribers can access the comprehensive Pro Research Report, which covers 1,400+ top stocks.

Financial Highlights

• Revenue: $8.9 billion, up 4% sequentially
• Earnings per share: $0.69, down $0.05 sequentially
• Pretax Segment Operating Margin: 18.2%, decreased by 32 basis points
• Adjusted EBITDA Margin: 23.1%, decreased by 92 basis points
• Cash Flow from Operations: $1.7 billion
• Free Cash Flow: $1.1 billion
• Digital Revenue: $658 million, 11% sequential growth

Earnings vs. Forecast

SLB reported an EPS of $0.69, slightly above the forecasted $0.68, marking a 1.47% surprise. However, the revenue of $8.9 billion did not meet the expected $8.97 billion, resulting in a negative surprise of 0.45%. This mixed performance reflects the company’s ongoing challenges in aligning revenue growth with market expectations, despite a positive earnings beat.

Market Reaction

Following the earnings announcement, SLB’s stock experienced a modest pre-market increase of 0.58%, reaching $33.11. This movement suggests that investors responded positively to the EPS beat, even though the revenue miss might have tempered enthusiasm. The stock remains within its 52-week range, with a high of $44.97 and a low of $31.11, indicating room for recovery and growth. InvestingPro highlights two notable facts: the company has maintained dividend payments for 55 consecutive years and has shown strong returns over the past five years. Additionally, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, with analysts setting price targets significantly above current levels.

Outlook & Guidance

Looking ahead, SLB anticipates high single-digit revenue growth in the fourth quarter, with its digital division expected to grow at double-digit rates. The company targets a digital EBITDA margin of 35% for the full year. SLB’s strategic focus remains on leveraging international market opportunities and advancing its digital transformation initiatives.

Executive Commentary

CEO Olivier Lapouche emphasized the transformative potential of SLB’s digital solutions, stating, "Digital solutions will create the space for their own." He also highlighted the anticipated rebound in international markets, noting, "We believe that the conditions are set when the supply-demand rebalances for the international markets to lead the future activity rebound."

Risks and Challenges

• Declining operating and EBITDA margins could impact profitability.
• Revenue miss indicates potential challenges in market demand or execution.
• Global economic uncertainties may affect upstream investment stability.
• Competitive pressures in the digital transformation space could intensify.
• Oil market volatility remains a potential risk to financial performance.

Q&A

During the earnings call, analysts inquired about SLB’s production recovery opportunities and the growth potential of its digital business. Discussions also focused on the mechanisms for oil market rebalancing and the addressable market for SLB’s digital solutions. These insights reflect investor interest in the company’s strategic direction and market positioning.

Full transcript - Slb NV (SLB) Q3 2025:

Megan, Conference Operator: Good morning. My name is Megan, and I’ll be your conference operator today. I would like to welcome everyone to the Third Quarter SLB Earnings Call. At this time, all participants are in a listen only mode. After the speakers’ remarks, there will be a Q and A session.

As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs, SLB: Thank you, Megan. Good morning, and welcome to the SOB Third Quarter twenty twenty five Earnings Conference Call. Today’s call is being hosted from Houston following our Board meeting held earlier this week. Joining us on the call are Olivier Lapouche, Chief Executive Officer and Stephane Viguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward looking.

These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10 ks filing and other SEC filings, which can be found on our website. Our comments today also include non GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our third quarter earnings press release, which is on our website. With that, I will turn the call over to Olivier.

Olivier Lapouche, Chief Executive Officer, SLB: Thank you, James. Ladies and gentlemen, thank you for joining us on the call. I’ll begin today by discussing our third quarter performance, then I will describe the near term outlook for oil and gas markets, and finally, I will share our guidance for the fourth quarter. Stephane will then provide more details on our financial results and the structure of our new digital division. After that, we’ll open the line for your questions.

Let’s begin. Our fourth quarter unfolded in line with expectations, as we achieved sequential revenue growth driven by the addition of two months of activity from Champagne X, our digital business and the resilient performance of our core. In the International Markets, revenue rose 1% sequentially with notable increases in several countries across The Middle East and Asia. Across this region, sequential growth was seen in Iraq, The United Arab Emirates, Oman, Egypt, China, East Asia, Indonesia, Australia and India, alongside broader improvement in offshore activity across Guyana, Sub Saharan Africa and Scandinavia. Meanwhile, revenue in North America grew 17% sequentially.

This was driven mainly by the contribution of Champagnex followed by higher offshore activity, which more than offset a decline in U. S. Land activity as U. S. Share operators focused on further efficiency gains and cash preservation during the quarter.

We also experienced strong growth in our Data Center Solutions business, extending our reach with hyperscalers to a new market for SLB. This quarter marks the first time we have disclosed our Data Center revenue, which has more than doubled year on year. Looking ahead, we foresee expansion beyond The U. S, along with the onboarding of new customers. Next, let me discuss the performance of our divisions.

I’ll begin with Digital, as this is the first quarter we are reporting Digital as a standalone division. As you have seen in our release this morning, our digital business is comprised of four categories where SAP offers a solution that help unlock productivity for geoscientists and engineers, drive step change in efficiency and safety in operations and help our customers in delivering better wells and higher producing assets. These solutions embedded in platform and applications, digital operations, digital exploration and professional services, each of which Stephane will describe in more detail a little later in this morning’s call. Specific to the third quarter, digital revenue increased 11% sequentially. This was driven by 39% increase in digital operations, which enables digital services and automation capabilities, augmenting our offering from our core divisions.

Of note, automated drilling footage increased by more than 50% year on year. This was also supported by the addition of new connected assets from Champagne X. Following the integration, we now have a combined total of more than 20,000 connected assets deployed in the field, providing additional digital insights and optimization for our customers. One of the reasons digital operation is such an exciting ARR growth, because it presents the opportunity to enhance every service and piece of equipment that we deliver, by embedding digital capabilities that enhance performance and unlock the power of autonomous operations, creating an adjacent and fast growing digital market that strengthens our core offering. In the earnings release published this morning, you would have seen a broad range of examples of platform and application being adopted by customers across all basins, customer types and life cycles.

These examples demonstrate global reach of our digital brand, the impact of our platform strategy and the emergence of AI as a transformative force in our industry. This quarter, for example, we secured key contracts awarded to our OptiSite production suite, which enables customers to process comprehensive data streams through cloud based applications to drive productivity and efficiency across assets and facilities in the field. We also announced a collaboration with AIQ to deploy its Energi agentic AI solution for ADNOC, powered by SLB Lumi data and AI platform. These are meaningful milestones that speak to the momentum behind our digital business and you can expect to hear more announcements in the weeks ahead that further demonstrate the impact and scale of these solutions. Turning to the financial performance of this business, we expect our digital revenue to continue growing at a rate that visibly outperforms global upstream spending and that exceeds the growth rate of our core business by double digits.

At the same time, we expect Digital to continue delivering highly accretive margins to the company. In the core, I was very pleased with the resilient performance of this quarter, given the challenging macro environment. Excluding the impact of the Champagnex contribution, the core divisions of Zelleboa Performance, Well Construction and Production Systems, were essentially flat sequentially. This demonstrates how our global footprint and broad portfolio helps us to navigate regional uncertainties and offset localized headwinds. Specific to our Production Systems division, we are already benefiting from the addition of Champagne X, which delivered revenue growth and margin contribution ahead of expectations.

We are very pleased with the integration so far. And in addition to the strong delivery of the team, we continue to receive positive feedback from our customers. For example, we recently delivered a combined ESP-three using a Champene X pump with an SLB induction motor for a main operator in the Permian Basin. By bringing together these two best in class technologies, we improved performance for unconventional wells and enabled faster installation, reducing downtime and strengthening project economics for our customer. And in The Middle East, we have received several contract awards for our shale lift, weld testing and pollution chemical technologies that leverage the combination of SLB and Champene X solution and engineering capabilities.

Moving forward, in the context of tighter industry economics and mounting pressure from production declines, our customers are placing greater emphasis on production recovery solutions to unlock additional barrels at the lowest possible cost and with maximum capital efficiency. This presents an exciting growth opportunity for companies who can offer solutions and technology to optimize production and maximize recovery from maturing assets, and technology will be the key. This is where SLB has a distinct advantage and why we have made production and recovery a strategic focus for our business. By combining our deep subsurface expertise, the industry broadest lift, intermittent and chemical technology portfolio with unique integration and digital capabilities, we offer a differentiated value proposition to our customers. This offering now includes Champene X, which brings unique technical capabilities and strong track record of customer success, from production chemicals to actual lift, enhanced with digital capabilities.

And we continue to develop our portfolio with strategic investments, including our recent acquisitions of Resman Energy Technology and Steamline Digital. Altogether, our production recovery offerings adds another level of growth to our business, with combined exposure to CapEx and OpEx spend complementing our leadership in Upstream Exploration and Development. Now turning back to our quarterly results and considering the market conditions we faced during the past few months, I’m pleased with our performance. We achieved resilient results across the core divisions, delivering early success with Champagne X and continuing the momentum in digital. And there are several bright spots on the horizon.

Thank you to the entire SLB team, including our new colleagues from Champene X for your excellent contribution this quarter. Next, I will discuss the ongoing macro environment and the near term outlook for oil and gas markets. In an environment with increasingly challenging commodity prices and uncertainty on demand supply balance, the industry has so far proven discipline and most long cycle and international activity demonstrating resilience. While it is difficult to predict the exact outcome of further production increases and ongoing geopolitical developments, the fundamentals for oil and gas remain constructive. Global inventories still reside at multiyear lows and the need to offset natural production declines accounts for nearly 90% of annual upstream investment.

These dynamics create a supportive environment for stable investment in near to mid term, barring a dramatic shift in commodity prices. Against this backdrop, with the exception of three to four well known markets where activity has recessed, Global activity has stabilized through many locations still on the rise. To touch on international markets, many countries remain poised for investment growth tied to long term capacity expansion plans and assurance of energy supply, particularly for gas. Notably, while OPEC plus production release are currently being filled using capacity behind the pipes, additional release will eventually require new infill drilling or new development to meet the higher supply output from these countries. This presents a positive catalyst for activity in member countries and reinforces the potential for higher activity in 2026.

Specific to deepwater markets, the pipeline remains very healthy with favorable economics. We expect further investments in countries across The Atlantic, supported by oil and in Asia, driven by gas. And while short term scheduling uncertainties have resulted in white space, partly in Sub Saharan Africa, We expect this to progressively disappear as there are a number of FID planned for 2026 and early twenty twenty seven. Meanwhile, in North America, operators continue to prioritize pollution maintenance as a result of commodity prices, underpinned by efficiency improvements leading to muted activity in the near to mid term. In this context, considering the current industry dynamics and commodity price environment, we believe the conditions are set when the supplydemand rebalances for the international markets to lead the future activity rebound and SAB is well positioned to benefit from such an event.

Now that we have discussed the market condition, let me describe how we see the fourth quarter unfolding for our business.

Stephane Viguet, Chief Financial Officer, SLB: We expect that we will

Olivier Lapouche, Chief Executive Officer, SLB: achieve a sequential step up in results in the fourth quarter of high single digit top line growth, as we reported full quarter of Champagne X and generated seasonally higher year end digital and product sales. With those third quarter results behind us, we are now in a position to confirm that second half revenue will be within the midpoint of our previous guidance range of €18,200,000,000 to €18,800,000,000 We also expect the fourth quarter adjusted EBITA margin to expand 50 bps to 150 bps sequentially. This was driven primarily by increased earnings contribution from both Digital and Production System end of year sales, including a full quarter of Champagnex results and fully restored operations on our APS ECOLA assets. Specific to the digital business, we expect a significant increase in the fourth quarter on seasonally higher sales across the portfolio. As a result, we believe our digital division will be able to achieve double digit growth year on year with EBITDA margin reaching 35% on a full year basis.

Overall, SAP continues to demonstrate resilience in navigating the challenging market environment, and our strength in digital, coupled with our growing presence in the production recovery space, will expand our leadership in the sector and help us drive positive outcomes for our customers. I will now turn the call over to Stephane to discuss our financial results in more detail.

Stephane Viguet, Chief Financial Officer, SLB: Thank you, Olivier, and good morning, ladies and gentlemen. Third quarter earnings per share, excluding charges and credits, was $0.69 This represents a decrease of $05 sequentially and $0.20 when compared to the first quarter of last year. We recorded $0.19 of charges during the first quarter. This includes $0.12 of merger and integration charges, largely related to the ChampionX acquisition that we closed during the quarter, as well as approximately $04 related to workforce reductions and $03 related to the impairment of an equity method investment. Overall, our first quarter revenue of $8,900,000 increased $382,000,000 or 4% sequentially.

I recognize that there are a lot of moving pieces this quarter, so let me bridge our Q3 revenue to Q2 at a high level. Dollars $579,000,000 of the sequential revenue increase comes from the two months of activity we recorded this quarter from the acquirer of ChampionX businesses. This increase was partially offset by the loss of approximately $100,000,000 of APS revenue due to production interruptions arising from a pipeline disruption in Ecuador and the absence of approximately another $100,000,000 of revenue following the divestiture of our interest in the Palliser APS project in Canada at the end of the second quarter. In other words, after considering the revenue contribution from ChampionX and the impact of the lower APS revenue due to the two factors I just mentioned, revenue was essentially flat on a sequential basis. Our pretax segment operating margin declined 32 basis points sequentially to 18.2%.

The impact of the two months of ChampionX was accretive to these margins as ChampionX contributed $579,000,000 of revenue and $108,000,000 of pretax income in the quarter. Companywide adjusted EBITDA margin for the third quarter was 23.1%, representing a sequential decrease of 92 basis points. The effect of the pipeline disruption in Ecuador negatively impacted our EBITDA margin by approximately 60 basis points. In addition, the divestiture of our interest in the Palisar project resulted in a further 30 basis points reduction. I will now go through the quarterly results for HDB.

And let me begin by sharing more detail about our new digital reporting structure. As Olivier described earlier, digital is a fast growing business and SLB is at the forefront of this industry transformation. We expect our digital business to grow faster than our core business for the foreseeable future with margins visibly accretive to the rest of the company. As such, our intent is to increase transparency around our digital business and better highlight its strategic value. To do this, we are now reporting digital as a stand alone division.

At the same time, our APS business is now being reported in the All Other category, together with our Data Center Solutions and SLP Capturing businesses. To provide you with better insight into these reporting changes as well as the impact of ChampionX, we have included supplemental pro form a financial information going back to the 2024 as an exhibit to the Form eight ks we filed this morning for our earnings press release. Getting back to digital. Revenue is captured and will be reported across four categories where SLB offers solutions for our customers: platforms and applications, digital operations, digital exploration and professional services. Let me briefly describe each of these categories.

Additional details can be found in question 11 to the FAQs at the back of our earnings release. The first category is Platforms and Applications. Platforms and Applications include SLV’s cloud technologies, such

Olivier Lapouche, Chief Executive Officer, SLB: as

Stephane Viguet, Chief Financial Officer, SLB: the Delphi and Lumi platforms, along with a suite of specialized domain focused applications such as Petrel and Teclog, offered as SaaS subscription or perpetual licenses. These platforms and applications automate complex models, unlock data and utilize AI and machine learning to reduce cycle time and improve efficiency of workflows. This allows our clients to make better, faster decisions to improve their project economics and reservoir performance. With the exception of one off license sales, revenue in this category is recurring in nature, underpinned by a globally installed software base built over four decades and complemented by growing adoption of cloud based capabilities and IoT enabled solutions. As a result, Platforms and Applications had high retention rates and very limited churn, as illustrated by the fact that the net revenue retention rate was 103% at the end of the third quarter.

This represents the percentage of recurring revenue retained from our existing customer base over the last trailing twelve months relative to the prior trailing twelve months. The second category is digital operations, which combines the unique strength of SLB’s core oilfield services and products with advanced digital technologies to deliver more reliable and more efficient field operations. By integrating connected solutions with performance live digital service delivery centers, customers gain real time monitoring, remote decision making and automated execution across their workflows from autonomous drilling to automated well intervention. Revenue in this category is generated from the same client base as our core divisions and is therefore repeatable. Additionally, a portion of the revenue is recurring in nature.

To incentivize the three core divisions, Rail Construction, Reservoir Performance and Production Systems and Digital to develop and promote this offering, the resulting revenue is recognized in both the respective core division as well as in the digital division. This revenue is then eliminated in consolidation. The third category is digital exploration. Digital exploration represents our exploration data business. Our differentiated library of seismic surveys and other subsurface data covers key exploration and producing basins worldwide.

These licensed data sets are refreshed and reprocessed to benefit from the latest imaging algorithms and AI technologies enabled by high performance cloud computing. Revenues are generated from one time non transferable license sales and are therefore non recurring in nature. Professional services makes up the fourth revenue category. This includes consulting and other services required to support our clients’ digital transformations. These services include transition support from on prem to cloud based digital solutions, data cleanup and migration and workflow automation, including deployments of solutions built using our global network of innovation factories.

Professional services revenue is largely project based and repetitive engagements with the same customers are common. These services generate pull through opportunities across the overall digital revenue streams. In addition to reporting revenue across each of these four categories, we will also share annual recurring revenue, or ARR, on a quarterly basis. ARR represents the annual value of recurring subscription and maintenance revenue from platforms and applications, along with the recurring portion of digital operations, providing a measure of predictable revenue over the next twelve months. Now that I have described our digital reporting structure in more detail, I will walk through our first quarter digital results.

First quarter digital revenue of $658,000,000 increased 11% sequentially and adjusted EBITDA was $215,000,000 reflecting a margin of 32.7%, up 123 basis points sequentially. Third quarter sequential revenue growth was driven by robust sales of digital exploration, coupled with increased digital operations. It also reflects two months of activity from ChampionX, which contributed digital revenue of $20,000,000 Annual recurring revenue stood at $926,000,000 at the end of Q3, representing year on year growth of 7%, highlighting our ability to continuously expand our offerings in platforms and applications and digital operations, as well as secure new customers. Turning to the core divisions. Reservoir Performance revenue of $1,700,000,000 declined 1% sequentially as higher activity in Europe and Africa was more than offset by lower revenue in The Middle East and Asia, primarily in Saudi Arabia.

Pre tax operating margin of 18.5% was essentially flat sequentially. Well Construction revenue of $3,000,000,000 was flat sequentially as higher revenue in offshore Guyana and North America were offset by lower drilling activity in Saudi Arabia and Argentina. Margins of 18.8% were essentially flat sequentially. Production Systems as reported revenue of 3,500,000,000.0 increased five forty two million dollars or 18% sequentially. This reflects two months of activity from the acquired ChampionX production chemicals and artificial leaf businesses, which contributed $575,000,000 of revenue.

Pretax operating margin of 16.1% declined 66 basis points sequentially, driven by an unfavorable geographic mix in completions and lower subsea margins. This decline was partially offset by the accretive margin contribution from ChampionX. On a pro form a basis, Production Systems revenue of $3,800,000,000 was flat sequentially with lower completion sales offset by increased sales of valves and production chemicals. While it is still early days, we are quite pleased with the performance of ChampionX, which recorded another quarter of year on year revenue and margin growth, demonstrating the resilient nature of its production and OpEx business. Going forward, these results will be further enhanced by the 400,000,000 of annual pretax synergies that we expect to generate within the first three years after closing.

We remain confident that we will be able to realize 70% to 80% of the synergies within the first twenty four months of the transaction. As a result, we expect the transaction will be accretive to both margins and earnings per share on a full year basis in 2026. Now turning to our liquidity. During the quarter, we generated $1,700,000,000 of cash flow from operations and $1,100,000,000 of free cash flow. These amounts include the payment of $153,000,000 of acquisition related items during the quarter.

Capital investments, inclusive of CapEx and investments in APS projects and exploration data, were $581,000,000 in the quarter. For the full year, we still expect capital investments, including the impact of ChampionX, to be approximately $2,400,000,000 We expect that following our historical patterns, free cash flow will increase in the fourth quarter on the back of lower inventory as a result of year end product sales as well as higher customer collections. The extent of the sequential step up in free cash flow will largely depend on cash collections in certain countries. And finally, we repurchased $114,000,000 of our stock during the quarter, which brings our total stock repurchases to $2,400,000,000 on a year to date basis. When combined with our $1,600,000,000 dividend commitment for the year, This will result in us returning a total of $4,000,000,000 to our shareholders for the full year.

I will now turn the call back to Olivier.

Olivier Lapouche, Chief Executive Officer, SLB: Thank you, Stephane. Megan, I

Stephane Viguet, Chief Financial Officer, SLB: think we are ready to open the floor for the questions.

Megan, Conference Operator: We will now begin the Q and A session. Your first question comes from the line of Dave Anderson with Barclays. Dave, your line is open.

Scott Schuzer, Analyst, Citi Research: So, the morning,

Dave Anderson, Analyst, Barclays: IEA put out a report highlighting the increased global decline rates and the need to spend capital just to offset these barrels each year. You now have ChampionX in the fold, and you’ve created really what looks to be the largest production focused business and services. When we think about chemicals, lifts, subsea, something like 40%, 45% of your revenue. Can you talk about how you see this part of your business growing? It’s a little confusing when I think about your core business because this seems a little bit different.

But how do you think about this part of your business growing, particularly with deepwater development ramping up? And I’m just wondering, are you thinking the production should outpace upstream driven part of your portfolio through the end of the decade? Is that the right way to think about it in terms of the opportunity set?

Stephane Viguet, Chief Financial Officer, SLB: I think the right way to think about it first is what the customer is looking for. And I

Olivier Lapouche, Chief Executive Officer, SLB: think as you pointed out, I think it’s clear that the material decline that are weighing on the industry that have to be offset not only by infill drilling and new developments, but there is increased recognition in the customer that production and recovery is a new theme that needs reinvestment, needs technology, that needs innovation, that needs integration and that needs capability to lift and increase production, enhance recovery through technology, through disruptive solution that I think the industry needs. So we are positioning ourselves with this acquisition of Champennix to not only address both the OpEx and the CapEx market as a larger market and hence as a larger share of the wallet of our customers, but also as a more resilient space as OpEx is indeed growing as has been growing at a higher pace than CapEx lately and we continue to do so. But what is more important, I believe, is that we are able to unlock new solutions because we have the broadest portfolio with this ambition. We have the broadest lift portfolio where we have the largest intervention portfolio in the market, And we have now science in chemistry and capability industry that not only touch the production from the wellhead to the process, but also the reservoir.

And I think when combining this, established integration capability of digital, I think we have something that I think the industry is worth looking for. And I think the customer feedback we are getting is actually extremely good because they are all focusing on on pollution recovery as a way to add to their pollution target. And it’s an end, it’s not an or. The end of upstream exploration

Stephane Viguet, Chief Financial Officer, SLB: development will

Olivier Lapouche, Chief Executive Officer, SLB: be complemented by pollution recovery. It’s a market that will expand long term. And this market, we believe we have a leadership position that we have established.

Dave Anderson, Analyst, Barclays: And so shifting over to digital, I’m thrilled to see all the breakout here. I have a million questions here. I’m going try to keep it to a handful of things just to focus on. Stefan, we have the four different segments here. I was wondering if you could kind of just talk a

Steve Richardson, Analyst, Evercore ISI: little bit about how we should be

Dave Anderson, Analyst, Barclays: thinking about those four segments, how they should be trending and kind of what the drivers are for those four segments? I guess the exploration part, but kind of the rest of it. And then secondarily, you highlighted $900,000,000 in recurring revenue year to date, up 7% from last year. I’m just curious, are you expecting this to accelerate? Did you think it was going to grow more or less this year?

And how should we think about that going forward?

Stephane Viguet, Chief Financial Officer, SLB: So thanks for all the questions. Indeed, it’s a lot of additional info. The ARR above 900,000,000 already, yes, it’s growing, and we clearly anticipate this to continue growing as we not only offer more to our existing customers, but also secure new customers. Probably going into Q4, we can be looking probably at high single digit growth for ARR And with the kind of number you see now, we are not too far, I believe, from getting into next year and getting to $1,000,000,000 of ARR, which really provides a very good baseline of revenue. For the rest of your questions, I will pass it to Olivier.

Olivier Lapouche, Chief Executive Officer, SLB: Yes. No, thank you, Stephane. Now Dave, clearly, think, yes, there’s a different dynamic for the four buckets. But I think if you have to look at the platform and application, these were the customer adoption and expansion of our offering will give us the opportunity to continue on our journey to accompany our customers from the across the subsurface, across the pollution and drilling and across their data and AI capability. So the expansion of AI into that space, and you have seen several announcements in the earnings press release this morning, showing that this is the early innings, will be a driving force for further growth.

The deployment of clouds, both hybrid and public clouds, continuation of platform transition that we have seen, and the continuing adoption of the capability we keep adding to our offering, the application we have seen. So this is all about customer adoption, driven by the technology transition from desktop to cloud to AI. Secondly, the digital operation is all driven by adoption of for everywhere we touch, for every product equipment we deliver, we will continue to add digital services, automation, autonomous capability to complement this offering. So this will be added to the core, it’s jointly to the core, but it’s an exciting adjacent space to the core that we grow and fast paced growth ahead of the core. You have seen this quarter, you have seen the year on year, we’re talking about 50% year on year growth.

This is remarkable. The digital exploration is linked to exploration market, but it’s increasingly becoming digital because the customer recognize they need to use more digital insight before they drill the first well. Hence, it will be linked and it will be up and down, highly viable from quarter to quarter, but yet trending in our opinion positively. And finally, service, professional services, I think I have to support the three buckets and I have the capability we put inside the customer office ahead of the large engagements or consulting engagements or during transition of that data space into our offering. This is what drives this.

So it’s different driver, but altogether, we believe over time, this will all be positive, leading to each other to create a sustainable growth going forward, as we say, outpacing the CapEx spend.

Dave Anderson, Analyst, Barclays: Appreciate the insight. Thank you.

Olivier Lapouche, Chief Executive Officer, SLB: Thank you.

Megan, Conference Operator: Thank you. Your next question goes to the line of James West with Moles Research. James, your line is open.

James West, Analyst, Moles Research: Thanks. Morning, Olivier and Stephane.

Stephane Viguet, Chief Financial Officer, SLB: Good morning. Good morning, James.

James West, Analyst, Moles Research: So curious on two key markets here for you guys where you have a nice dominant position that I’d love to get your thoughts on. First is deepwater as we look out into ’26. Obviously, it’s been very resilient, although some white space, but it looks like we’re going to kick off a lot of campaigns next year. Just love to hear your thoughts on how we should think about that unfolding in Schlumberger’s position or SLB’s position.

Olivier Lapouche, Chief Executive Officer, SLB: No. First and foremost, I think deepwater remains easy to stay and easy to grow as a market. It has several economics. And it is seen as a place to invest to unlock new resource. You see it’s not only development FID, it’s also exploration.

The border is going on and is steady and is growing. So now if we look at the activity and the schedule of the rigs that we foresee going forward, actually, we are foreseeing that white space that developed in the last eighteen months are starting to dissipate. And we are at the we believe from a rig activity drilling activity, we may say that we are at bottom this quarter in 2025. And we expect, although very gradual, we expect strengthening of the rig activity to support this both exploration and development FID coming in the pipeline with a gradual strengthening and an uptick in the later part of the year that is currently scheduled and strengthening further in 2027. And we see it from the call from our customers to prepare the subsea pipeline that correspond.

We are happy with our subsea position. We’ll be closing the year with growing both our booking and backlog to be ahead of last year both and to place us to a position where Subsea should grow not in 2026, but materially in 2027 as a consequence of this pipeline. So we are confident that it’s on the horizon, and I think we’ll start to see the strengthening happening step by step.

James West, Analyst, Moles Research: Got it. Okay. That’s great. Thanks for that, Olivier. And then the other market, The Kingdom Of Saudi Arabia has gone through some gyrations here in recent quarters, but it seems to me like at least that we may have found somewhat of a bottom and maybe looking to add activity next year.

Is that consistent with what you’re seeing in that market? I know it’s a sizable market for yourself.

Olivier Lapouche, Chief Executive Officer, SLB: No, I would comment on the activity. I think it is our assessment indeed that we have reached a stabilized activity, if not bottom, in the current level of activity we see. And we are anticipating a likely rebound in near to mid term. And directionally, we are anticipating that we should expect increased activity in the 2026 for both gas and oil for different drivers. Gas continues to support the expanded capacity commitment to 2,030 and on commercial Jafua and other assets in the country.

And for oil in relation with supporting the extra supply that is delivered to the market and assurance of supply through intervention and possibly to some additional oil drilling as well.

James West, Analyst, Moles Research: Great. Thanks, Olivier.

Olivier Lapouche, Chief Executive Officer, SLB: Thank you, James.

Megan, Conference Operator: Thank you, James. Your next question comes from the line of Scott Schuzer with Citi Research. Scott, your line is open.

Scott Schuzer, Analyst, Citi Research: Yes. Good morning. I wanna ask about the the data center solutions business. Good morning. So the data center solutions business, it’s it’s growing pretty quickly here.

It’s actually becoming really sizable. Can you talk about the strategy for the business? Is the aim here to develop a a skill set and and take it take it global, you know, as data center construction goes global? And overall, how do we think about the growth for the Data Center Solutions business in 2026 and beyond?

Olivier Lapouche, Chief Executive Officer, SLB: Yes. I think it’s early days, and we’re very pleased with the market position we gained in very fast pace. I think based on our first relationship and partnership with PerScale, it gave us the opportunity to step into that market, building on our manufacturing and generating process technology and global supply and logistics that I think we have put to make it a reality. Now going forward, yes, the ambition is to expand beyond The U. S.

Footprint we have established, and we already have a pipeline of expansion here in Asia that has been agreed, and to also expand to more customers and diversify hyperscalers and collocators as we call them to complement our offering. But yes, we will add technology, we will add the clinical technology that make it unique to go beyond the first step we have. So yes, we have an ambition to grow it, to expand customers, to expand geography, to broaden our offering. And remember, this is clearly not driven by oil and gas customers, it’s driven by hyperscalers partners that reach out to us to help them respond to this AI boom and data center growth that I think will last beyond this decade, clearly.

Scott Schuzer, Analyst, Citi Research: Got it. No, very interesting. It’s a bit of a different business. Is it fair to assume that there’s little CapEx and balance sheet commitment with the business? Or is there an investment needed

Grow that

Olivier Lapouche, Chief Executive Officer, SLB: The investment is the competencies that I think we have at scale in the organization. It’s technology, creating a reputable, scalable modular solution that differentiates us for fast deployment. And but it’s not CapEx, no. I think we are not this is a very low CapEx intensity business that we have set up here.

Scott Schuzer, Analyst, Citi Research: Excellent. We’ll continue to watch. Thank you. Thank

Megan, Conference Operator: Thank you, Scott. Your next question comes from the line of Josh Silverstein with UBS. Josh, your line is open.

Josh Silverstein, Analyst, UBS: Yes. Hi, everyone. Thanks for the new digital details here. You like the 7% growth in the annual recurring revenue. Is this growth predominantly coming from new customers or growing the new customer base sorry, the existing customer base?

Obviously, the 100% net retention rate shows how sticky the revenue is, but I’m curious about if you need to keep adding customers to drive that growth going forward.

Stephane Viguet, Chief Financial Officer, SLB: I think we already have 1,500 customers, and

Olivier Lapouche, Chief Executive Officer, SLB: I think we have a lot to grow with each customer we have. But yes, we are adding new customers in every new space where we develop technology. I think the digital operation, I think, is a discovery for many customers, and we are doing it every day. The platform application, I think the new offering, Data and AI Platform, I think, is being delivered fresh from launch last Q4 to new customers and adoption has been already more than 50 customers in less than a year, I think, remarkable. So I think we are very proud of this.

So it’s a combination of enhancing the adoption within customers, developing enterprise solution and enhancing the consumption and delivering more to an existing customer set and also expanding and broadening customer access for part of our offering that we are more confined to a few customers in the past. So I think we are broadening our offering with more access across all our customers and we are strengthening for existing large customer and you have seen announcements in the last and you will see more announcement coming soon on customer adoption, large customer adoption that reflect our success with those customers.

Josh Silverstein, Analyst, UBS: Great. And then just as a follow-up, I wanted to go back on the EBITDA margin comments that you guys have made. You highlighted it was around 32% for the first nine months, but I think you said you expected to reach 35% for the full year, which implies a very large drop towards 45% in the fourth quarter. So I wanted to just make sure that was right. And then where you think margins can kind of go to if we look at 2026 versus 2025?

Stephane Viguet, Chief Financial Officer, SLB: Yes, yes, we I confirm we did say that we think we can reach 35% EBITDA margin for the full year. Yes, it’s a step up for the fourth quarter. If you look at actually at the pro form a statements we provided for the which include the digital division by quarter back to 2024, it’s This variability and seasonality is quite common actually. We always start very low in the first quarter and margins as well as revenue by the way, grow quarter after quarter. So Q4 is always the best revenue quarter and is always the best EBITDA quarter as well.

So we are pretty confident we can get there. If you look into the future, 35% EBITDA margin is a good baseline to start from basically. By the way, if I can add something we’ve not discussed before, EBITDA margin, except for the digital exploration part of it, is a very good proxy for free cash flow. There’s obviously no CapEx in the digital business, again, excluding exploration data.

Scott Schuzer, Analyst, Citi Research: Your

Megan, Conference Operator: next question comes from the line of Arun Jayaram with JPMorgan.

Arun Jayaram, Analyst, JPMorgan: Yes. That was my question on kind of digital margins and kind of the capital intensity of that segment. So I was just wondering about as you think about longer term growth from that segment, I mean, you mentioned that you think that it could help strip the core business by double digits. I was wondering if you maybe elaborate on that commentary on growth from digital.

Olivier Lapouche, Chief Executive Officer, SLB: I think there are two comments to it. One, as I said, is the adoption of our customers, existing and new customers we developed in the last question. I think the market expansion itself, the digital is being seen as a critical mission critical for many customers to transform the way they operate, to add productivity, to add efficiency to their geoscientists, engineers and asset team. And I think this trend is here to stay, and we are leveraging our market leadership to leverage and to continue to grow our market position into that superior trend. But secondly, and I think more importantly or equally importantly, is our ability to continue to add digital operation capability, digital growth.

And hence, this one will outperform the core because the principle we are setting here is essentially for every service we provide, for every well site we touch, for every equipment we deliver, we’ll progressively add building on our platform and connecting to our live performance center, we’ll add a set of digital services and enhance this offering that enhance the operation, the performance and get differentiation, get the customer to create more value. So this will ultimately and mechanically be going at a higher rate than the core because it will be the market penetration of digital into our core business. So you add this to the underlying trend of digital transformation with the earnings that we have witnessing in AI, I think we get the combination that give us the confidence that we’ll clearly outperform the market growth of CapEx and outperform the core as a combination.

Arun Jayaram, Analyst, JPMorgan: Great. One follow-up, Olivier. I wanted to see if you could elaborate on your commentary on what would happen in the recovery. Your commentary suggests that you expect that international would lead in a recovery. Historically, it’s been North America.

So I

Olivier Lapouche, Chief Executive Officer, SLB: was wondering if you could

Arun Jayaram, Analyst, JPMorgan: maybe just elaborate on that thought behind that commentary.

Olivier Lapouche, Chief Executive Officer, SLB: Yes. I think we believe that the tightened economics that we are under, and we believe we don’t see them necessarily changing very much. We see them improving slightly as soon as the demandsupply rebalance. But under those conditions, I think we believe that the situation in North America is such that we don’t anticipate significant gain of activity based on the efficiency, traffic growth based on the, I would say, the challenged economics of some basin and also the continued consolidation happening in this market. By contrast, in international, you have several trends that are here to stay.

I think that deepwater has a very solid pipeline that drives the international growth. You have gas and as a security of supply that has led to capacity deployment, exploration, capacity expansion and on commercial development internationally. And you still have the commitment to oil capacity expansion, if not the necessity to offset the decline and many international location and aging basin that combined to make international, I would say, getting a better outlook and first leg for the rebound as activity strengthened.

Arun Jayaram, Analyst, JPMorgan: Great. Thank you.

Scott Schuzer, Analyst, Citi Research: Thank you. Your

Megan, Conference Operator: next question comes from the line of Neil Mehta with Goldman Sachs. Neil, your line is open.

James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs, SLB0: Yes. Morning, Olivier and team. Thank So, you for taking the sir, I was wondering your perspective on the oil macro. And this is more of a near term question. Certainly, the market has flipped into oversupply.

And I think what a lot of market participants are trying to figure out, which you have unique perspective on, is what is the rebalancing mechanism to get the market back into balance? And there are a couple of different levers. Certainly, The U. S. Could be part of it, and part of it could just be time and demand can grow into it.

But how do you guys see the market rebalancing from this current period of oversupply?

Olivier Lapouche, Chief Executive Officer, SLB: Yes, I think first you have to assume that I think the release of supply that are happening that have happened, I think will align and moderate and or be managed to not create a further, I think, I would say, further stretch, okay, to the demandsupply or to the oversupply market. You have to assume this first. And I think that’s an assumption we are making. Certainly, So we are making the assumption that indeed the demand will over time, and we are talking about we’re not talking years, we are talking a month, okay, will catch up. And hence, we believe that with the buffer of supply being behind us, the decline of this excess of supply being behind us, we believe that sometime next year, I think that’s what happens is, that demand supply will be sufficiently rebalanced to allow the market to have the investment incentive to in-depth consolidate from this steady solution or steady situation in which we are today to start to rebound.

So there are some plus and minus, obviously, in Filipe, there is some China adding some silos of liquid inventory. There are some OPEC countries that currently are not fulfilling their quota despite the release. And I think there is some U. S. Shale production anticipation that could also be starting to create a deficit of supply on the horizon.

So you combine this and you get a situation where the demand supply will rebalance itself in the future. And under those conditions, we believe that the drivers of activity will prompt reinvestment and rebound of activity first in the international market.

James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs, SLB0: Yes. Thanks, Olivier. You have a unique perspective to what’s going on in the oil market. The follow-up is just on M and A. ChampionX, I think, in retrospect, really helps to balance out the portfolio on the production side.

Just to the extent we are in a period of softness, do you see an opportunity for SLB to continue to be a consolidator? Or given the softness in the equity, do you feel like a more organic approach is the right strategy?

Olivier Lapouche, Chief Executive Officer, SLB: I think first, we are focusing on executing the strategy of Champennix, realizing the benefit of this unique addition to our portfolio to consolidate and execute a production recovery strategy. And you have seen we have done two more add on bolt on strategic acquisition, Resnan for the tracer technology, use chemistry actually to enhance and to help enhance recovery development. And Steamline Digital, which is a technology, digital technology addition to our portfolio and application, cloud application that helps to plan and execute well intervention for our customers. So all of this pertains to the production recovery portfolio and this is one focus that we have and we believe that aside from bolt on acquisition, we don’t see any further need for consolidating this, but executing through integration, through our unique capability set and expanding internationally, getting the full benefit of this that’s our current focus.

James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs, SLB0: Okay. Thanks, Glenn. Thank

Megan, Conference Operator: you, Neil. Your last question will go to the line of Steve Richardson with Evercore ISI. Steve, your line is open.

Steve Richardson, Analyst, Evercore ISI: Thank you. Thanks for fitting me in. Good morning. I was wondering if you could talk a little bit about the addressable market in digital. I think you just talked about the longer term growth.

But how should we think about the addressable market? I mean, we’ve seen consultants talk about a mid-thirty billion dollars number for total revenues in 02/1930. Or should we think about it as a proportion of total upstream spend? How do we think about the total pie here? And I appreciate that it’s very subjective in terms of how you define what is digital and

Olivier Lapouche, Chief Executive Officer, SLB: digital? Yes. It’s very subjective, but I would consider it unconstrained. I would consider that I think the digital solution will create the space for their own. And I believe that the scale of offering the capability and the opportunity we have, I don’t see constraints into the market.

So I believe that the growth potential we have from both the digital operation today, if you compare the digital operation, if you were to do the math, okay, we could say that this represents 1% of revenue of our core, why not 50% of revenue of our core in the future. So that’s the way you could look into it, okay? We have 1,500 customers, only a few portion of them have adopted our platform. We are in early innings of AI, we have seen handful of announcements on Lumi and AI in this quarter, why not 1,000 customers using Lumion AI in the future and using Adjunctik AI to supplement and get companions to help them execute their workflows with digital capabilities. So this is okay, digital is a new line, I could say, okay?

So I think I believe that you should consider it unconstrained for now, and it’s only limited by our ability to create the right solution that I think the customers are keen to adopt because it has a net impact on their productivity for their geoscientists, has a net impact on their effectiveness and their decision making and it creates value and they recognize the value. So one on one, we’ll continue to work on partner for customers, continue to develop and use our platform to both address the office workflow, the back office workflow and the digital operation to expand the offering. And we will use the technology portfolio we have at our disposal, both on premise, public cloud, hybrid cloud, edge and obviously accelerate our JNI and adjunctive AI for the future. So it’s unconstrained, and I would not want to put a constraint. I’m just willing to keep supporting our customers into their digital journey, and we believe we are the partner of choice in this regard, and we’ll continue to lead the industry for technology, our solution and get the benefit of it.

Steve Richardson, Analyst, Evercore ISI: That’s great, Olivier. Thank you so much. I mean, I think the quick follow-up, if I may. On the commercial push here, do you find that you are is it fair to assume that you’re coming in to your customer and providing a new solution that’s outsourcing or replacing something that they’re doing internal? Are you finding that you’re bidding against a competitor?

And then as a follow-up there, how much of digital would you think right now is bundled with something that comes out of the core? So does that create the commercial entry to then make the digital sale? Or should we think about them completely separately?

Olivier Lapouche, Chief Executive Officer, SLB: No. I think it’s all in. I think we are the leader in the space and it’s organized by customers. And I think they work with us, they desire to work with us and partners to understand how they can get a better use of the the few products they have. Most of the product most of the customers have one of our product, one of our application, and they are then sitting with us and we are partnering to see how we can expand and help them go along the journey to adopt to more of our offering.

So it’s sometimes it complements because we have taken an approach of an open strategy for our platform. It complements what they have, and we are able to preserve and build on what they have developed internally. Sometimes it sits side by side with a competitive offering that is integral part of their workflows, we are not here to push everything out, but to be perceived as the platform integrator in our industry. And yes, it builds on the core because whenever we are delivering new ticketed drilling operation and we can offer autonomous geosteering as an option, I think it obviously has a mutual pull through, pull through on the digital to sell this value added geo steering capability and pull through of hardware services that get the benefit of better performance with digital services. So it’s all in, and I think that’s the reason why we are optimistic that it will continue to grow at a faster pace than the industry global spend and hence, it’s a bright future ahead of us.

Thank you.

Scott Schuzer, Analyst, Citi Research: Thank you. I

Megan, Conference Operator: will now turn the call over to SLB for closing comments.

Olivier Lapouche, Chief Executive Officer, SLB: Thank you, Megane. Ladies and gentlemen, as we conclude today’s call, I would like to leave you with the following takeaways. First, upstream oil and gas remains investment remains resilient with pockets of growth in many international markets. SME’s unique global footprint and portfolio provides us with leading exposure to many of these regions and enable us to deliver steady financial results through all market conditions. Second, the addition of Champlain X is already making a meaningful impact, as customers remain focused on increasing production from existing assets.

Our expanded portfolio positions us to capture a larger share of their spending and under a greater value across the production life cycle, both in OpEx and CapEx spend categories. And finally, our digital business is a true differentiator for SAP. This is the fastest growing part of our business, and I look forward to sharing the continued growth of this business through our new digital division. With these strengths, SAP is exceptionally well positioned to continue delivering for our customers and our shareholders. I look forward to delivering a strong fourth quarter to close the year.

With this, I conclude today’s call. Thank you all for joining.

Megan, Conference Operator: This concludes today’s conference call. You may now disconnect.

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