SLB targets high single-digit Q4 revenue growth and 35% digital margin while expanding ChampionX integration

Earnings Call Insights: SLB N.V. (SLB) Q3 2025

MANAGEMENT VIEW

*
CEO Olivier Le Peuch opened by highlighting sequential revenue growth in Q3, attributing it to "the addition of 2 months of activity from ChampionX, our Digital business and the resilient performance of our Core." Le Peuch reported international revenue rose 1% sequentially, with notable growth across the Middle East, Asia, and offshore markets, while North America revenue increased 17% sequentially, primarily due to ChampionX and higher offshore activity.

*
Le Peuch emphasized the launch of Digital as a stand-alone division, stating, "Our Digital business is comprised of 4 categories where SLB offers solutions that help unlock productivity for geoscientists and engineers drive a step change in efficiency and safety in operations." Digital revenue increased 11% sequentially, driven by a 39% increase in Digital Operations and additional connected assets from ChampionX.

*
Le Peuch explained the integration of ChampionX is already delivering above expectations, with examples such as "a combined ESP string using a ChampionX pump with an SLB induction motor for a main operator in the Permian Basin" and several contract awards in the Middle East. He added, "Our customers are placing greater emphasis on production recovery solutions to unlock additional barrels at the lowest possible cost and with maximum capital efficiency."

*
Regarding market outlook, Le Peuch noted, "Global inventories still reside at multiyear lows and the need to offset natural production decline accounts for nearly 90% of annual upstream investment," signaling a supportive environment for investment.

*
Fourth quarter guidance was detailed: "We expect that we'll achieve a sequential step-up in results in the fourth quarter of high single-digit top line growth as we report a full quarter of ChampionX and generate seasonally higher year-end Digital and product sales."

*
CFO Stephane Biguet stated, "Third quarter earnings per share, excluding charges and credits, was $0.69. This represents a decrease of $0.05 sequentially and $0.20 when compared to the third quarter of last year." Biguet explained Q3 revenue of $8.9 billion increased $382 million or 4% sequentially, with ChampionX contributing $579 million of that increase.

OUTLOOK

* Management expects "second half revenue will be within the midpoint of our previous guidance range of $18.2 billion to $18.8 billion."
* Le Peuch projected "fourth quarter adjusted EBITDA margin to expand 50 to 150 bps sequentially."
* The Digital Division is expected to achieve "double-digit growth year-on-year with EBITDA margin reaching 35% on a full year basis."
* Biguet indicated Digital annual recurring revenue stood at $926 million at the end of Q3, with expectations to reach $1 billion in ARR in the coming year.

FINANCIAL RESULTS

* Biguet reported, "Company-wide adjusted EBITDA margin for the third quarter was 23.1%, representing a sequential decrease of 92 basis points."
* Digital revenue of $658 million increased 11% sequentially with an adjusted EBITDA of $215 million and a margin of 32.7%.
* Annual recurring revenue for Digital grew 7% year-on-year.
* Reservoir Performance revenue was $1.7 billion; Well Construction revenue was $3 billion; Production Systems revenue was $3.5 billion, which increased $542 million or 18% sequentially, with $575 million from ChampionX.
* The company generated $1.7 billion of cash flow from operations and $1.1 billion of free cash flow, including $153 million of acquisition-related payments. SLB repurchased $114 million of stock, bringing year-to-date repurchases to $2.4 billion.

Q&A

* John Anderson, Barclays: Asked if production should outpace the upstream-driven part of the portfolio. Le Peuch responded, "Production and recovery is a new theme that needs reinvestment, that needs technology, that is innovation...we are positioning ourselves with this acquisition of ChampionX to not only address both the OpEx and the CapEx market as a larger market..."
* Anderson: Inquired about Digital's four segments and ARR growth. Biguet replied, "The ARR above $900 million already, yes, it's growing, and we clearly anticipate this to continue growing...probably going into Q4, we can be looking probably at high single-digit growth for ARR."
* James West, Melius Research: Asked about deepwater and Saudi Arabia. Le Peuch stated, "Deepwater remains easier to stay and easier to grow as a market." On Saudi Arabia: "We have reached a stabilized activity, if not bottom...anticipating a likely rebound in near to midterm...increased activity in the first half of 2026 for both gas and oil."
* Scott Gruber, Citi: Questioned the data center solutions business. Le Peuch shared, "The ambition is to expand beyond the U.S. footprint...we already have a pipeline of expansion here in Asia...this is a very low CapEx intensity business."
* Joshua Silverstein, UBS: Asked about ARR growth sources. Le Peuch explained, "It's a combination of enhancing the adoption within customers...and also expanding and broadening our customer access for part of our offering."
* Silverstein: Asked about Digital EBITDA margin. Biguet confirmed, "We think we can reach 35% EBITDA margin for the full year...Q4 is always the best revenue quarter and is always the best EBITDA quarter as well."
* Arun Jayaram, JPMorgan: Asked about Digital growth. Le Peuch replied, "Digital is being seen as a critical -- mission-critical for many customers to transform the way they operate...we will progressively add...Digital services and enhance this offering."
* Neil Mehta, Goldman Sachs: Inquired about oil market rebalancing. Le Peuch said, "We believe that sometime next year...demand supply will be sufficiently rebalanced to allow the market to have the investment incentive."
* Stephen Richardson, Evercore ISI: Asked about Digital's addressable market. Le Peuch described the opportunity as "unconstrained" and said, "Digital is a new wireline...I believe that you should consider it unconstrained for now."

SENTIMENT ANALYSIS

* Analysts pressed on growth rates, market positioning, Digital segment details, and margin outlook, showing a neutral to slightly positive tone, with focus on execution and clarity for new business segments.
* Management maintained a confident tone during prepared remarks, using phrases like "we are confident," and "we expect," but provided more nuanced and detailed responses during Q&A, occasionally emphasizing execution and integration, and at times acknowledging market uncertainties.
* Compared to last quarter, both analysts and management maintained a constructive but slightly more cautious tone regarding macro headwinds and operational integration.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for Q4 now specifies "high single-digit top line growth" as opposed to last quarter's "flat to low single digit" second half growth, reflecting more precise expectations.
* Digital is now reported as a stand-alone division, with explicit revenue, margin, and ARR disclosures, whereas last quarter only anticipated this reporting change.
* ChampionX's contribution is more detailed, now quantified in both revenue and margin impact, and its integration is highlighted as exceeding initial expectations.
* Analysts’ questions this quarter focused more on Digital performance segmentation, ARR growth, and the expansion of new business lines such as data center solutions, reflecting a shift from last quarter's emphasis on macro resilience and integration planning.
* The tone from management has shifted to confident execution of integration and digital initiatives, while analysts continue to probe for sustainability and specifics of growth and margin expansion.

RISKS AND CONCERNS

* Management cited "challenging macro environment" and "uncertainty on the demand supply balance" as ongoing risks.
* Production interruptions in Ecuador and the loss of APS revenue due to a pipeline disruption were noted as impacting results.
* Market uncertainties tied to commodity prices and geopolitical developments remain potential headwinds.
* Analysts sought clarity on capital intensity, margin sustainability, and customer adoption rates, highlighting execution and market risk concerns.

FINAL TAKEAWAY

SLB highlights a quarter marked by sequential revenue growth, the successful integration of ChampionX, and the launch of Digital as a distinct division. Management signals confidence in high single-digit revenue growth and expanded EBITDA margins for Q4, while underscoring the strategic importance of Digital and production recovery solutions. Digital revenue and recurring revenue metrics are now a focal point, as the company positions itself to benefit from both technology-driven transformation and resilient core operations in a dynamic market environment.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/slb/earnings/transcripts]

MORE ON SCHLUMBERGER

* SLB N.V. (SLB) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4830808-slb-n-v-slb-q3-2025-earnings-call-transcript]
* Schlumberger: ChampionX Integration And Strong Cash Flows Support Buy Case [https://seekingalpha.com/article/4825684-schlumberger-stock-championx-integration-and-strong-cash-flows-support-buy-case]
* Buy Schlumberger Limited Shares, As They're Quite Cheap [https://seekingalpha.com/article/4825106-buy-schlumberger-limited-shares-as-theyre-quite-cheap]
* Schlumberger Non-GAAP EPS of $0.69 beats by $0.02, revenue of $8.93B beats by $10M [https://seekingalpha.com/news/4505150-schlumberger-non-gaap-eps-of-0_69-beats-by-0_02-revenue-of-8_93b-beats-by-10m]
* SLB N.V. Q3 Preview: Analysts see muted quarter with softer earnings [https://seekingalpha.com/news/4504980-slb-nv-q3-preview-analysts-see-muted-quarter-with-softer-earnings]