SLB N.V. Q4 FY2025 earnings call

• The fourth quarter saw strong financial performance with sequential revenue growth, margin expansion, and substantial cash flow generation. Internationally, volume increased by 9% sequentially, with organic revenue up 7% excluding ChampionX. - Key highlights included strong year-end product sales globally, higher exploration data sales, and increased demand for digital operations. Activity saw an uptick in The Middle East, Asia, etc. - Divisional performance: Production systems and digital led the way, reservoir performance rose slightly, and well construction was steady. Digital annual recurring revenue exceeded $1 billion, with the launch of the Tela AI system and a partnership with ADNOC. - Market environment: Near-term oversupply may exert pressure on commodity prices, but upstream investments are expected to gradually recover, with international markets stabilizing and trending upward.

In the fourth quarter, digital revenue stood at $825 million, marking a 25% sequential increase, with pretax operating margin expanding by 557 basis points to 34%. Reservoir performance revenue was $1.7 billion, a 4% sequential rise driven by strong international activity. Well construction revenue was $2.9 billion, down 1% sequentially. Production systems revenue reached $4.1 billion, a 17% sequential growth, reflecting a full quarter of activity from ChampionX. Excluding ChampionX, production systems revenue increased by 11%. Digital annual recurring revenue surpassed $1 billion, exhibiting a 15% year-on-year growth.

• Anticipate 2026 revenue to fall within the range of $36.9 billion to $37.7 billion. North America will benefit from ChampionX and data centers, while international revenue is projected to trend upward. - Adjusted EBITDA is expected to be between $8.6 billion and $9.1 billion, with margins in line with 2025 levels. - Expect a sequential revenue decline in the first quarter, followed by a rebound in the second half. - Aim to return more than $4 billion to shareholders in 2026 through dividend increases and share repurchases.

• Macro environment uncertainties may cause results to differ significantly from projections. - Intense market competition within the industry.

Q: Steve Richardson inquired about CapEx and the customer mix in The Middle East.

A: Stephane Biguet stated that CapEx increased to $2.5 billion, and Olivier Le Peuch discussed international customers and the rebound in The Middle East.

Q: James West asked about the digital business and Venezuela.

A: Olivier Le Peuch talked about the momentum in the digital business and Venezuela's readiness under the right conditions.

Q: Arun Jayaram questioned about Venezuela's product lines and the data center business.

A: Olivier Le Peuch discussed Venezuela's capabilities and the data center's revenue run rate exceeding $1 billion.

Q: David Anderson asked about production recovery and geothermal.

A: Olivier Le Peuch spoke about production recovery and the geothermal pilot project with Ormat.

Q: Neil Mehta asked about OPEC spare capacity and Mexico.

A: Olivier Le Peuch commented on OPEC's situation and Mexico's market.

Q: Mark Bianchi asked about pricing and the offshore outlook.

A: Olivier Le Peuch discussed pricing pressure and the improvement in the offshore outlook.

Q: Scott Gruber asked about the data center and CapEx.

A: Stephane Biguet talked about CapEx and the growth of the data center business.