Schlumberger outlines $18.2B-$18.8B H2 revenue target as ChampionX integration begins

Earnings Call Insights: Schlumberger Limited (SLB) Q2 2025

Management View

• CEO Olivier Le Peuch welcomed the ChampionX team, emphasizing the completed transaction as a pivotal step for SLB, stating, “I could not be prouder to lead the company at this juncture, building on an unmatched talent pool and portfolio of technologies to serve our customers and create value for our shareholders.” He highlighted steady revenue, slight EBITDA margin expansion, and resilience against macro headwinds as evidence of strong execution. Le Peuch noted, “International markets, revenue grew by 2%, benefiting from pocket of growth in the Middle East, Asia and North Africa, fully offsetting sequential headwinds in Saudi Arabia and certain offshore markets.”
• The CEO detailed growth in Iraq, UAE, Kuwait, East Asia, China, and Australia, while acknowledging the decline in North America revenue was “led by increased sales across most of our business lines in Production Systems and higher digital sales in U.S. land.” He pointed to strong Production Systems performance and digital adoption, with “more than 7,800 users across the DELFI platform, representing double-digit growth year-on-year.”
• Le Peuch emphasized the strategic rationale behind ChampionX, stating this enhances SLB’s position in “production chemicals and natural enhance our portfolio in 2 essential and fast-growing segments,” and unlocks “a less cyclical and growing market opportunity that is more OpEx driven and is less sensitive to short-term commodity cycles.”
• CFO Stephane Biguet reported, “Second quarter earnings per share, excluding charges and credits, was $0.74. This represents an increase of $0.02 sequentially and a decrease of $0.11 when compared to the second quarter of last year.” He outlined that revenue was $8.5 billion, up 1% sequentially, with company-wide adjusted EBITDA margin at 24%. “We generated $1.1 billion of cash flow from operations and free cash flow of $622 million during the quarter,” Biguet added.

Outlook

• SLB expects second half 2025 revenue to be between $18.2 billion and $18.8 billion, incorporating ChampionX from August and anticipating a full quarter contribution in Q4. Le Peuch stated, “We expect second half revenue to be between $18.2 billion and $18.8 billion for the second half.”
• Management projects second half EBITDA margins to be flat compared to Q2, with approximately 20 to 40 basis points of tariff impact. Biguet explained, “Assuming no changes to the tariffs that are currently in place, we estimate that this will cost us between 20 and 40 basis points of margin in the second half.”
• Both executives signaled that the integration of ChampionX is expected to be accretive to margins and earnings per share on a full-year basis in 2026, with $400 million in annual pretax synergies targeted within three years, half realized in the first 18 months.

Financial Results

• Revenue for Q2 was $8.5 billion, a 1% sequential rise. Adjusted EBITDA margin reached 24%, up 21 basis points sequentially. Segment operating margin increased 20 basis points to 18.5%.
• Digital & Integration revenue was $1 billion, down 1% sequentially with margins expanding to 32.8%. Reservoir Performance revenue declined 1% to $1.7 billion, while Well Construction revenue was flat at $3 billion. Production Systems revenue increased 3% to $3 billion, with margins improving to 16.4%.
• Free cash flow for the quarter was $622 million, a significant increase from last quarter, driven by seasonal improvements in working capital. Capital investments for the quarter totaled $520 million, with full-year capital investments expected at approximately $2.4 billion.
• Biguet noted the completion of the Palliser asset sale in Canada, which brought $316 million in Q2 proceeds and $22 million in Q3.

Q&A

• J. David Anderson, Barclays, asked about customer behavior and macro trends. Le Peuch responded that “major adjustments in international markets are largely behind us,” and the outlook for the second half reflects growth driven by production systems and digital, offsetting headwinds in selective markets.
• Anderson also queried deepwater trends. Le Peuch acknowledged temporary slowdowns, such as in Namibia, but expressed optimism, stating, “I’m more excited about what I see in Americas at large for oil… I think it is a market that has only upside going forward.”
• Scott Andrew Gruber, Citigroup, asked about production business growth and medium-term outlook. Le Peuch pointed to customers’ focus on maximizing recovery and operational efficiency, anticipating less cyclicality and more resilience in production market exposure.
• Gruber’s follow-up on capital intensity was addressed by Biguet, who said, “We are basically at maintenance CapEx level this year and at the very low end of our 5% to 7% CapEx as a percentage of the revenue range.”
• Arun Jayaram, JPMorgan, inquired about regional spending trends. Le Peuch highlighted resilience in Middle East and Asia, with North America presenting the greatest downside risk due to short-cycle spend. Jayaram’s follow-up on quarterly revenue phasing was clarified by both executives, noting a back-end loaded second half with stronger Q4 due to ChampionX and year-end sales.
• Neil Mehta, Goldman Sachs, probed ChampionX integration and digital business performance. Le Peuch stressed the complementarity and international expansion potential, while Biguet confirmed digital margins would continue increasing in the second half.
• Roger Read, Wells Fargo, questioned synergy pace; Biguet confirmed, “the pace can be a bit faster actually because now we have done the homework,” supporting the accretive outlook for 2026.

Sentiment Analysis

• Analysts displayed a neutral to slightly positive tone, focusing on ChampionX integration, margin resilience, and macro uncertainty. Questions sought clarity rather than expressing skepticism.
• Management maintained a confident and constructive tone, emphasizing resilience, growth opportunities, and detailed plans for integration and synergy realization. Le Peuch repeatedly cited strong customer engagement and an “exciting start” with ChampionX.
• Compared to the previous quarter, both analysts and management showed increased focus on integration execution and the impact of macro volatility but with a steadier outlook on operational resilience and synergies.

Quarter-over-Quarter Comparison

• The Q2 call shifted from a cautious Q1 tone to greater emphasis on the completed ChampionX acquisition, synergy targets, and expanded guidance, as opposed to the regulatory and closure delays cited previously.
• The revenue guidance for H2 is more explicit and incorporates ChampionX, whereas Q1 focused on flat-to-mid single digit growth excluding the acquisition.
• Analysts’ questions in Q2 were more focused on integration and synergy delivery, while Q1 centered on macro headwinds and margin protection.
• Management’s confidence in digital growth and production market resilience was sustained, but Q2 remarks provided more color on division-level outlook and integration benefits.

Risks and Concerns

• Management acknowledged macro uncertainty, particularly from OPEC+ supply decisions, commodity price volatility, tariff impacts, and short-cycle spending risk in North America and Latin America.
• Biguet outlined expected margin impact from tariffs at 20 to 40 basis points in H2 and detailed mitigation strategies including supply chain optimization and efforts to recover tariff costs from customers.
• Analysts sought clarification on Mexico’s recovery, deepwater activity timing, and ChampionX integration, signaling ongoing concern about regional and market execution.

Final Takeaway

SLB management highlighted the successful integration of ChampionX, providing expanded revenue guidance for the second half of 2025 and targeting substantial cost and revenue synergies. The company anticipates steady margins, strong cash generation, and continued momentum in digital and production systems despite macro uncertainty and regional volatility. Management underscored the resilience of its global portfolio and readiness to deliver value for shareholders through operational excellence and strategic expansion.

Read the full Earnings Call Transcript