NESR's Q2 2025: Unpacking Contradictions in Contract Durations, MENA Growth, and Capital Allocation

Revenue and Growth Strategy:
- NESR reported an overall second quarter revenue of $327.4 million, which was up 8% sequentially and 0.71% year-over-year.
- The growth was driven by strong performance in Saudi Arabia and Egypt, and was part of the company's countercyclical investment strategy.

Financial Performance and Cash Flow:
- NESR's adjusted EBITDA for the second quarter of 2025 was $70.6 million with margins of 21.6%, up 95 basis points sequentially.
- Cash flow from operations for the second quarter was $98.5 million, with free cash flow at $68.7 million, reflecting improved working capital efficiency.

Macro Outlook and Regional Performance:
- Despite macroeconomic headwinds, NESR's revenue in MENA remained stable, with growth seen in countries like Saudi Arabia and Kuwait due to unconventional resource development.
- Encouraging energy demand trends and continued investment in unconventional resources were key drivers for regional growth.

Contract Awards and Backlog:
- The company secured multiple new contracts in Kuwait and North Africa, which are expected to contribute to a significant backlog spanning multiple years.
- These contract awards and tenders are a foundational backlog that supports the company's outlook for revenue growth and expansion.