SLB’s Digital Push Drives 25% Sequential Revenue Jump

Date of Call: Jan 23, 2026

Financials Results

• Revenue: $9.7B, up 9% sequentially
• EPS: $0.78 per diluted share, up $0.09 sequentially, down $0.14 YOY
• Operating Margin: 23.9% adjusted EBITDA margin, up 83 basis points sequentially

Guidance:

• Revenue for 2026 expected to be between $36.9B to $37.7B, assuming oil prices remain in high 50s to low 60 range.
• Adjusted EBITDA expected to be between $8.6B to $9.1B with margins in line with full year 2025 levels.
• Q4 2026 revenue expected to be higher than Q4 2025, driven by international rebound.
• Q1 2026 revenue anticipated to decline high single digits sequentially; adjusted EBITDA margin expected to decrease 150-200 basis points sequentially.
• Capital investments expected to be approximately $2.5B in 2026.
• Returning more than $4B to shareholders via dividends and buybacks in 2026.

Business Commentary:

Revenue Growth and Geographical Performance:

• SLB reported a sequential revenue increase of 9% in Q4 2025, with international revenue growing by 7% and North America by 6% when excluding ChampionX.
• The growth was driven by strong operational performance across all geographies, marking the first time since Q2 2024, indicating stabilization and rebound in global upstream activity.

Digital and Production Systems Division Growth:

• SLB's Digital revenue reached $825 million, a 25% sequential increase, while its annual recurring revenue surpassed $1 billion, marking a 15% year-on-year growth.
• The strong performance was attributed to increased demand for digital exploration and operations, particularly in regions like the Gulf of Mexico, Brazil, and Angola.

ChampionX Acquisition Impact:

• The acquisition of ChampionX contributed an additional $300 million to SLB's Q4 revenue and is expected to add approximately $1.8 billion in incremental revenue for the full year 2026.
• This growth is primarily due to the integration of ChampionX's production chemicals and artificial lift technologies, enhancing SLB's production recovery portfolio.

Capital Expenditure and Efficiency Improvements:

• SLB's total capital investments for 2026 are projected at $2.5 billion, focusing on operating requirements and capturing new opportunities as activity recovers.
• This reflects improved capital efficiency, with the company planning to invest more in technology and digital solutions rather than traditional high-capital-intensive projects.

Middle East Market Recovery:

• The Middle East is anticipated to see a rebound in drilling and workover activity, with rig counts potentially returning to early 2025 levels by the end of 2026.
• The recovery is driven by OPEC+ policies and sustained gas development, particularly in Saudi Arabia, UAE, and Iraq, supported by increased international investment.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'We ended the year with strong operational and financial performance...' and 'Overall, the outlook is becoming more positive for SLB. The recovery of Saudi Arabia, the positive pipeline in Subsea, the growth dynamic in both digital and data centers are all catalysts...' CFO highlighted 'strong performance' and 'strong free cash flow generation'.

Q&A:

• Question from Stephen Richardson (Evercore ISI): Could you give context on CapEx trend and how the capital intensity of the forward business differs from the past?
  Response: CapEx increased slightly to $2.5B for 2026 to capture new opportunities. Capital efficiency has improved significantly in recent years, allowing more with less, but the company will increase CapEx if activity recovers faster.

• Question from Stephen Richardson (Evercore ISI): What is the customer mix and optimism for the Middle East in 2026?
  Response: Confidence in NOCs continuing capital programs; rebound in Saudi rig activity expected by end of 2026. Growth also expected in Libya, Algeria, Egypt, Iraq, and unconventional UAE, driven by both NOCs and international companies.

• Question from James West (Melius Research): How are you thinking about the exit rate for 2026 vs 2025, and the magnitude of the up cycle?
  Response: Q4 2026 revenue expected to be higher than Q4 2025, led by international rebound. A gradual recovery throughout 2026 driven by international markets sets a favorable scene for 2027.

• Question from James West (Melius Research): What is the progress on digital platforms (Lumi, Delphi, cloud) and their potential?
  Response: Digital transformation is in early innings; platform approach combining geoscience, production, and operations is gaining traction. Digital Operations currently driving momentum, with Lumi and Tela seeing significant customer uptake.

• Question from Arun Jayaram (JPMorgan): What is the near-term and longer-term opportunity for SLB in Venezuela?
  Response: Under the right licensing and operating conditions, SLB can rapidly ramp up activities, leveraging historical experience, existing assets, and local talent, with potential to become the leading drilling partner.

• Question from Arun Jayaram (JPMorgan): Can you discuss the data center infrastructure business and growth opportunities?
  Response: Growth is rapid; targeting a $1B annual run rate by year-end 2026, with plans to expand internationally, add new customers, and potentially pursue inorganic opportunities to complement capabilities.

• Question from John Anderson (Barclays): What is the growth opportunity in production recovery over the next few years?
  Response: Production recovery represents a significant new chapter, driven by integrated capabilities (OneSubsea, ChampionX, digital) to improve asset performance, with strong customer demand for solutions to get more from existing assets.

• Question from John Anderson (Barclays): What is the potential for geothermal, especially enhanced geothermal, to scale?
  Response: Partnership with Ormat aims to develop integrated solutions for conventional and unconventional geothermal. The focus is on using technology and digital modeling to optimize and scale economically in the near future.

• Question from Neil Mehta (Goldman Sachs): What is your perspective on OPEC spare capacity and its impact on the oil curve?
  Response: Believes there is not significant spare capacity beyond what has been released; market will tighten into 2027, setting conditions for better investment backdrop and sustaining production through technology.

• Question from Neil Mehta (Goldman Sachs): What is the outlook for the Mexico market?
  Response: Market has normalized; land activity expected steady, with potential to strengthen in 2027. Offshore deepwater activity, particularly in projects like Woodside, provides upside.

• Question from Marc Bianchi (TD Cowen): What is pricing pressure like today and embedded in the outlook?
  Response: Pricing pressure persists in North America and some international markets due to competitive tendering. SLB is managing it through technology, mix shift, and synergies, maintaining margins steady in 2026.

• Question from Marc Bianchi (TD Cowen): What gives confidence in offshore improvement now versus prior expectations?
  Response: FIDs and bookings in 2026, especially in East Asia, Africa, and Americas, are setting the stage for a rebound in 2027-2028. Near-term activity in deepwater Indonesia and Gulf of America supports some 2026 growth.

• Question from Scott Gruber (Citigroup): Does the $1B data center target include international growth, and could international become larger than U.S.?
  Response: International growth is part of the future upside; 2026 is the first step into Asia and partnerships. U.S. remains the primary market, but global expansion is a key ambition.

• Question from Scott Gruber (Citigroup): Can similar growth rates be sustained with CapEx around $2.5B, or will it need to increase?
  Response: CapEx will increase as necessary if growth accelerates, but as a percentage of revenue, it will remain at the low end of the 5-7% historical range, supported by less capital-intensive digital and production recovery drivers.

Contradiction Point 1

Middle East Market Recovery Outlook and Timing

Specificity on Saudi Arabia's recovery timeline contradicts a broader, more immediate regional rebound.

What are the customer mix expectations in the Middle East for 2026, particularly for national oil companies (NOCs) and international oil companies (IOCs)? - Stephen Richardson (Evercore ISI Institutional Equities)

2025Q4: The company has strong confidence in NOCs continuing to execute their capital programs and expects a V-shaped recovery in Saudi Arabia’s drilling and workover activity, returning to early 2025 levels by end-2026. - Olivier Le Peuch(CEO)

Is Saudi Arabia's market stabilizing or bottoming, with potential for a 2026 rebound? - James West (Mellus Research)

2025Q3: A rebound is anticipated in the near-to-mid term (first half of 2026), driven by the need to support expanded capacity commitments and assure energy supply for both gas and oil. - Olivier Le Peuch(CEO)

Contradiction Point 2

Deepwater Market Outlook and Activity Timeline

The expected timeline for deepwater drilling activity bottoming and recovering contradicts previous statements.

What changes have inspired confidence in an offshore rebound compared to earlier unmet expectations? - Marc Bianchi (TD Cowen)

2025Q4: The confidence stems from investment decisions (FIDs) and bookings expected in 2026, which will set the stage for a rebound in 2027–2028. - Olivier Le Peuch(CEO)

What's the deepwater market outlook for 2026, considering upcoming campaigns and current white space? - James West (Mellus Research)

2025Q3: The current white space is expected to dissipate, with drilling activity likely bottoming in Q4 2025. A gradual strengthening is anticipated, supported by FIDs and exploration/development plans, leading to stronger activity in 2027. - Olivier Le Peuch(CEO)

Contradiction Point 3

Data Center Solutions Business Strategy and Growth Plans

The strategic focus for the data center business appears to shift from a broad expansion plan to a more concentrated, platform-driven approach.

Can you update on digital business penetration for cloud and AI platforms like Lumi, Delphi, and Tela? - James West (Melius Research LLC)

2025Q4: The strategic platform approach (Delphi, Lumi, Tela) is gaining traction... The strategic platform approach is expected to be at the core of the industry’s digital transformation. - Olivier Le Peuch(CEO)

What is the strategy for the data center solutions business and its expected growth trajectory through 2026 and beyond? - Scott Gruber (Citi Research)

2025Q3: The ambition is to expand beyond the U.S., diversify customers (hyperscalers and colocation providers), and add technology to differentiate offerings. This is a low CapEx intensity business, driven by scalable, modular solutions. - Olivier Le Peuch(CEO)

Contradiction Point 4

Revenue Growth Outlook for 2026

Contradictory guidance on year-over-year revenue growth for the fourth quarter of 2026.

Considering headwinds bottoming out and regional improvements, how do you expect the 2026 exit rate to compare to 2025, and what is the magnitude of the upturn? - James West (Melius Research LLC)

2025Q4: The company expects Q4 2026 revenue to be higher than Q4 2025, driven by an international rebound. - Olivier Le Peuch(CEO)

How do expectations for Q3 compare to Q4? - Arun Jayaram (JPMorgan Chase & Co)

2025Q2: When compared like-for-like, second-half revenue growth is flat to low single digits. - Olivier Le Peuch(CEO) & Stephane Biguet(CFO)

Contradiction Point 5

Digital Business Growth Expectations

Contradictory statements on the growth trajectory and momentum of the digital business.

What's the current status of digital business penetration for cloud and AI platforms like Lumi, Delphi, and Tela? - James West (Melius Research LLC)

2025Q4: The company is in the early innings of digital transformation. - Olivier Le Peuch(CEO)

Are you still on track for mid-to-high teens top-line growth for Digital this year and what are the growth contributions from DELFI Cloud and AI platforms? - Joshua Ian Silverstein (UBS)

2025Q2: Digital growth remains ambitious, aiming to outpace the broader market significantly. The combination of cloud, desktop applications, and digital operations is growing at double digits, with a significant uptick expected in H2. - Olivier Le Peuch(CEO)