SLB N.V. Q2 FY26 Earnings Analysis

- ChampionX addition has been accretive, growing year-on-year with expanding margins, contributing positively to revenue and margins (Page 13). - Digital business is expected to grow, driven by increased digital services adoption and AI integration, with annual recurring revenue growing 15% YoY, and full-year digital EBITDA margin targeted at 35% (Pages 4, 10). - OneSubsea backlog increased 5% YoY, with expected margin normalization and growth trajectory through 2026-28, benefiting from offshore deepwater rebound (Pages 10, 6). - Production Recovery is positioned for accelerated growth, leveraging chemistry, artificial lift, and digital solutions to unlock additional barrels, seen as a key growth driver (Pages 3, 13). - Data Center Solutions show rapid growth (45% YoY), scaling toward a $1 billion run rate by year-end, with strong demand visibility and potential for meaningful earnings contribution over time (Pages 2, 3). - Broad-based investment recovery anticipated in ’27 and ’28, supported by higher oil prices, increased offshore activities, and energy security-driven investments (Pages 6, 3).

- SLB expects Digital adjusted EBITDA margins to recover and reach at least 35% for full year 2026, matching last year's level (Page 9). - OneSubsea margins, initially weak in Q1 due to project timing, are expected to normalize and improve over the coming quarters, supported by a 5% year-on-year backlog increase (Page 10). - Mid-to-long-term outlook is positive with growth driven by offshore and deepwater markets, especially in Africa, Asia, and the Americas (Page 6). - Earnings per share (EPS) impacted in Q2 by Middle East disruptions but anticipated to improve as operations resume (Page 5). - SLB targets returning more than $4 billion to shareholders in 2026, implying confidence in cash flow and earnings recovery (Page 5). - Overall, growth levers include Production Recovery, Digital, and Data Centers, supporting scalable, technology-driven earnings expansion (Pages 3, 9-10).

- Q1 capital investments (CapEx, APS projects, exploration data): $510 million. - Full-year 2026 capital investments expected to be approximately $2.5 billion. - Focus on Production Recovery, Digital, and Data Center Solutions as strategic growth areas. - Ongoing investments in OneSubsea projects and subsea processing announced (e.g., Ormen Lange, Gullfaks). - Scaling Data Center Solutions business through expanded capacity, partnerships, and selective international growth. - Potential further M&A to accelerate growth in Digital and Data Center Solutions, including thermal management and decarbonized power. - Capital-light growth focus in new businesses like Data Centers with clear path to meaningful earnings contribution.

- Net debt increased by $797 million sequentially to $8.2 billion in the quarter. - Generated $487 million cash flow from operations during the quarter. - Free cash flow was slightly negative at $23 million, affected by annual employee incentives payment and seasonal working capital increase, plus delayed collections in the Middle East. - Capital investments expected around $2.5 billion for the full year. - Repurchased $451 million of stock in the quarter; expect a minimum of $2.4 billion stock repurchase for the full year. - Targeting to return more than $4 billion to shareholders in 2026 via dividends and stock buybacks. - No explicit mention was made of new fundraising through debt or equity during the period or planned ahead.

- OneSubsea backlog is up 5% year-on-year, indicating growth and better visibility on future projects. - OneSubsea received recent awards in Malaysia, South China Sea, Suriname, and Norway. - The company sees a strong pipeline of projects across Americas, Asia, and Africa. - The full-year 2025 guidance for OneSubsea order intake is $9 billion over the next two years. - SLB expects OneSubsea bookings to be higher in 2026 than 2025, with continued growth trajectory into 2027 and 2028. - Digital division’s annual recurring revenue reached $1.02 billion, growing 15% year-on-year. - Production Systems and ChampionX have demonstrated portfolio accrual and growth in order intake and margins, contributing positively to bookings.