SLB Reports Mixed Fourth-Quarter Results Amid Signs of Upstream Market Stability

In its latest earnings release, SLB Limited (NYSE:SLB) reported fiscal fourth-quarter revenue of $9.745 billion, reflecting a 5% increase compared to the same period last year and surpassing analyst projections of $9.547 billion. This topline growth was primarily driven by stabilization in the global upstream sector and was bolstered significantly by expansion in its Production Systems and Digital divisions. The company highlighted that year-end demand strengthened and that the portfolio enhancements following the ChampionX acquisition further contributed positively to results. Notwithstanding revenue growth, SLB's diluted GAAP earnings per share (EPS) decreased to 55 cents from 77 cents reported a year prior. When excluding charges and credits, adjusted diluted EPS stood at 78 cents, down from 92 cents last year but outperforming the consensus estimate of 74 cents. Net income attributable to SLB for the quarter contracted to $824 million, compared to $1.095 billion in the year-ago quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $2.331 billion, slightly below the $2.382 billion from a year earlier, a reflection of reduced margins year-over-year despite sequential operational improvements. From a cash flow perspective, SLB demonstrated robust financial discipline during the quarter. Operating cash flow reached $3.01 billion, and free cash flow amounted to $2.29 billion, which factors in $71 million related to acquisition settlements for ChampionX. The company underscored consistent cash generation capabilities despite facing a challenging macroeconomic environment. As of the end of 2025, SLB maintained $4.212 billion in cash and short-term investments on its balance sheet. Conversely, short-term debt obligations, including the current portion of long-term debt, aggregated $1.894 billion, while the overall long-term debt burden was $9.742 billion, culminating in a net debt position of $7.424 billion. Additionally, the board of directors approved a 3.5% increase in the quarterly cash dividend to 29.5 cents per share. This enhanced dividend will be disbursed on April 2, 2026, to shareholders of record as of February 11, 2026, marking a continued commitment to shareholder returns. Segment Analysis Breaking down results by business segment reveals a mixed performance landscape. The Digital division experienced a notable 17% year-over-year revenue rise, reaching $825 million in the quarter. Correspondingly, pretax operating margins in the Digital segment improved to 34.0%, underscoring enhanced profitability aligned with increased activity levels. Reservoir Performance revenues declined marginally by 3% to $1.748 billion, paired with a pretax operating margin of 19.6%. Similarly, the Well Construction segment saw a 10% revenue downturn, totaling $2.949 billion, with a pretax operating margin of 18.7%. In contrast, the Production Systems segment expanded significantly, posting a 30% revenue increase to $4.078 billion and a pretax operating margin of 16.3%. SLB attributed the strong results within this segment to completing a full quarter of contributions from the recently acquired ChampionX businesses, which themselves provided $879 million of revenue during the quarter. For the full fiscal year ending 2025, SLB recorded total revenue of $35.708 billion, representing a 2% decrease from the previous year. The reported GAAP EPS for the year was $2.35, while adjusted EPS excluding special charges and credits was $2.93. Management Perspective Chief Executive Officer Olivier Le Peuch outlined the company’s approach amidst a demanding market setting in 2025, characterized by weaker commodity prices, geopolitical tensions, and an oversupplied oil market. He emphasized SLB’s efforts to fortify its portfolio resilience by accelerating strategic priorities, including increasing focus on production optimization and recovery, expanding artificial intelligence (AI) applications, and rapidly growing its Data Center Solutions business. Looking ahead to 2026, Le Peuch expressed optimism that the key regional headwinds experienced in 2025 are now dissipating, particularly in the Middle East market. He noted expectations for increased rig activity in the region, where SLB’s established presence positions the company well to benefit from the anticipated upswing. The company anticipates capital expenditures for 2026 to be approximately $2.5 billion. Furthermore, SLB remains committed to shareholder returns, planning to return more than $4 billion through dividends and share repurchase programs within the upcoming year. Stock Market Reaction Shares of SLB rose modestly by 0.57% during premarket trading on Friday, reaching $49.60. The stock is currently trading near a 52-week high, reflecting investor confidence in the company’s strategic positioning and outlook. Market data confirms the stock’s strong momentum yet acknowledges sideways challenges in other valuation metrics. SLB’s recent financial disclosures provide a nuanced view of a company navigating a tough industry environment while leveraging acquisitions and technology-driven segments to stabilize and grow revenues. The emphasis on cash flow generation, balanced capital investment, and shareholder returns highlights management’s focus on execution amid evolving market dynamics.