SLBSLB

SLB reported second-quarter revenue of about $8.97 billion, which was higher than the $8.67 billion analysts expected. Its profit of $0.55 per share also topped estimates. The results show that the company's focus on deepwater projects and international markets is paying off, helping it grow even as conflict in the Middle East disrupted some operations.

Management also highlighted a growing role in the AI economy, using its energy expertise to help power data centers. The board approved a quarterly dividend of $0.295 per share, signaling that the company remains on track to return cash to its owners. This performance supports the view that SLB can thrive by providing high-end technology that makes oil production more efficient globally.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Data center growth accelerating: Revenue from the data center solutions business grew 80% year on year and is on track to hit a $1 billion annual sales rate by the end of 2026. This unit helps big tech companies build digital infrastructure, and its expansion to a new 1-gigawatt project with Meta shows SLB is successfully moving beyond oilfield services.
• Middle East conflict drag: Revenue in the Middle East fell 13% sequentially as regional conflict caused operational disruptions and production shut ins. This local weakness offset growth in other areas, dragging total international revenue down 3% year on year to $6.67 billion.
• ChampionX integration boosting production: The Production Systems division saw revenue climb 29% to $3.77 billion, mostly because of the $870 million contribution from the newly acquired ChampionX business. Adding this business, which specializes in chemicals and lift systems that keep wells running longer, helped the division's profit margins expand by 1.38 percentage points over the previous quarter.
• Digital software margins jump: Profit margins in the Digital division reached 27.8%, a sharp increase from 20.9% in the prior quarter, as customers bought more high profit exploration data licenses. This software business reached $1.04 billion in annual recurring revenue, meaning the predictable yearly value of its active subscriptions, which is 15% higher than it was a year ago.
• Shareholder returns and buybacks: The company spent $648 million to buy back 12 million shares during the quarter, which is part of its plan to return at least $3 billion to shareholders this year. Management also approved a dividend of $0.295 per share to be paid in October, maintaining the same payout level as the previous quarter.
• Strong outlook for 2027: Management expects to reach a $2 billion annual revenue run rate for its data center business by the end of 2027, double what it expects for this year. They also believe a recovery in Middle East activity and rising demand for deepwater offshore drilling will provide a strong foundation for growth heading into next year.

Our take: A resilient quarter that shows SLB is becoming more than just a driller. While Middle East conflict hit the core business, the 80% jump in data center revenue and 15% growth in digital subscriptions prove the company can find profit elsewhere. This diversification makes the long-term case for the stock much stronger.