SLB N.V. SLB used its second-quarter 2026 earnings call to frame Middle East disruption as temporary while stressing that the recovery will unfold unevenly. Management paired that caution with a constructive view of deepwater, exploration, production recovery and digital demand.
Adjusted earnings of 55 cents per share beat the Zacks Consensus Estimate of 51 cents. Revenues of $8.97 billion topped the consensus mark of $8.72 billion.
SLB Limited Price, Consensus and EPS Surprise
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SLB Builds Guidance Around a Gradual Recovery
Chief executive officer Olivier Le Peuch said SLB expects third-quarter revenues to grow 3% to 4% sequentially, with adjusted EBITDA margin expanding about 75 basis points.
The base case assumes gradual Middle East remobilization. Renewed disruption that leaves regional revenues flat would reduce third-quarter revenues by about $150 million and adjusted EBITDA by roughly $75 million.
For the fourth quarter, management expects revenues above $10 billion and an adjusted EBITDA margin near 24%, assuming Middle East revenues to reach $2.1 billion to $2.2 billion.
Management Sees a Longer Restoration Cycle
Le Peuch emphasized that returning Middle East production to prior levels will require more than restarting activity. Well intervention, equipment replacement, infrastructure repair and shipping realignment will all be needed.
In the Q&A, a Barclays analyst challenged the view that production recovery could take longer than the market expects. Le Peuch responded that conditions vary sharply by country, with security and infrastructure constraints limiting the pace.
SLB’s CEO also said some countries could restore capacity within weeks or months, while others may require several quarters.
SLB Leans Into Deepwater and Exploration
Management described the market as beginning to show upcycle characteristics, supported by energy security, supply diversification and reserve replacement.
Le Peuch said long-cycle project final investment decisions are expected to rise about 30% in 2026, supporting higher exploration spending and upstream capital investment in the second half.
A Citigroup analyst asked whether stronger exploration activity was durable. Le Peuch said the trend extends beyond one quarter and is tied to reserve replacement across deepwater, frontier and infrastructure-led opportunities.
Management Highlights Digital and Recovery
Digital revenues rose 9% sequentially to $697 million, while its adjusted EBITDA margin reached 34.7%. Annualized recurring revenues increased 15% year over year to $1.04 billion.
Production Systems revenues climbed 7% sequentially to $3.77 billion, supported by OneSubsea, artificial lift, valves and production chemicals. ChampionX delivered sequential margin expansion for a third consecutive quarter.
These businesses helped offset weakness in Reservoir Performance and Well Construction, where Middle East disruptions reduced activity.
SLB Expands Its Data Center Ambition
Data Center Solutions revenues increased 33% sequentially and 80% year over year. Management expects the business to exceed a $1 billion annualized revenue run rate by year-end and $2 billion exiting 2027.
Le Peuch said the offering is moving beyond modular manufacturing into design, engineering and systems integration. A Goldman Sachs analyst asked about the economics and scalability of the business.
Chief financial officer Stephane Biguet said margins are below SLB’s corporate average, but the model is capital-light and generates strong free cash flow.
SLB Keeps Capital Returns in Focus
Biguet said SLB generated $716 million of free cash flow in the quarter and expects materially stronger cash generation in the second half.
The company still plans at least $2.4 billion of share repurchases in 2026 and more than $4 billion of total shareholder returns through dividends and buybacks.
Management’s tone remained constructive on 2027, but its outlook depends heavily on the pace and durability of Middle East normalization.
What Zacks Signals Say About SLB
SLB carries a Zacks Rank #4 (Sell). Its Value Score of B is favorable, but the Growth Score of D, Momentum Score of F and VGM Score of C indicate weaker growth and trading-momentum characteristics.
Zacks Style Scores complement the Zacks Rank, with the strongest combinations generally involving a Zacks Rank #1 (Strong Buy) or 2 (Buy) and an A or B Style Score. SLB’s current mix presents a cautious signal, though the Zacks Rank can change as analyst estimates are revised following the reported results. You can see the complete list of today’s Zacks #1 Rank stocks here.
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