Schlumberger Limited (SLB 0.66%) reported Q2 2025 earnings on July 18, 2025, with revenue of $8.5 billion, adjusted EBITDA margin of 24%, and EPS of $0.74 (excluding charges and credits).
Management announced the completed acquisition of ChampionX and provided second-half 2025 guidance for total revenue of $18.2 billion to $18.8 billion and flat adjusted EBITDA margins in the second half of 2025 compared to Q2, setting expectations for significant integration and synergy realization in the near term.
ChampionX Acquisition: Scale and Synergies Transform Production Portfolio
This transaction closed in July and brings ChampionX’s $850 million in revenue and $190 million in adjusted EBITDA into Schlumberger starting August 1. The transaction is expected to deliver $400 million in annual pre-tax synergies within three years of closing -- 75% from cost savings, including substantial supply chain efficiencies realized beyond just the acquired base, and $100 million in annual revenue synergies.
Management intends to report ChampionX’s revenues under the newly formed digital segment, reflecting a narrower definition than prior ChampionX disclosures.
"We are now even more comfortable with our initial assessment that we will be able to generate $400 million of annual pretax synergies within the first three years after closing. The largest portion will come from cost synergies, which represent approximately 75% of the $400 million. Roughly half of these cost synergies will come from supply chain savings, which will be generated not only from ChampionX operations but also from Schlumberger Limited's existing cost base, including the chemical spend in our legacy businesses. The other half of the cost synergies will come from operating costs and G&A savings."
— Stephane Biguet, Chief Financial Officer
This step-function portfolio enhancement reduces cyclicality, increases margin potential, and creates white space for differentiated, integrated solutions—reshaping the company’s long-term cash generation capability by aligning with secular OPEX spend and digital trends across upstream markets.
Margin Resilience and Efficiency Amid Global Volatility
Despite challenging macro conditions—including regional drilling contractions, headcount reductions, and non-repeat Canada and US offshore data sales—adjusted EBITDA margin of 24% expanded by 21 basis points sequentially, with segment operating margins rising to 18.5%.
Sequential revenue growth in artificial lift and midstream production systems helped offset North American and offshore softness, while divestment of the high-margin Palliser asset and M&A integration charges did not disrupt underlying operational leverage.
"Our pretax segment operating margins increased 20 basis points sequentially to 18.5%, as margins increased in three of our four divisions. Companywide adjusted EBITDA margin for the second quarter was 24%, representing a sequential increase of 21 basis points."
— Stephane Biguet, Chief Financial Officer
The ability to maintain and slightly grow margins, despite regional revenue declines and market volatility, demonstrates that the operating model’s diversity and scale are enabling earnings stability and absorbing near-term shocks, as reflected by a sequential increase in companywide adjusted EBITDA margin to 24% (non-GAAP).
Accelerating Digital Segment Growth, Reporting, and Structural Visibility
Double-digit year-on-year user growth of the cloud-first Delfi platform and sustained expansion in digital operation applications are prompting the separation of digital results as a standalone segment beginning in Q3 2025. Digital and Integration revenues were $1 billion, with divisional margin expansion of 240 basis points to 32.8%, and cloud CPU hours surged by 50% year-on-year to 40 million, facilitated by strong customer adoption of SaaS, AI, and well-planning tools.
"I am pleased to announce that we will start reporting the results of our digital business as a separate segment beginning in the third quarter."
— Stephane Biguet, Chief Financial Officer
This transparency unlocks discrete valuation for the high-growth, high-margin digital franchise.
Looking Ahead
Management forecasts H2 2025 revenue between $18.2 billion and $18.8 billion, steady legacy revenues, and a strong year-end digital uplift; Q4 revenue is expected to be high single digits above Q3 due to a full ChampionX quarter and seasonal digital sales.
Companywide adjusted EBITDA margins (non-GAAP) will remain flat with Q2 (24%), as 20–40 basis points of tariff headwinds offset potential margin expansion from integration, and approximately half of the $400 million in synergies are targeted for realization within 18 months of closing the ChampionX transaction.
The rollout of separate digital segment reporting begins in Q3, while free cash flow is projected to be materially higher in the second half on improved collections and lower inventories.