Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 5, 2026 · Beat 0 of last 7 quarters
LandBridge Company LLC reported Q2 FY2026 revenue of $67M, a beat of 11.3% against consensus, and EPS of $0.50, a miss of 5.1%.
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LandBridge's disclosure of seven counterparties and more than 10 gigawatts of power and data center potential under LOI, option, or late-stage negotiation is a concrete signal that West Texas is emerging as a data center hub, with the company positioning land, behind-the-meter power, fiber access, and brackish and treated produced water as a bundled offering. Management's expectation that multiple agreements could convert to firm leases with revenues by the end of next year suggests the region's digital infrastructure pipeline is moving from diligence toward contracting, which could pull forward demand for power generation, water handling, and related surface infrastructure on and around LandBridge's acreage.
LandBridge reported record second quarter revenue of $66.8 million, up 41% year-over-year and 31% sequentially, with adjusted EBITDA of $59.8 million at an 89% margin and free cash flow of $40.2 million at a 60% margin. Surface use royalties and revenues rose 41% sequentially on higher produced water handling volumes and increased commercial activity; resource sales and royalties rose 1% on higher water sales on legacy acreage; and oil and gas royalties rose 20% sequentially on higher oil prices, though they remain only about 5% of Q2 revenue. Capital expenditures were $1.1 million, and net cash used in investing activities was $11.3 million, including $10.2 million for bolt-on acquisitions. The company declared a $0.12 per share dividend, ended the quarter with $269.8 million of total liquidity and 2.5x net leverage, and announced board approval of a conversion to a Texas corporation.
Management reaffirmed full-year 2026 adjusted EBITDA guidance of $210 million to $230 million, the range it raised last quarter, and said it expects to continue the momentum into the second half of the year. On digital infrastructure, LandBridge disclosed it is under LOI, option, or in late-stage negotiations with seven power and digital infrastructure counterparties representing more than 10 gigawatts of power generation and data center potential, and management said it would not be surprised if several of those convert to firm leases with revenues kicking on by the end of next year. The company expects a produced water volume ramp in the back half of 2026, though less pronounced than the Q1-to-Q2 step-up, with WaterBridge's Speedway development cited as a driver. Management said royalty rates should continue to rise as pore space scarcity plays out, noting the prevailing new-facility rate of $0.15 per barrel and that WaterBridge's legacy sites pull the blended average lower. Subsequent to quarter end, LandBridge increased its revolver from $275 million to $375 million with an accordion to $475 million and cut borrowing costs by 25 basis points, and the board unanimously approved a conversion and redomicile from a Delaware LLC to a Texas corporation, which management said could broaden index eligibility and expand the investor base.
“LandBridge is currently under LOI, option, or in late-stage negotiations with seven power and digital infrastructure counterparties, representing more than 10 gigawatts of power generation and data center potential across our footprint.”
on Digital infrastructure pipeline
“I think having multiple of these LOIs and options flipped to firm leases with revenues kicking on by the end of next year is very realistic.”
on Conversion timeline
“We're going to see royalty rates continue to increase as pore space scarcity continues to play out.”
on Royalty rate trajectory
Can you provide color on the potential economic impact of the Delaware landfill deal and how we should think about similar waste management acquisitions going forward — are they tied to WaterBridge or would LandBridge pursue them independently?
McNeely said the $20 million surface acquisition implies a high single-digit run rate with room to blend down as WaterBridge grows cash flows on the site, plus option value on the surrounding surface. He said it is a deal LandBridge would do with any third party, sets the royalty rate equal to other WaterBridge sites on LandBridge acreage, and falls 'right in the middle of the fairway.'
How does the seven-counterparty digital infrastructure pipeline compare to expectations 12 months ago, and what would success look like a year from now?
McNeely said commercial momentum has grown quarter-over-quarter and several counterparties were added since last quarter, with room to add more in coming months. He said success would be multiple LOIs and options flipped to firm leases with revenues by the end of next year, and that counterparties are eager to get capacity online quickly.
How do you read the recent directive halting new data center approvals pending the ERCOT audit, and does it change the pace of converting the 10-plus gigawatt pipeline?
McNeely characterized the governor's effort as an audit and disclosure exercise rather than an outright moratorium, aimed at separating committed projects from speculative ones. He said LandBridge's contemplated projects are behind the meter, use brackish or treated produced water for cooling, and sit on large contiguous acreage with community support, so they should continue to move quickly while less-differentiated projects could be extended.