Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 24, 2026 · Beat 6 of last 7 quarters
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SLB's data center solutions growth (+33% sequentially, +80% y/y) and the raised 2027 exit rate target of $2 billion underscore the accelerating AI infrastructure buildout. The expansion into design, engineering, and system integration, exemplified by the Meta Canada project, positions SLB as a broader industrial technology partner for the AI economy, potentially increasing its relevance in the AI infrastructure supply chain.
SLB reported Q2 revenue of $9.0 billion, up 3% sequentially, with adjusted EPS of $0.55, beating consensus. Growth was broad-based across international markets and North America, offsetting a 13% sequential decline in Middle East revenue due to the conflict. Production Systems and Digital were standout performers, with Production Systems margins returning above 20% and Digital margins reaching ~35%. Data Center Solutions grew 33% sequentially and 80% y/y. Free cash flow was $716 million, up $739 million sequentially.
Management guided Q3 global revenue growth of 3-4% sequentially with adjusted EBITDA margin expansion of ~75 bps, assuming a gradual Middle East recovery. For Q4, they expect revenue to surpass $10 billion (~5% y/y) with adjusted EBITDA margin around 24%, assuming Middle East revenue reaches $2.1-2.2 billion (~95% of Q4 2025). They highlighted a compelling 2027 outlook driven by deepwater acceleration, production recovery, digital, and data center solutions. Data center solutions are expected to exit 2027 at an annualized revenue run rate exceeding $2 billion. They also noted a downside scenario with ~$150 million lower Q3 revenue and ~$75 million EBITDA headwind if Middle East re-escalates.
“This was a solid quarter for SLB marked by broad-based international growth and rebound in North America.”
on Quarterly performance
“We now foresee that data center solution will exit 2027 at an annualized revenue run rate exceeding $2 billion.”
on Data center growth
“The market is starting to exhibit the characteristics of an upcycle.”
on Macro outlook
How much of a step up is the Middle East recovery in Q4 from Q3, and is the $10 billion revenue run rate a good base for 2027?
Olivier declined to comment on 2027 but detailed Q4 drivers: further Middle East recovery, year-end digital and production systems sales, and data center growth. Stephane clarified that Q2 Middle East revenue was $1.36 billion, and the base case assumes gradual recovery in Q3; if re-escalation occurs, revenue could be $150 million lower, back to Q2 levels.
What is the level of urgency to get back to work in the Middle East, and what does the recovery look like?
Olivier said engagement with customers is increasing, with activity restored in UAE, Qatar, and to a lesser extent Saudi, while Iraq remains constrained. He noted customers are eager to restore production, and the recovery will be gradual, varying by country, with a mix of well intervention, production recovery, and digital deployments.
Can you simplify what exactly is the product you're providing for data centers and the economics of the business?
Olivier explained they deliver modular, off-site manufactured equipment for data center infrastructure and cooling, providing reliable, scalable delivery with shorter lead times. Stephane noted the business is capital-light with strong free cash flow, though currently not accretive to overall margins.