Schlumberger Aktie

Good morning, everyone, and thank you for joining us today. Before we start, let me briefly step back and review the story you heard so far. We have discussed the pivotal role of digital in our industry and the differentiated position SLB has built over time. You have seen how we are leveraging our platforms and applications across planning and operations workflows. And you have heard about the opportunity to scale AI across our portfolio to unlock even greater value. What I would like to do now is bring that story together through a financial lens. Over the next few minutes, and we'll focus on 3 areas. First, the digital profile of our digital business, the financial profile of our digital business. Second, the significant market opportunity ahead of us and how we plan to monetize it. And finally, our 2030 financial ambitions. The key takeaway is this. Digital has become a meaningful contributor to SLBs financial performance in the past few years. And we continue to see significant runway ahead with accretive growth and continued margin expansion.

Let me begin with where the business stands today. In 2025, Digital generated approximately $2.7 billion of revenue. More than $900 million of adjusted EBITDA and an adjusted EBITDA margin of 35%. It also reached approximately $1 billion in annual recurring revenue on a trailing 12-month basis. But what is most important is the quality of this growth. Since 2029 -- 2021, Digital revenue has grown at a 16% compound annual growth rate, well above the oilfield services market and SLBs overall growth during the same period. And adjusted EBITDA grew even faster at a 23% CAGR compared with approximately 14% for SLB overall, demonstrating Digital strong operating leverage and differentiated earnings power.

Also, the margin profile you see here already reflects a meaningful share of the costs required to support growth as the research and engineering spend is directly expensed. That translates into very strong cash generation and effectively makes Digital the division with the highest return on capital employed in the company. So what Digital brings to SLB is very clear. It has growth, it lifts margins and it delivers very attractive returns.

Let me now describe our Digital revenue footprint. One of the defining strengths of this business is that it is diversified across geographies, customer types and revenue categories. That matters, because it gives us a broader opportunity set, greater resilience and multiple paths to growth. Today, our Digital business serves more than 1,500 customers, including more than 90 of the world's top 100 oil and gas producers. That is a strong installed base, and a solid foundation for growth. Geographically, the business has broad exposure across the Middle East and Asia, Europe and Africa, Latin America and North America. And our customer mix is also well balanced across national oil companies, independents and majors. That mix is important. With national oil company and independents, we already see strong Digital adoption, particularly in planning workflow. With the majors, we see a meaningful runway. As some customers move away from internally developed systems towards scalable, enterprise-grade platforms that can support broader Digital transformation.

And finally, from a revenue category perspective, Platform as an application represent approximately 40% of Digital revenue, followed by professional services, digital operations and digital exploration. That mix will evolve as digital operations continue to scale. We expect it to become the largest part of the business over time, as I will describe momentarily. Overall, this is a well-balanced business. We have the broadest Digital offering in the industry, and it is not dependent on one geography, one customer or one product line. It is also supported by the depth of the broader SLB portfolio and our global reach. Taken together, that gives us confidence in both the durability of the business and the opportunity ahead. So next, building on what Rakesh outlined earlier, let me turn to the market opportunity and where we see the strongest growth Recent third-party analysis shows the total addressable market for our Digital business growing to approximately $35 billion by 2030. That view aligns closely with SLBs internal analysis. And when we map the market by category, we expect the strongest growth to come from digital operations, where the market is expected to grow at an 11% CAGR through 2030. This is compared with about 8% of the overall digital market. And as highlighted earlier this morning, there is meaningful upside to this outlook. If adoption of AI solution moves faster than currently forecasted, the digital market could expand to as much as $50 billion by 2030, representing a 15% CAGR. Taken together these trends along with our differentiated market position, gives us confidence that we can grow Digital revenue at a 10% to 15% CAGR through the end of the decade, with the higher end of this range based on accelerated AI adoption. This revenue trajectory would outpace both oil and gas upstream investment, as well as the industry's Digital spend as we believe we can leverage our digital platforms, customer footprints and AI capabilities to continue growing ahead of the market. Notably, we expect to deliver this level of revenue growth without significant M&A activity, although we will continue to consider bolt-on technology acquisition that can further strengthen our offering.

With that as the backdrop, let me now turn to how we will monetize that opportunity. Our Digital offerings are monetized through several commercial models, each contributing differently to growth margins and recurring revenue. Platforms and applications are largely recurring. They are sold through software subscriptions or perpetual licenses with annual maintenance. Digital operations has a different model. It is generally sold as an incremental digital line item connected to our core services or equipment. Revenue in this category is repeatable or sometimes recurring and typically delivers high incremental margins. Digital exploration represents our exploration data business, which consists of a differentiated library of seismic service and other subsurface data covering key basins worldwide. This is usually highly profitable, but nonrecurring in nature, with revenue generated primarily through onetime license sales. Our success in producing and selling high-quality data is highly dependent on the use of our platforms and applications, enhanced by our domain foundation models.

And finally, professional services is more project-based. It includes consulting and technology services required to support our clients' digital transformations. Although this category has lower relative profitability than the other digital categories. It remains strategically important because it helps drive adoption and creates pull-through across the broader portfolio. In short, we have multiple ways to monetize the Digital opportunity. More importantly, these various models reinforce one another. And combined, they create a business with growth, resilience and flexibility. Let me now go one level deeper into the two areas with the strongest growth potential, namely platforms and applications and digital operations and explain how we will unlock further growth and value.

In platforms and applications, we see 3 key levers for increasing monetization. First, gradually transitioning on-premises customers from perpetual licenses with maintenance to subscription models. This allows for better tiering of our commercial offering based on the features our customers choose to consume. Second, migrating more customers from on-premises offerings to the client. And first, monetizing consumption across the portfolio as customers expand the usage of our platforms and applications, data environment and AI solutions. As you can see, growth in platforms and applications is not only about adding customers. It is also about shifting the mix towards more recurring subscription and consumption or outcome-based models. This will improve revenue productibility, reduce sales volatility, increased contract lifetime value and improve customer retention.

The opportunity in digital operations is of a different nature and scale. Here, we believe we can increase the size of the market, if not create the market. By scaling connected equipment and autonomous workflows across customer operations, with new AI capabilities further accelerating that trend. Today, those Digital services only represent about 15% of our core equipment and services revenue, despite delivering significant results in the field. As customers increasingly recognize the benefits of these solutions, we see the potential for spending in this category to grow at an elevated rate, potentially tripling by 2030, supported by digital add-ons and increased outcome-based pricing. Second together, the evolution of platforms and applications and digital operations are expected to drive the majority of the growth in our Digital business. And the value generated from these offerings will continue to compound. As platform usage increases, more data is organized [ in activity ]. As more assets and operations become connected, the opportunity to automate workflows expense. And as AI becomes embedded in those workflows, the value we create for customer increases. All in all, this will support our ability to continue delivering attractive digital growth with margins that are highly accretive to SLB.

To make this more explicit, let me now close by sharing our 2030 financial ambitions. Based on market growth and the trends we are seeing in terms of adoption and monetization, we expect to double Digital annual revenue -- annual recurring revenue to approximately $2 billion by 2030. This is supported by the assumption I shared earlier that Digital revenue will grow at a 10% to 15% CAGR from 2025 through 2030. We also see a path to approximately double our current adjusted EBITDA for Digital to between $1.8 billion and $2 billion by 2030, with margins expanding to a range of 38% to 42% towards the end of the decade.

Our ability to achieve margins towards the higher end of this range will depend on our success in increasing the share of subscription-based revenue in our mix. The continued expansion of digital operations and the addition of AI-driven capabilities that create incremental value for customers and support better monetization of the outcomes we have help enable. In summary, Digital is already helping to accelerate SLBs growth with accretive margins and compelling returns. And as adoption continues to expand across platforms, operations, data and AI, we see a clear path to sustain double-digit growth, continued margin expansion and increasing contribution to SLBs return -- overall returns over time. Thank you for your attention. I will now turn it back to Olivier.

Thank you, Stephane. Ladies and gentlemen, as we conclude, let me leave view of this. Digital is becoming central to how this industry plans, operates and creates value. And what you have heard today, reflects a leading position SLB has built over many years. It is one that is powered by science, accelerated by AI and built for the complexity of energy operations. We are the only company that brings together the government expertise, the technology, the partnerships and global execution to redefine what is possible, where it matters most. But this is just the beginning. In the age of artificial intelligence, new opportunities are being unlocked across all industries and we are pursuing them not only through the Digital offering we discussed today, but also through our Data Center Solutions business. There, we're expanding our work with hyperscalers. The same partners we work with and we collaborate in our digital upstream business to deliver the physical infrastructure required to scale AI. In that sense, SLB is uniquely positioned to benefit from the secular growth of AI in 2 ways: full platform and digital solution that transfor energy operations and to the infrastructure that enables AI to scale. So it is one takeaway. It is this. Our Digital leadership is here, it is differentiated, and it is creating long-term value for SLB and its shareholders. Thank you for joining us today and for your engagement throughout the session. With that, I would like to invite to their speakers to come with me on stage for the Q&A session.

[Operator Instructions]. As you're thinking about your question, allow me to kick it off by asking Olivier about something we've been hearing a lot lately.

Olivier, as we think about SLB Digital next phase, what gives you the confidence that this business can evolve into a scaled, higher multiple engines, distinct from traditional oilfield services and what proof points should investors focus on today?

Thank you, James. So indeed, I think I will state first saying is that we are not building our digital capability anymore. We have built it. We're here to scale it. We're here to scale it. And if you look at the proof points of where we stand today, we're already growing at double digit. We're expanding margins, and we are seeing a mix further evolving towards increased recurring and consumption-based revenue. What makes me confident is that we have a clear path forward. And the clear path forward is around digital operation and AI solution. And the Sandbox is a total SLB OFS footprint. That is unique. The capability we have together, the domain, the platform, including an AI-ready stack, the partnership ecosystem we have developed and the global reach, as we've said, is unique. When you combine all of this, as we continue to scale, the ARR will shift upwards, the consumption based on our platform will start to be clear and our margin will resemble software-like margins. When you put all this together, I believe this would deserve a higher multiple. And I think it's no more cyclical growth. It is durable growth that will compound and create value for the company.

Thank you, Olivier. Let's take questions now from the audience. We have one right up here up front.

Marc Bianchi with TD Cowen. I'm curious to achieve these targets. I think you talked about $3 billion of R&D spend since 2016. Can you talk about what additional R&D spend is contemplated to get to these targets? And then related to that, how do you see this initiative sort of helping the capital intensity of all business? Do we see a reduction in capital per dollar of revenue, for instance, as time goes on and you are able to implement more of these capabilities?

Thank you, Marc, for the question. Stephane, can I pass that one to you?

Yes, of course. Thank you, Marc. Look, as Olivier mentioned, the foundations are built. I mean we've spent actually decades then an increased R&D in the last in the last few years to get there. So we are not going to stop there. We will always need to enrich the platform. But in terms of R&D, you've seen the numbers over the last 10 years. I would expect this, of course, not to increase as fast as the revenue if it ever increases. So you will gain operating leverage from this, but we will continue to enhance the platform and invest into it.

I have a question right here in the middle. Scott?

Yes, Scott Gruber from Citigroup. Thanks for the presentation this morning. Super impressive. I'm curious about the pricing strategy for some of these services, thinking back to the digital operations examples, where autonomous drilling can save 25% to 40% on the drilling time of a well. So if you think about that in the context of a deepwater well, it could be like $25 million, right, which is a huge amount of savings. How do you guys think about what is the fair share of that savings for Schlumberger's SLB -- sorry, a multiple for SLB to capture versus how much you share with the client. Obviously, you want to push the adoption of these services and scale it up, but there's a huge amount of value creation there. How do you think about the pricing strategy with that value creation potential. Rakesh, would you like to kick off the question and perhaps

Cecilia on digital operations, you can have a follow-up.

Sure. Thank you. So I think on different categories of revenues we've reported, the pricing strategies, of course, vary. So for the operations, as you rightly point out, significant value for our customers. And we will, therefore, be in a very strong position to be able to scale. In the operations, as I think Stephane briefly mentioned, we are talking about almost very little new investment for us to be able to provide this value addition because of the fact that we are utilizing the existing hardware already, and we are just bringing new algorithms to be able to bring the value for our customers. Of course, we expect, therefore, the margins to be very, very significantly accretive, as I think mentioned by Stephane. For the other categories, for example, in the platforms and applications, again, I think the fact that we have a very distinctive and a very strong offering, we expect to scale that. And therefore, the additional scaling would not cost us very much and which is why the confidence that we have in terms of even stronger margins in the years ahead. And then, of course, the agentic AI, that will bring significant value on top of what we are already charging and that should bring significant margins for us going forward as well. So if I look at those, each one of those categories has distinct advantages, which will continue to bring more margins for us going forward.

Cecilia, perhaps you want to elaborate on operations?

A couple of points other than what Rakesh said. First of all, many and most of our contracts are performance-based contracts. So when we get this additional digital add-on service, we actually increased revenue, not just from digital, but also from our general operations. Second is many of our digital operations that we sell actually are agnostic. But as in the completions example, when we merged our -- the digital piece with our innovative hardware, that's when we see a step change in performance. So then it is also an enabler to bring additional pull-through revenue for the locations where we're not having operations there.

James see you right here.

James West, Melius. Question about the changing dynamics that we've seen and how it impacts the digital and digital adoption in this space. Energy and power changed a lot in the last 110 days. And of course, that change with energy security started in '22 as well, but it's become more pronounced. And Olivier, you're having the CEO to CEO conversation. And I'm curious what the feedback is from the customer base about the security of their operations as they move more and more information to the cloud and build more digital, do they worry about cybersecurity? Do they worry about hacks, things like that? And does that limit? Or have you created a platform where they're very comfortable that you can protect their data?

Olivier would you like to take the first part of the question and then perhaps we can pass it to Shashi for the second part?

Yes. The first thing I would say is common that what is happening today with energy security, the need for supply diversification, the need to secure and accelerate the supply management is all playing to the strength of the impact of digital in our industry. [indiscernible] thing I'm hearing from customers the same way we heard back in 2020 is that Digital is becoming more critical, more essential to unlock the performance efficiency to fast track the cycle of first oil, first gas and to improve recovery for the market for the assets that can be deployed securely in a world. So this is the trend that we see is only accelerating. It's a secular trend that we believe that this crisis is only reinforcing the role of Digital going forward, will be a shift and critical transition for the industry. So that is happening. And I think this is only accelerating. That's the feedback we're getting . And we are seeing it in adoption. We're seeing a pilot. And if any mention of the impact, actually, our business -- Digital business in Middle East has been extremely resilient against this backdrop of crisis.

Let me add two points here. I think when we talk about customers and their concerns around their assets, I would put them into one aspect, which is around data. So we implemented our digital platforms in a way that we can meet their customers where they are. For those customers that are comfortable with a traditional SaaS offering, great. We have -- we support all the 3 hyperscalers. But then there are customers for whom we have implemented what we call private SaaS, which means deployed solutions onto their talent, which means it is managed by their own IT and security organizations. So that's one fact. And of course, then there is a set of customers that want everything on-prem. So we cover that entire spectrum to say, wherever the customer is and their data are, we can deliver a solution there. The second angle I would say is from a cybersecurity point of view. So we run one of the largest cyber SecOPs operations across the industry. And we work very closely with leading hyperscalers, but also security companies like Palo Alto Networks, et cetera, on those, right? We are adopting and using the latest frontier models to test to validate our implementations or any kind of loopholes that might be existing. And then, of course, we work very hand-in-hand with our customers' own IT and security organizations as well. So at the end of the day, for our customers to use our stack, they need to be comfortable that the implementations that we have meet their standards, and that's what we go with.

Thank you, Shashi. Right here in second row in the middle. Dave, please?

David Anderson, Barclays. Stephane, just a real quick point of clarification. On your 2030 targets, was that based on the $50 billion TAM or the $35 billion TAM?

David, it's a range. So it -- this is why we have a range of EBITDA as well. The revenue itself is between 10% and 15% CAGR through that period, right? So the market overall, if you take the low end of the TAM, we've given you the $45 billion, that would be 8% CAGR. The $50 billion would be 15% CAGR. So it's based on the entire range, if you will.

Understood. So Olivier, [indiscernible] SLB has made a big point today about your mode in Digital. You're really the only OFS company doing this. You've been doing this longer than anybody, the foundational models, the rest of the domain expertise gives you all a head start or a lead in AI. But your customers are also adopting AI. They're adopting AI agentics, all sorts of platforms as well. So where is that line today? And are you concerned about that line moving? In other words, your customers are going to be adopting some of this in-house, you're going to be providing other things. But is there a concern that, that line could shift and what is the concern that some of them are going to be started adopting what you're doing?

As you heard before, we meet our customer and they are where they are in their digital journey. And I think if you look back at the history of digital, 30 years ago, most of the reservoir simulators were owned and developed by our customers. and some of the basic interpretation was done the same way. Over time, the emergence of platform, industrial grade platform has replaced those developments. Nowadays, some customers are willing to enter the development of AI model, if not development of agentic AI using models. And what we offer is an open platform. We offer DELFI, Lumi, the data and AI open platform and Tela as agent -- agentic agent framework that our customer can use to extend their agentic and connect to their agentic workflow, connect to their third-party application and also embed our domain foundation model or retrain our domain foundation model to their own data sets, that's what is happening in a pilot we have with several customers, and they see a huge benefit of doing so because they have a starting base that is a step change from what they can do by themselves. As we said, the relationship with NVIDIA give us the guarantee that just peaked performance for this domain formation model. We have designed them from the ground up, not using the existing frontier model. We have designed it using our science, our technology from the ground up with the guardrails that we integated from NVIDIA, from other provider into it. So the starting point is very strong. The framework we have give them the freedom to extend, and that's what is attractive into our offering to the customer today.

Yes, right back here. Right here in the middle. Someone pass the microphone.

Yes. Sebastian Erskine from Rothschild & Co. Just a question on the -- in one of the presentations you mentioned about the performance-based contract in Libya and actually trying to buy in a bit to the efficiencies that kind of customers can gain. Obviously, that's interesting to me when we look at U.S. land, one of the big stories was the deflation services, the fact that E&Ps could do more with less. So how much as a percentage of these performance-based contracts or pricing based outcome-based models do you see and a scope for that in digital operations going forward?

Cecilia, I think you answered part of that question earlier, maybe you can take it.

Yes. We have -- it's a large percentage of our contracts are performance-based contracts. I believe you were asking specifically on the U.S. market. In U.S. market, we have a very flexible go-to-market approach. We rent and sell our equipment as well as do the services. Many of our services are performance-based and then the rental and the sale of our equipment is through a third-party competitor.

Yes, right back here. Thanks.

Heath Terry, Citi. I really appreciate you taking the time on all of this, particularly the level of detail around some of your technology partnerships. The reliance that you have on the cloud providers, they've obviously been very vocal about the issues that they're dealing with from a supply perspective and the constraints with demand increasing the way that it is. That's showing up in pricing, it's showing up in this whole issue around token costs going up as we started referring to as token maxing. I'm curious if you're seeing sort of any of those kind of issues showing up in your relationships, either with the hyperscalers or with your customers as those costs -- those underlying costs start to go up and how you're planning longer term against the constraints that seem like they're going to be around for a while in this space?

Trygve, you explain to the audience, the digital advantage and the partnership model. Why don't we pass this question to you.

Yes. We -- as you said, we have a close relationship with all the hyperscalers, all the major cloud providers. And we, of course, secure ourselves with -- for direct expenses, we secure ourselves with long-term contracts with these providers to ensure that we have cost competitive access to the technologies. And we also work very actively with them, particularly on securing capacity where we have a well-established playbook for securing that we have the right capacity as our workloads will be sometimes having -- demanding the same type of capacity they use for other workloads to make sure that we can continue providing continuity to our customers in operating.

Rakesh, would you like to elaborate further?

Yes. Heath, actually, you do make a good point. There is clearly a transition happening. And the industry is getting used to the changes that are happening. So I'll say there is a very interesting trend that is happening right now. So instead of going from cloud first, many of our customers are going to what they call hybrid cloud for elasticity. They want to keep on-prem for consistency and then they go on the edge for immediacy. So they are moving in a direction where they will actually have infrastructure, which encompasses all of them so that they are able to benefit, take the benefit of what the cloud compute brings as well, but they are also prepared so that they are able to get the maximum benefit from what they have in-house already and also from the edge operations where it is required.

Olivier?

Yes. And what is important to this is that to offer our customers the ability to navigate through this tenant hybrid cloud for elasticity of cloud compute and edge at the same time, doesn't come in a quarter. It has taken us years of development, of tuning, of testing and validation and certification of our customer. So we're proud of ourselves to be the only one that can do this complex environment at scale industry grade complex architectures that combine the benefits that you heard about that allow our customers to use the cloud when and as necessary and remain independent where they believe it's more secure and they have the capacity they can to develop their workflows.

In the very back. I see your hands up.

Stephen Gengaro, Stifel. When we think about Digital and we think about maybe the last few years and then now through 2030, how do you think that impacts your growth versus history in the core business?

Stephane, let me go ahead and pass this one to you. Did you hear the question?

Yes. Actually, if you don't mind rephrasing?

Yes, very good Stephane.

So maybe relative -- unless you want to tell us what you think the market does for the next 5 years. But relative to the market, through 2030, how do you think Digital impacts the growth in your core operations versus the peer group?

Okay. Got it. Sorry for that. So look, first, the growth we are portraying here for Digital, and we've said this before, we believe is at least partially the correlated from the growth of our core services and equipment, which, as you know, are more cyclical. So if we are confident to give that 10% to 15% CAGR there for Digital only is that we think this is really secular, structural and trigger more recently by the acceleration of AI. So that gives us confidence that there is this spot of Digital, if you want, that can grow a bit regardless of what can happen in the rest of the E&P upstream sector, particularly because it remains a very small percentage of the total spend as you've seen. So now can that can that influence the size of the overall E&P spend. Yes, it can. That's what it can do, at least for us, is that it can bring more first, more digital. But then because as Cecilia highlighted, it's not just about the software and the platforms, but it's the connection with the hardware is that, that more Digital is going to pull through more core services as well. So our clients may -- we want them to gain in efficiencies and generate cost savings but this is not going to happen in the core services and equipment we provide. To the contrary, we are going to have a boost from the advent of more digital operations.

Thank you, Stephane. Yes, Doug we'll get you a microphone right now.

Doug Becker with Capital One. Just curious about as autonomous operations really start to scale, how are you thinking about risk management, just what safeguards are in place from a suboptimal decision made by an autonomous operation or maybe in an extreme example, a well control incident that was really triggered by an autonomous decision.

Thanks, Doug. We're going to pass that one to Cecilia.

So just like self-driving car like Tesla, if the system can go into manual mode at any time, and the user can decide whether to go autonomous or if the recommendation needs to be approved by the user. So it's a very easy on/off. And ultimately, there's always going to be a user that makes the final call, which is going to be our customer.

Thank you, Cecilia. Saurabh, did you have your hand up? Right up here in the front, please.

Saurabh Pant, Bank of America. One thing, Olivier, when you took over as the CEO back in 2019, you were talking about the fit-for-basin at that point of time. I think I heard the word fit-for-basin once in Shashi's remarks. How do you think about it fit-for-basin from a digital perspective? I know you talked about 7, I think innovation factories across the globe. Maybe talk to how are you thinking about that? What are you doing differently in different parts of the world?

Olivier why don't you go ahead and [indiscernible] around the question?

I think this -- Digital brings us one thing, it's ability to customize, to tailor and to fit our Digital offering to the basin challenge that we are facing. And I think the concept we have put together with the innovation factory, and we have 7 of them in the world where to provide the digital backbone, the digital domain expert, the digital platform, close to our customer to collaborate on what could be done locally, do you make fit technology, digital technology solution. Now with the advance of digital operation, the advance of agentic AI, we are going to the next level. The next level of putting together, stitching together, OFSE operation with digital capability and creating unique set of fit operation with a fit domain formation, a fit set of workflows that are stitched together to an agentic AI and fit set of equipment or services provider back to back. Best example actually happening today that we can refer to. It's what you heard about ADNOC, referring to that AI PSO and the AI PSO's production optimization using AI. We are CO-DEVELOPING THE AGENT. We are fitting this agentic work on the specific assets of ADNOC and we are lifting and kind of enhancing the production performance through this. So it's a fit application of AI capability tailored to the OEM equipment that they use, tailored to the reservoir characteristics that they have using a DELFI and a Lumi platform to make it work together. That's the principle, and that's what we want to extend that we want to repeat from basin to basin.

And Trygve, did you wish to add any additional color?

Just there's one more color to fit-for-basin as well that is increasingly being important now and which is underpinned by our platform investment over the last few years, and that is the technology sovereignty. A lot of operators around the world are increasingly concerned about their sovereignty, their ability to operate their digital environment. And we have -- this is exactly what our platform has been built for and enabled for the last few years. And I would say we are uniquely positioned to be able to guarantee our customers this type of sovereignty as well. So that's the additional thing in addition to the particular operation and geological challenges they have as well.

And Cecilia.

I want to add a different angle to the whole -- to the question. Every geography is going to be different. And the system needs to learn what are the parameters for those -- for that geography. So for example, our deepwater operation is directional drilling is going to look completely different than U.S. land. And what the customer wants is going to be completely different. So in deepwater, it's about landing the operation per the plan at -- in the sweet spot with a minimal amount of risk. In the U.S., it's about drilling as fast as possible as long as you're in the tunnel, you're fine. So each -- the system learns and gets smarter depending on which geography and what type of operations you're running. Hence, why it's very important to have this wide footprint that we have at SLB.

In the very back. Yes, please keep your hand raised. Thank you.

[ Aarti Malhotra's ] from Goldman Sachs. I wanted to connect a few dots. So I think, Shashi, you mentioned generic ALMs are challenging to do. Olivier you mentioned at the beginning that it's important to know what to build. We've been hearing customers trying to build their own applications. Where are we in that evolution of that dynamic? And I'm curious how that evolution is factored into or affects the sensitivity on your 2030 guidance?

Shashi, would you like to take the first part of the question?

Yes. So I think we talked about LLMs because they are very, very powerful tools, but they're very statistical in nature. And they build and they predict the next -- they generate the next response based on the context you provide. We cannot take that risk when we are talking about technical workflows where customers are making high-value decisions or high-risk decisions, right? So what we want to do is to say we will leverage the large language models where they bring value, which is converting the context into an outcome. But then the context is set by us by providing the domain. So that means when we are working with a well-off foundation model or a seismic foundation model, that absorbs the knowledge that comes from that domain, and then there's a handoff between the foundation model and the large language model to then aggregate the information and serve it out, right? So that way, we don't ask the large language model to figure out how to work with seismic data. It has no clue, but we do. So we work with that balance of us providing the domain context and informing everything based on the domain and then use the large language model for where it is best suited, which is to aggregate and summarize and provide the outcome to the user.

Maybe I'll pass it to Rakesh.

Yes. So I think I want to also bring in Dave's point that you -- I think you were alluding to. Many of our customers have actually tried and absolutely, they will continue to try to go down that value as well. But they are realizing more and more that the changes are happening at such a rapid pace that unless you really have the expertise and you're engaged in it on a regular basis, this is not a pace that you will be able to keep up with. So more and more, we are seeing that the customers are actually aligning with partners that they realize are going to be in this for the long game. The other comment I want to make, we're talking about LLMs a little bit. LLMs are based only on text. The data that we have in our industry is in very other different formats. Seismic formats have nothing to do with text. Logs are completely different. And therefore, the models, the domain foundation models, naturally, the LMMs cannot do anything with the data that we have in our industry. So the domain foundation model have a very distinct application that will continue to bring value to our industry specifically and only companies who can handle that kind of data will be able to benefit from it as well. So I just wanted to give you those 2 colors.

Thank you for that, Rakesh. Right here. Dan?

So I just wanted to ask a question on labor and kind of talent retention on the catalyst. So the question was, I noticed one of your -- in one of the earlier partner testimonials, it was someone who had actually been at SLB for a couple of decades and then most recently was at one of your biggest competitors. But yes, can you just talk about -- to what extent attracting talent, retaining talent is a bottleneck or any type of impediment to growth for SLB. And also if it's something when you speak with your customers, if training and attracting the right talent is a bottleneck for their digital adoption as well.

Olivier, why don't you?

Yes. I think we all compete for the same talent pool, but I think we have demonstrated for the last decades that I think we have still the foundation, the culture, the training framework to attract talent, digital talent, geoscience talent, petro technical experts, engineered talent that we train. We co-train in AI and in data science as well as in geoscience or in domain. And we have been able to attract from every region, top talent across the best university. Occasionally, we compete with those hyperscalers. We compete with some other horizontal player. But I think the talent we have in our team has allowed us to build what you have seen today, to build the Tela infrastructure, to build the DELFI, to build the Lumi. And I think it speaks volume to the talent we have that Shashi is leading and our team is leading. So I'm very proud of what we have as a talent pool in our team. I'm convinced we'll continue to attract, I think this event and what we are publishing every day and the path to autonomy is what is exciting the most new and future employees and prospects that are joining us, and they love what they can see when they enter the company. They see that we are becoming a digital-first company. And I think that's very attractive. And I think that is the magnet we are putting for digital talent throughout the next few years. So I'm not concerned. I'm excited about the future can give us with this talent pool we are attracting.

Thank you, Olivier.

Keith Beckmann from Pickering Energy Partners. It sounds like M&A is probably not a key way to grow. You guys got a lot of internal things going on. But on that front, is there anything within the Digital portfolio that you think you're missing? And maybe what are some of the key characteristics you're looking for when evaluating potential opportunities?

Thank you, Keith, for your question. I'm going pass that to Rakesh.

So Keith, clearly, we are always on the lookout for bolt-on technology that will bring value. We've announced a couple, I think, over the last few months that I'm sure you are aware of. I'm not going to sit here and tell you this is the weakness we have in our system. But we are always on the lookout for technologies which will complement what we have for bolt-ons that we decide, we will not develop in that particular domain or that particular part of the technology. So I think both, extending our partnerships with companies that have complementary skills that we will either integrate or we have decided not to compete. But then occasionally, where we see that it is a good fit into our own organization as we have done, we will continue to look out for opportunities.

Thank you, Rakesh. I think S&P Global and TaskUs are good examples of that. Derek, right here, please.

Dark Podhaizer, Piper Sandler. I thought it's interesting when you split about -- split apart the customer type for Digital, I think you have 37% NOC, 37% independents, 21% for the majors. Maybe can you talk about the opportunities to capture more share with the majors or on the flip side, some of the limitations and headwinds to continue to drive adoption in with the majors?

Go ahead, Olivier.

think you have seen 3 statements from Eni, from Chevron from TotalEnergies and from Shell, I forgot about Shell in the statement. They are very, very clear of the benefit they see in partnering with us. They all collaborate with us on a different scope. Eni is in digital operation, trying to get the most of autonomy for drilling operation. Chevron is the historical partner that has helped us develop and accelerate our platform at scale with Microsoft. And both Shell and TotalEnergies have entered a collaboration agreement with us to develop fit subsurface and adapt their workflows to the benefits of the organization. So I don't see any limitation on this. I see organizations on the customer side that are keen and eager to leverage and to work side by side with us so that they can leverage our agentic AI environment. They can leverage the power of our platform so that they can deploy to the complex environment they always want to deploy to match security requirements they have, sovereignty when they operate in certain countries and leverage of their own IP, which our platform allows us to plug in. So I don't see an obstacle. I see a big runway with all the major and the one that we mentioned into this. We continue to work with them for adoption at scale.

Very good. Right here.

Phil Jungwirth with BMO. Can you talk about the drivers behind the margin improvement by 2030, 38% of 42% is quite a bit higher than 35% and 25%, and I think you guided to a similar level here in '26, despite the 9% growth. Is it mainly just mix shift with platforms and applications, digital operations growing more? Or is there more behind it? If so, could you please expand upon that?

Stephane, I'm going to pass this one right to you.

Look I'm -- first, I'm quite confident we can reach that range towards the end of the decade, if not earlier, I think actually margins will increase year after year into 2030 to reach these levels. The key driver of this -- it's a few things. So first, you have simple operating leverage. We've mentioned R&E before. R&E, if you want, is the biggest cost to grow. But again, the heavy lifting is done and if we increase R&E little bit, it's not going to increase for sure as much as the revenue growth. So you get margin expansion from there. And then you have that shift in pricing model. Some of it is enabled by AI. We believe we will be able to increase the subscription-based revenue, which is -- which allows us to tier better, if you want, the levels of pricing depending on the features each customers use. And then more consumption based, the more outcome-based pricing should help us lift the margins as well. So it's the combination of all this that really gives us the confidence that 38% to 42%, the midpoint of 40%, if you want is -- it's quite a good ambition, I think we can reach there.

Allow me to come back to this side of the audience. Yes, right here.

Noah Naparst from Goldman Sachs. I have another question on the mix. If we look at the 60% or so of revenues that's recurring and repeating, just wondering how weighted it is to pure SaaS. And do you plan to increase SaaS mix over time? And how do you plan to do that?

Yes. So I'll pass it back to Stephane.

Yes. So we -- definitely, we do, yes. Part of the -- it's part of the driver is indeed the SaaS mix. Again, we are not betting everything on the cloud, right, because as we mentioned before, we need the customers where they are. But still, we are seeing that shift. Is it going as fast as we want it to be, maybe not, but it is going. And so today, we have, if you want a bit less than 50% on the cloud, and we could very much go to 2/3, around 75% at one stage of SaaS and cloud. So it's part of it.

Olivier.

And the other element is the consumption model as part of the [ science ]. And I think the use of AI and use of agent, as you have seen a demo as well as shown by Shashi earlier today, you can imagine the compounding effect of deploying agents that can then run autonomously, part of our engines, either in the cloud or on the talent and consumption is based on the frequency and intensity of use of this application. So that's this compounding effect that we believe will drive the way forward.

Do we have any further questions from the audience?

Keith MacKey with RBC. The digital operations TAM expansion is certainly key to the growth metrics here. Can you just talk about what some of the key customer impediments to adopting digital operations has been? And how do you mitigate that to drive the further adoption going forward?

Thank you, Keith, for the question. Cecilia?

Sure. Thanks for the question. Excellent question, in fact. What we see is that customers like to pilot and test the system first to really understand the value it brings and to ensure that it's a safe operations and it fits everything that they would like to see out of the tool. And just to give you an idea, the last 6 months, we've done as much autonomous feets drilled than the last -- first 2.5 years. So it's taken us quite some time to get those pilots to get our customers to feel comfortable with it. But now we're starting to see quite a lot of uptake and an acceleration of uptake. The second thing is that a lot of customers are waiting to see who is going to go first. But now we have enough pilots that we're actually seeing customers almost not wanting to be left behind, and they're starting to be very, very interested in what we have to offer.

We have time for one final question.

Thank you. Heath Terry again from Citi. You obviously have operated for a very long time in some of the most geopolitically sensitive parts of the world. This past weekend, we've got a bit of a wake-up call with the U.S. government's decision to effectively ban access to one of the large language models. How is that potentially -- how does that potentially impact the way that you and your customers are operating around this, does it lead you to want to use more open source? Does it lead you to want to have sort of more distributed systems in terms of where your own technology or where your customer technology is sitting?

Thank you for that final question, Shashi. Why don't you go ahead and take the question, and then we'll leave it to Olivier for closing remarks.

Yes. It's a very good question. I think when we started this journey, the LLM providers was few and select. But now the level of capabilities that we will need from an LLM to integrate into our technical solutions is getting to a point that you can get it from number of providers. And what we have done is that we -- while we leave this choice of a specific LLM to a customer because they may have an internal enterprise level choice, we also make sure that we implement our technology stack from the point of view of supporting open models. So we partner with NVIDIA. So we have NVIDIA's Nemotron models as the models that we can deploy ourselves. So we can -- we don't have to wait for a CSP to provide it in a particular area. It can be deployed on-prem or within a customer's environment. Similarly, we have models from Mistral. So we have several options. We keep that option open. Even our own domain foundation models are -- start from a base model that is open source so that we have not tied down to a particular provider and get our hands in a bind at some point in time.

And it matters to our customer. They realize when they are working with us through and discover the way we have built this model, the way we have factored open source or open protocol into our Tela framework, into our Lumi, into our DELFI reinforce the attractiveness and the confidence they can bet on this technology platform for the future.

So just to conclude, I think we had run through for the last more than 2 hours. I hope we convinced you that I think we have a unique moat as a digital leader in our industry. We are building it on 4 clearly distinct combined capabilities, deep domain expertise that is [indiscernible] 100 years ago, a platform approach that includes an AI-ready stack, an ecosystem with partners that you have heard about that is unique and are willing to and making every effort to work with us. And finally, ability to scale, not only to scale AI, but to scale in digital operation and to scale and use the footprint and sandbox of our oilfield services and equipment potential to reach all of our customers and to then help transform this industry to be digital first. And that's the way we are willing to lead the future, to be recognized as digital-first company that help transform and unlock new level of efficiency, performance and value for this industry. We believe we are there to lead this, to create this shift that the industry needs for energy, security, for energy, affordability and for the future of growth in our societies. So that's where we believe we have a role to play, and that's why we wanted to share with you today. So again, thank you for joining us. I hope that you got enough information to help you model the future and recognize what we believe will be an elevated multiple for the company going forward. Thank you very much.

Thank you, everyone. That completes the formal portion of our program today. On behalf of the entire team, we thank you for your time, your thoughtful questions and your continued engagement. We hope today's session clearly demonstrated not just the current strength of our digital business, but the distinct competitive advantages that will drive our next phase of growth. We are incredibly excited about the opportunities ahead and our ability to deliver long-term value for our shareholders.

With that, we will conclude today's live stream.

Now please join our leadership team and today's presenters for a standing lunch in the Vault ballroom. Feel free to engage and continue the conversation. Thank you again for your time today. Safe travels and have a great afternoon.

Good morning. My name is Megan, and I will be your conference operator today, and I would like to welcome everyone to the First Quarter SLB Earnings Call. [Operator Instructions]. As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Megan. Good morning, and welcome to the SLB First Quarter 2026 Earnings Conference Call. Today's call is being hosted from Houston, following our Board meeting held earlier this week in Midland, Texas. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.

Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our first quarter earnings press release, which is on our website.

With that, I will turn the call over to Olivier.

Thank you, James. Ladies and gentlemen, thank you for joining us. Before we begin, I would like to acknowledge our people, customers and partners in the Middle East as they navigate this challenging and uncertain time. Our strong presence in the region dates back more than 85 years, and I'm proud of the resilience and unity demonstrated by our people as they work in lockstep for customers to safeguard our teams and assets while preparing for an eventual resumption of operations. I want to commend the entire SLB team for their continued care, commitment and support for one another and for our customers.

Turning to today's call. I will start with our first quarter performance, followed by an update on the evolving situation in the Middle East and our outlook in the mid- to long term. I will then cover our strategic initiatives, including ChampionX, Digital and Data Centers and provide our thoughts for the second quarter. Stephane will then take you through the financials, and we'll open the line for your questions.

Let's begin. It was a challenging start of the year, marked by severe disruption in the Middle East that impacted our first quarter revenue and earnings. At the onset of the conflict, customer decision to safeguard personnel and assets led to an initial wave of operational shutdowns. As the conflict persisted, further activity curtailments followed as a result of production shut-ins. The impact of these actions was most pronounced in Qatar due to force majeure and the suspension of offshore operations and in Iraq due to the security conditions. We also experienced a more gradual impact from offshore rig shutdowns in other countries in the region, driven by a combination of security concerns and export capacity disruptions.

In addition to the situation in Middle East, unfavorable activity mix and higher costs further weighed on the quarter, most notably in OneSubsea. Looking across the divisions, Production Systems and Digital grew year-on-year, while Reservoir Performance and Well Construction declined mostly due to the impact of the conflict. Production Systems' year-on-year revenue increased 23% due to the acquisition of ChampionX, which continued to deliver accretive growth. Additionally, we're on track to achieve our synergies target. On a pro forma basis, ChampionX also grew year-on-year, demonstrating the increasing demand in the production market.

Turning to Digital. Revenue increased 9% year-on-year, driven by strong uptake in Digital Operations. Of note, automated footage drilled increased by 145% year-on-year as customers continue to adopt Digital and AI-powered Solutions to boost operational performance and efficiency. Also, Data Center Solutions remains a bright spot with 45% growth year-on-year. The momentum in this area continues, as you saw with our recent announcement to serve as a modular design partner for NVIDIA DSX AI factories. With our growing backlog, we remain on track to exit the year at $1 billion run rate and expect the growth rate to accelerate in 2027.

Overall, despite the challenges of the quarter, I'm pleased that the strategic decisions and portfolio actions that we are taking in Digital, Data Center Solutions and Production Recovery are delivering results. I would like to express a big thank you to our teams in the Middle East and across the world who continue to deliver each day for our customers in this very dynamic environment.

Now let me turn to how we expect the market to evolve as the conflict in the Middle East is resolved. Firstly, we anticipate that oil prices will settle at levels above the pre-conflict baseline. This reflects the new balance of liquid supply and demand, which has been significantly altered by more than 500 million barrels of lost production impact thus far. In this environment, energy security will remain at the forefront. We expect many countries to accelerate efforts to diversify supply, strengthen domestic resource development and rebuild strategic and commercial inventories that have been drawn down during the conflict. In short, the fragility of the global energy complex we are witnessing today demonstrates the strategic importance and long-term value of oil and gas.

Together, these dynamics are expected to support a constructive macro environment for upstream investment over the coming years. In the near term, activity would be led by efforts to restore production capacity across the Middle East for both oil and gas. While some countries executed orderly shut-ins and should be able to resume production within days or weeks, other areas, particularly where disruption were more abrupt may require more gradual ramp-up, including additional well intervention. As a result, while the near-term recovery will be gradual and differ across countries, we see an upside in the outlook, barring demand restriction from the prolonged conflict. We are committed and ready to support our customers across the region.

Beyond the region, we expect a broad-based response across both short- and long-cycle investments. Short-cycle activity is likely to strengthen first, particularly in North America and parts of Latin America, where operators can respond quickly to higher prices. In addition, well intervention activities that can lead to additional production will get a natural boost across all basins. At the same time, we expect renewed momentum in long-cycle development, especially in offshore and deepwater markets as customers look to secure a durable, large-scale source of supply. This is also likely to improve certainty of offshore FID approvals while also supporting increased exploration activity.

As you can read in third-party reports, the FID pipeline in 2026 is strengthening and directionally adding over $100 billion total investment approval visibly ahead of the last 2 years and with another step-up expected in 2027 with deepwater resource getting a large portion of this investment. Regionally, this presents opportunity in Africa, Asia and Latin America. Africa represent one of the most compelling long-term opportunities with a significant base of underdeveloped oil and gas resources. We expect portfolio allocation to shift more favorably towards this region over time.

Asia will continue to prioritize access to gas, both onshore and offshore as it works to diversify supply through development of national resources. And across Latin America, from Guyana to Brazil to Suriname, we see continued strength in deepwater development, complemented by short-cycle growth in unconventional in Argentina. Separately, Venezuela continues to represent an exciting growth opportunity where we can expand on our existing operation in country.

To conclude, in the context of energy security and the rebalancing of supply and demand, we see 3 primary drivers of increased investment over the coming years. First, the replenishment of depleted commercial inventories and strategic reserves; second, the diversification of supply, including greater redundancy in sourcing; and third, increased emphasis on developing local resource to enhance long-term resilience. Our core business will benefit from these dynamics, supporting a positive outlook for SLB into 2027 and 2028.

Let me now describe the additional strategic growth levers for SLB: Production Recovery, Digital and Data Centers. Starting with Production Recovery. This is becoming increasingly critical as the industry faces structural challenges in replacing reserves and sustaining production from existing assets.

In this context, technology that enhance recovery and extend the life of mature fields are no longer optional. They are essential. Against the macro we just discussed, this is a defining moment for Production Recovery. This technology has the potential to shape the next stage of recovery in unconventional assets and to create a step change in production enhancement in every basin and resource play from deepwater to conventional and from gas to oil.

With ChampionX, we are uniquely positioned to lead in this space by combining production chemistry, artificial lift, digital capability and subsurface domain expertise, we're helping customers unlock additional barrels from existing reservoirs in a capital-efficient manner. This is particularly relevant as operators look to maximize recovery, improve returns and bring incremental supply to market in support of energy security.

We hosted our first Production Recovery Summit in Houston a couple of weeks ago, and we are very pleased with the engagement from our customers from every region across the world. They increasingly recognize the potential of this domain and the opportunities present to unlock growth for the industry.

Turning to Digital. This business continued to build strong momentum and is a key driver of both differentiation and long-term value creation for SLB. While still a relatively small portion of our revenue today, its impact extends well beyond its size. Our approach is grounded in domain expertise where AI, data and software are integrated into our platform and workflow to deliver measurable performance outcomes. This is not about stand-alone tools. It is about embedding intelligence across the full life cycle of reservoir development and production.

Our teams continue to make exciting developments, particularly in agentic AI. And as the number of use cases increase, the value of this technology are proven in the field, we anticipate increased adoption. Over time, we expect digital to become an increasingly important lever for growth, both as stand-alone business and as an enabler across our broader portfolio. And we're excited to share more about this business during our Digital Investor Day later in June.

Finally, Data Centers represent a new and rapidly expanding opportunity for SLB. Building on our core strengths in engineering, manufacturing and project execution, we're extending our scope of modular infrastructure solutions to support the accelerating demand for AI and digital capacity. In less than 2 years, we have established our right to play in this industry, proven by our manufacturing know-how and supply chain capabilities. We are building on this expertise to support design engineering and performance optimization of the Data Center build-out, and we are currently scaling the business through expanded capacity, deepening partnerships and selective international growth.

While still at an early stage, this business is already demonstrating the characteristics we are looking for: capital-light growth, strong demand visibility and a clear path to becoming a meaningful contributor to earnings over time. Looking ahead, we see additional upside through opportunities such as thermal management, decarbonized power and serving as a system integrator. These are areas where our capability can further differentiate our offering and expand our addressable market. We also continue to assess potential opportunities to accelerate this trajectory through targeted M&A.

Taken together, these 3 areas: Production Recovery, Digital and Data Center Solutions reflect how we are evolving our portfolio towards higher return, technology-driven and less cyclical growth. They are complementary, scalable and aligned with the long-term trends shaping both energy system and digital infrastructure.

Let me now share our view on how the second quarter may unfold. First, it is uncertain how long geopolitical disruption will last and how the recovery in the Middle East will unfold. At the same time, we are facing higher procurement and logistics costs driven by the conflict. As a result, it is challenging to provide precise guidance for this quarter. However, there is a scenario where operational disruption in the region persists through the middle of the second quarter and then begin to gradually ease. Under this assumption, we estimate that the sequential revenue and earnings decline in the Middle East will be fully offset by all other international markets combined, where we anticipate mid- to high single-digit revenue growth with improved margins.

Meanwhile, North America revenue is expected to be flat sequentially. By division, under the middle scenario I just highlighted, Digital and Production Systems will grow globally, while Reservoir Performance and Well Construction will decline globally. I will now turn the call over to Stephane to discuss our financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. First quarter earnings per share, excluding charges and credits, was $0.52. This represents a decrease of $0.20 when compared to the first quarter of last year. During the quarter, we recorded $0.02 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our first quarter global revenue of $8.7 billion increased 3% year-on-year. Excluding the impact of the ChampionX acquisition in the third quarter last year, revenue declined by $607 million or 7% year-on-year.

When compared to the fourth quarter of last year, revenue fell by just over $1 billion or 10.5%. This decline was approximately 200 basis points or about $200 million higher than we expected at the time of our last earnings call in January. This was primarily due to the impact of the conflict in the Middle East as we experienced operational disruptions throughout the month of March.

Company-wide adjusted EBITDA margin for the first quarter was 20.3%, down 346 basis points year-on-year. Margins were negatively affected by high decrementals on the Middle East revenue impact. We did not make any material adjustment to our cost base during the quarter as our immediate focus was the protection of our people and preserving operational capacity for the expected future rebound in activity. We also incurred additional logistics and materials costs as a result of supply chain disruptions due to the conflict. Beyond the effect of the Middle East conflict, first quarter margins were impacted year-on-year by increased tariffs, project mix and higher costs in OneSubsea as well as pricing headwinds in select markets, particularly in Well Construction.

Let me now go through the first quarter results for each division. First quarter Digital revenue of $640 million increased 9% year-on-year, primarily driven by 87% growth in Digital Operations. This was supported by increased digital services adoption and new technology introduction as well as the acquisition of ChampionX. Notably, annual recurring revenue for the division stood at $1.02 billion at the end of the first quarter, representing year-on-year growth of 15%.

Digital pretax operating margins of 20.9% was essentially flat year-on-year. However, adjusted EBITDA margin of 26.1% declined 473 basis points due to lower amortization relating to exploration data as a result of the mix of surveys sold during the quarter. As you know, Digital margins are historically lowest in the first quarter due to seasonality and steadily increased throughout the year, reaching the highest level in the fourth quarter as evidenced by last quarter's results. This trend will continue. And consequently, we expect to achieve full year digital adjusted EBITDA margin that is at least equivalent to last year's level of 35%.

Reservoir Performance revenue of $1.6 billion decreased 6% year-on-year, while pretax operating margin of 16.1% decreased 47 basis points. These decreases were due to lower stimulation and intervention activity, primarily as a result of the disruptions in the Middle East. Well Construction revenue of $2.8 billion decreased 6% year-on-year, primarily from lower activity due to the disruptions in the Middle East, partially offset by higher offshore drilling activity in Europe and Africa, Latin America and North America. Pretax operating margins of 15.2% contracted 463 basis points year-on-year due to lower profitability on account of the Middle East conflict as well as pricing headwinds in select markets.

Finally, Production Systems revenue of $3.5 billion increased 23% year-on-year. Excluding the impact of the ChampionX acquisition, first quarter revenue decreased 6% year-on-year. On a pro forma basis, revenue from the ChampionX Production Chemicals and Artificial Lift businesses grew 2% compared to the first quarter of 2025. This strong ChampionX performance was offset by the impact of the Middle East conflict, lower OneSubsea revenue and independent of the conflict, lower product deliveries in Saudi Arabia.

Production Systems' pretax operating margins of 14.2% declined 240 basis points year-on-year due to lower profitability in Surface Production Systems, Completions and OneSubsea. As it specifically relates to OneSubsea, pretax margin in the first quarter was 14.4% compared to 18.1% in the first quarter of 2025. Margins were affected by the concurrent wind down of several large programs and the initiation of new projects with high start-up costs. OneSubsea margins are expected to increase over the remainder of the year.

ChampionX partially offset those effects as we continue to make progress with our synergy realization. As a result, ChampionX margins this quarter were higher than in both Q4 and Q1 of last year and were accretive to both Production Systems and total SLB's margins.

Now turning to our liquidity. Our net debt increased $797 million sequentially to $8.2 billion. During the quarter, we generated $487 million of cash flow from operations. Free cash flow was slightly negative at $23 million on account of the payment of annual employee incentives and the seasonal increase in working capital that we typically experience in the first quarter. This was compounded this year by delayed collections in the Middle East stemming from the conflict.

We expect our cash flow generation to follow our historical pattern with free cash flow gradually increasing throughout the year with the majority coming in the second half. Capital investments inclusive of CapEx and investments in APS projects and exploration data were $510 million in the first quarter. For the full year, we are still expecting capital investments to be approximately $2.5 billion. During the quarter, we repurchased $451 million of our stock, and we still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025. As a reminder, we are targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks.

Before I wrap up, let me come back to our second quarter outlook and more specifically to the Middle East. I would first like to clarify that the Middle East represented approximately 70% of our Middle East and Asia business in the first quarter. Under the specific scenario that Olivier highlighted earlier, where operational disruption in the region continues until the middle of the quarter and then starts to alleviate, we estimate that it would negatively impact our second quarter earnings per share by an incremental $0.06 to $0.08 when compared to the first quarter. This is the result of lost revenue as well as higher procurement and logistics costs associated with the conflict.

I will now turn the conference call back to Olivier.

Thank you, Stephane. I believe we are now ready for taking your questions.

[Operator Instructions]

Your first question comes from the line of Dave Anderson with Barclays.

So looking past some of the near-term disruptions, I was wondering if you could expand a bit more on your views on how the investment cycle has changed. You mentioned a broad-based recovery in '27 and '28. Is that predicated on oil prices being structurally higher now? And can you also comment on kind of which end markets that you see the most upside as you sit here today?

I think there are multiple reasons why I think we believe that the industry will benefit from an uptick in investment. First, indeed, I think we are projecting that the commodity price will be higher after this than they were before. But more importantly, I think the significant impairment of the supply-demand balance, I think, has created the need for replenishing these inventories, replenishing the strategic reserve and also have heightened the risk of energy security.

And hence, as a reason -- as a consequence of this, there will be multiple factors that will play into an increased investment outlook. Firstly, to replenish inventory and strategic reserve will supplement the natural demand in oil and gas. Secondly, the energy security will draw decision -- national decision to reinvest into local resource and to diversify the source of supply, including creating some redundancy if and as necessary and clearly maintaining in the future higher inventory stock spare to prevent future shock of supply.

So we believe that these are aligning with trends that are already in play that we're indicating that offshore was set for a rebound as we exit 2026 and 2027. So we believe that this combination will both affect the short cycle impact in a shorter time and the long cycle at scale into '27 and '28. So we are set in our opinion, for an uptick into the cycle strength going forward.

So Olivier, you had talked about deepwater looking particularly attractive in that outlook. Obviously, that's part of the long cycle story there. Can you talk about where you see the most upside in terms of SLB business? Is it more on the Well Construction and Reservoir analysis side? Could OneSubsea be a big driver? Just trying to think about through the business that would be most impacted?

So first, I think we are confident that offshore, I think, as being very attractive economically now, and I think where the large resource are set for operator to unlock and develop going forward, I think, is the reason why we are seeing this uptick into the FID pipeline and the prediction by many reports saying that this will at scale exceed what we have seen in the last couple of years.

So the macro assets are very positive for deepwater. And this is true across -- I would be very clear, across Africa, Asia -- East Asia and Americas for different reasons. Africa, as I stated in my remarks, I think it would certainly be one of the most beneficiary for this as it has vast undeveloped still resource, both oil and gas on the West and on the East and clearly set to be developed, and this is where we see potential acceleration of FID in the coming quarters.

Americas is very strong from Brazil to Gulf of America. And I believe this will continue to be a play part in Central America, that we see support in Asia because of gas. We see a double down on the development of gas, deepwater resource, and we have seen a lot of development happening these days in Indonesia. And you have seen some of the announcements we have made earlier today in the earnings press release and with Subsea being awarded in Malaysia and in South China Sea, a critical award.

So I believe that core at large will benefit from this rebound. We have strong market position across the different divisions. But yes, indeed, Subsea, we expect OneSubsea to benefit at scale. And as guided historically previously, I think we expect OneSubsea to benefit to have higher booking this year than last year visibly and to then have a growth trajectory in '26 and into '27 and '28 as we see the scale of this offshore cycle developing.

Your next question comes from the line of James West with Melius Research.

Olivier, the Middle East is your backyard. You guys have owned that market for a century or more. You don't leave conflict zones when conflicts happen and you're always there for the recovery. As you think about the recovery and how it could unfold, and I know you made some comments in your prepared remarks about this. But as you talk to the customers, what do they want to do? What do they need you for initially? And how do you think the kind of momentum builds, assuming that we -- the conflict resolves in the time line that you've kind of laid out and others have laid out?

First, I think to be clear, I think we are working in lockstep with our customers every day, every week. We continue to work closely with them to understand as they are contemplating all options for recovery, and I continue to observe the outcome of the discussion and the geopolitical events happening on the back, and we stand ready. So I think we are more in standby as we speak.

But yes, multiple scenarios are being considered. And there are some country where the resumption of operation will be relatively fast and could turn into days and weeks. And there are a country as facility and/or field have been stopped and shutting abruptly, where we will be needing to intervene on those fields. Hence, it will be an initial phase of assessment, initial phase of intervention before the production can come back to full capacity. And there are country or region or -- not region, but zone in the region where security will remain a concern and will delay further the recovery.

So it's a gradual recovery. But yes, we are working very closely with customers, both to mobilize equipment or resource and also to anticipate the reservoir consequence and the type of services you need to provide as the conflict start to be stabilizing and as the customer have the confidence to remobilize. So we see long-term clear upside in the region. And we see that some country will actually use it to catch up and maybe expand the capacity to recover from the market share and the production loss during this period.

Got it. Okay. Very, very helpful. And then maybe a quick follow-up. Understanding that most energy countries and, of course, companies and countries want to diversify supplies now. Do you see more of your customers that are Middle East-based maybe stepping outside of the region. They've already started to do that a little bit, but stepping outside more post conflict?

No, I think that generally, I think operators will continue to diversify their options across the entire world. And I think there are plenty of basins that still stand undeveloped. And I think I highlighted Africa. I think there's a lot of oil and gas resource that are set to be developed. And I think the fiscal terms and the security conditions have improved actually in the region and will make it very critical.

But the Middle East remains a low-cost barrel and low-cost gas country at scale. And hence, it will continue to attract investment as well. And I think the national resource holder in the region will continue to develop at scale the resource. So we see a mix, but I think beneficiary of this, and I think maybe additional investment will go into Africa, into Americas offshore, into Asia deepwater and into production recovery across all regions, we believe, because this is where the fastest incremental barrel can come from.

Your next question comes from the line of Steve Richardson with Evercore ISI.

I was wondering if we could talk a little bit about Digital made this acquisition with S&P. And from what we understand, this is a largely U.S.-centric data business and data sets. So can you talk about what the longer-term vision is there and be sure to hit on how and if that's an enabler of some of the other things you're doing in the broader business outside of Digital?

Yes, absolutely. As described in our press release this morning, I think we have come to an agreement with S&P Global Energy to acquire actually their upstream petrotechnical software suite, not their data. And this is mostly deployed in North America with independent and with workflows that are quite specific to commercial market. So this is highly complementary to the offering we have. And as we go forward, this will complement our offering in North America, give us opportunity to expand the reach of this petrotechnical workflow solution internationally for the [ iberian ] market. And also it will help us to maybe expand and address the next challenge into the unconventional development and recovery and use this new software suite to complement what we have and [ add sounds, add domain ] and create and unlock new commercial workflow into North America.

So it gives us a broader market access. It gives us a tool that is fit for the commercial market where we're not having the same offering today. And this just expands our product suite into the domain.

Now separately, as you may have seen also into the earnings press release announcement, we have entered an agreement to pursue a strategic partnership with S&P Global Energy with AI, giving an opportunity to use the power of Lumi and Tela, including specific domain foundation models that we build using the data sets, the global data sets of S&P Global Energy so that we together provide our customers with unique insights to AI, applying AI capability, applying our domain and our domain foundation model, our capability on the full data sets of S&P Global Energy. So that's unique, and I think that will be very, very appreciated by customers and benefit the customer greatly going forward.

That's great. And I suspect we'll hear much more about that at the Analyst Day in June. I'm wondering if you could give us a brief update on the Data Center business and your outlook there in terms of securing additional customers, commercial approaches there and expectations for the balance of the year relative to what you talked about a quarter ago?

Yes. I think you have seen we continue to progress. I think we continue to reiterate our ambition and our goal that we will reach or exceed the $1 billion run rate as we close this year. And actually, we have made great progress this quarter to secure additional customers that give us further visibility into the demand for our capacity in 2027 and '28. And as indicated, developing more growth and scaling more than what I've mentioned as an exit rate going forward.

So you have seen one announcement on NVIDIA that has chosen us, has selected us as their design partner for the DSX AI factory. It means a lot. It means that we have been selected amongst others as a partner they believe they can trust to develop this modular infrastructure solution for DSX center, large-scale future Rubin Vera solution center that will need to be scaled fast, and we will add our capability to build this site, manufacture this equipment off-site and bring this modular infrastructure to this NVIDIA customer in the future. So that's great. And I think you will see additional announcement coming that will show the breadth of our customer reach and the scale of our operation going forward. So we are very pleased with the progress, and this will continue to grow in '26 and clearly at scale in '27.

Your next question comes from the line of Arun Jayaram with JPMorgan.

Olivier, Production Recovery seems to be an important theme this morning. I was wondering if you could highlight some of the industrial and technical challenges in restoring production, which is off-line in the Middle East. And do you think that -- assuming that we get to an improvement in the situation in the Middle East in 2Q, could this be a driver of SLB's second half '26 results?

So firstly, I will not be commenting on behalf of our customers in the Middle East as they go through the assessment of their facilities. Some of them, as you know, have been damaged by this crisis. I will more comment on the engagement, collaboration and close partnership we have with our customers to prepare for and as they are ready to mobilize as they believe the security concerns are no more present.

And I think -- first and foremost, I think some, as I said, the shuttings were done orderly. And I think this would just be a resumption of operation that would just be redeployment of resource, remobilization of resource, and I think with no necessarily significant impact in short term. Others will need well intervention activity, and that's where we have an upside, and we will want to work with our customers to see how we can help restore the production and add -- and use the production recovery technology set to help us regain the capacity production that was pre conflict.

So long term, as we said earlier, we see more upside. I think once this resumption of operation gradually resumes throughout the following months and possibly quarter for some country, we see that there is an upside into the desire for some country there to uplift their capacity and to participate to the replenishment of the depleted inventory and strategic reserve. So we are seeing gradual intervention first recovery, production recovery focus and then a large-scale development and expansion of capacity for some country.

Great. I have a follow-up to Stephen's question on Digital. If I look at year-over-year trends, Olivier, your revenue was up 9%, but your margins fell by 473 basis points. I was wondering if you could talk about what you saw on the margin front and perhaps the recovery potential for Digital margins over the balance of the year?

I'll take this question, Arun, it's Stephane. So as you know, we closed last year in Digital with full year EBITDA margin of 35% and the pretax operating margins of 28%. There's a bit of a distinction between the pretax margin and the EBITDA here. We started 2026 with pretax margin of just about 21%, which is essentially in line with where we started in the first quarter of 2025. EBITDA margins, however, were indeed lower, and this is exclusively due to lower amortization from the mix of exploration data that we sold during the quarter.

So if you step back anyway, as I said earlier, the first quarter of the year is typically the lowest for Digital margin. So if you look at where we started, same as last year, and we fully expect to see the same pattern we have seen over the years. we will reach the highest margins in the fourth quarter. And it is clearly our ambition to deliver the total EBITDA margins from Digital of at least 35% this year as well. So this is the choppiness of quarterly movements, but it's not a concern to us.

Your next question comes from the line of Scott Gruber with Citi Research.

I got a couple of questions on Digital. So in a world where code writing becomes easier and more commoditized, can you speak to the resilience of the value add of your Digital portfolio? And as you kind of take moves to shape the portfolio like you've done with the S&P acquisition, how do you think about kind of expanding that value add and enhancing that resilience?

No, I think the customers are accelerating the adoption of Digital because they believe that no matter what the cycle is turning into, a highly favorable cycle or challenging cycle, they believe they need to differentiate. They need to add and extract efficiency, productivity in the [ general ] terms and planning workflow, operational performance and efficiency into the drilling and into the production and recovery space.

And they have seen that the digital capability, and you can see it by the adoption of Digital Operations growing at very nicely year-on-year and is driven by drilling, is driven by production, operation workflow where customers are adopting AI solution, adopting software solution that can transform the performance of drilling operation like drilling automation, can transform production workflow to render ESPs autonomous. And I think this capability will be looked for, for every customer.

So every use case we see is resonating across customers in every basin. And I think we see this not only resilient, we see this as a long-term tail of any cycle and something that Digital will continue to have a tailwind in our industry because we have data like no other industry has. We have scientists and engineers that love to play with data, and we have AI that is starting to come at play as a catalyst to become an X factor, if you like, to unlock productivity.

So we are, I think, unique in our capability. We have the domain knowledge that is deep, and we have the platform that can help scale this AI capability going forward. So we feel that I think it is the right time for the industry to adopt AI at scale. We think that we have the platform, we have the deep domain and the first use case that are starting to be realized recently and the power of agentic in our industry will only reinforce this growth opportunity, and it's not only resilience, it's growth going forward. And we show more of this in the Digital investor forum.

Definitely, look forward to it. And a follow-up here, just with an outlook for higher oil prices, at least over the medium term, how does that impact the Digital business? I assume your seismic sales could improve. How meaningful could that be? And then kind of more importantly, would you anticipate customers taking some of this excess cash that they're generating and spend it on more software, more applications to get a bigger boost for their own internal efficiency?

Yes. Obviously, when the commodity prices are high, and I think the customer have more optionality with their discretionary spend, they use it in 2 domains, use it in Digital and they accelerate exploration. And I think we foresee that -- and we have seen it, and we have seen signal that exploration is coming back. You have seen some announcements of some company reinvesting in exploration at scale because they believe they want to secure reserves to participate to long-term energy security.

And at the same time, yes, they use this discretionary spend smartly and using this on occasion to buy data sets to accelerate the exploration and will benefit from that, but also participate to more pilots and then make decision faster to accelerate their platform software deployment in their organization.

Your next question will go to the line of Sebastian Erskine with Rothschild & Company Redburn.

I just want to start on SLB OneSubsea. It's really one of the jewels in the SLB Crown. You guided at full year '25 results of $9 billion in sort of order intake over the next 2 years. But I wonder if you could give perhaps some outlook on the margin expansion potential within the OneSubsea business, particularly with comparison to the sort of broader offshore E&C universe. Is there more room for integration with the rest of your portfolio or further efficiencies related to your -- the existing kind of Aker Subsea business? Any color on the margin outlook for OneSubsea?

Yes, sure, Sebastian. So you have noticed that actually for the first time, we gave you our margins for -- in OneSubsea for the first quarter. Unfortunately, they were not as brilliant this quarter, but these are temporary effects for -- due to the timing of project completions and start-ups. So you've seen where the margins were in the same quarter of last year, pretax margins of 18%, which means EBITDA margins very close to 20%.

So this is what we expect from this business over the cycle at the minimum. And even though we started on a rough note in the first quarter, we expect the margins to normalize in the coming quarters. And hopefully, on the back of a backlog, that is increasing year-on-year. We are actually up 5% year-on-year on the backlog. We have better visibility on the growth going forward and potential margins at least.

Yes. I just want to add a couple of things. Yes, Production Recovery, I think I just want to add that, obviously, Subsea as a domain of deepwater, I think, is essential for our customers and Production Recovery plays a great role. And I think we have a unique processing -- Subsea flow processing portfolio. You have seen one more announcement that we are continuing to renovate and to enhance the project we have at Gullfaks with Equinor in Norway and we have done one acquisition that complements offering to help us better participate into the intervention world of deepwater subsea.

So we believe indeed that our Production Recovery strategy and the connection with our other core capability is essential going forward as it will help customers leverage OneSubsea to enhance the production of existing fields and provide more life-of-field services as we call it, including Digital capability to this subsea installation. So it's both on the E&C cycle and then on the life-of-field services long term that will benefit.

Really appreciate the color there. And then just a follow-up. I think, Olivier, in the prepared remarks, you mentioned towards the end of the Data Center Solutions section, you were kind of considering potential further M&A following the closure -- or the announcement of the S&P Global deal. What areas are you seeking to add in terms of your portfolio? Any color on that would be helpful.

Yes. We are looking at everything where we believe that we could build a portfolio that give us a more technology anchor into our portfolio so that as we build more modular infrastructure solution across the full space, thermal management is one that obviously come to mind. And we're looking at the opportunity we believe could complement the offering we have and the go-to-market that we have created and right of play we have created into the space.

Your next question will go to the line of Marc Bianchi with TD Cowen.

I just first wanted to quickly clarify on the outlook here for second quarter. So you're essentially saying that results will be the same as first quarter and there's sort of a $0.06 to $0.08 incremental hit from Middle East that's being offset elsewhere. Is that the message you're trying to deliver here?

Yes. No, that's a good summary, Marc. Just to be clear, this is under the specific scenario that we highlighted where the operational disruptions start to ease more or less at the middle of the quarter and then gradually recover. So in this scenario, we can offset the negative impact of $0.06 to $0.08 incremental effect of Middle East with the rest of the international operations.

Great. The other question I had going back to OneSubsea and sort of the $9 billion of awards over '26 and '27. Just given sort of the outlook here, do you see upside to that now? And how are you sort of thinking about your competitive positioning? We hear a lot from your other competitor about their integrated capabilities. Can you kind of talk about how you see OneSubsea positioned from a competitive perspective?

So first, I think commenting on the cycle. I think the more the dynamic plays probably as the conflict ends, the more we believe that the investment will be attractive into the deepwater market as it is a majority actually of what we foresee as FID in '27 and '28. And hence, the more it will play into the size of the addressable market. Hence, if FID have firmed up, if not accelerated in '27 or even in '26, this will give us a potential to outperform the guidance we have given.

So yes, now on the position, we feel very good with the position we have, extremely good. We have a partner with Subsea7 who gave us when and as customers ask for integrated offering, the indicated capability to deliver, and we have done it at scale with many customers. We feel that we have developed partnership and collaborative engagement with several customers that have led us to be getting -- working jointly with our customers to help and provide support to increase and improve the design of the subsea architecture and unlock FID, and this is true with the partner we have with Equinor with bp. And we believe that we have a unique portfolio with subsea processing that is having no match on the market.

And you have seen an announcement today, and you will continue to see a pipeline of projects that will make it pretty unique in the marketplace. You have seen the Ormen Lange subsea gas compression that unlock a new level of recovery for the field of Ormen Lange in Norway. You have seen the additional announcement we did today on the Gullfaks project, where we'll rework with our customer to make sure that we extend the life and improve the performance of this capacity of subsea processing so that it unlocks next level of recovery.

So yes, we feel good about our integration capability. We feel good on the pipeline that you have seen. We were awarded in Malaysia, in South China Sea, in Suriname and in Norway announced today. And we continue to have a pipeline of exciting projects going forward across the basin. I mentioned earlier, Americas, Asia and Africa. So we are pleased with the OneSubsea progress and continue to support them fully.

Your last question comes from the line of Neil Mehta with Goldman Sachs.

You guys talked a lot about some of the cost impacts that you're seeing in the Middle East and how that's impacting margins. And I think we all understand that a conceptual level, things like freight. But can you just kind of give us some of the line items that might be causing the pressure point and help us understand what are some of the specific items that are pressure points?

Sure, sure. We can do that. So clearly, from the situation in the Middle East, it introduced quite some strain on supply chain networks locally, but with ripple effects in other places in the world. So probably the line item that's the most impacted is logistics and transportation costs clearly. Coming next is raw materials, those which are derived from petroleum products, of course, and that would also include chemicals.

So it's raw materials and logistics mostly. So this has impacted our margins in the first quarter, and it will linger for a while. Now we are not going to let just that hit our cost. We have mobilized our commercial organization to recover some of these increased costs, and we are activating inflation pass-through clauses that we have in our contracts. And if we don't, we are in direct negotiations with both our suppliers and our customers to offset these effects. So we are kind of used to these spikes in costs coming from inflation, and we will try to recover as much as we can.

And my last question, it's been a couple of months now that ChampionX has officially been in the SLB portfolio. Just any observations about what it's bringing to the table here and how you've been able to integrate the system into the broader company?

First, I think I will reiterate the results part of the ChampionX addition to our portfolio. As Stephane highlighted, I think ChampionX has been as a portfolio accretive to the company in the first quarter, and I think it has been growing year-on-year and expanding margin year-on-year.

Second, I will come back to the 3 days we spent with our Board in Midland. I think it was a pleasure to see in action our ex ChampionX employee integrating fully in [ Port to Pipeline ] if you like, a tool that we made for our customer with our Board of Directors to showcase our fit-for-basin technology in the Permian. Highly integrated, already getting pull-through or getting synergy -- revenue synergy and technology synergy that customers are appreciative.

The second highlight of this trip was meeting of our customers. We hosted many customers with our Board of Director in Midland, and I think it was a pleasure to give -- to get feedback, very direct and transparent feedback from our customer. They were very pleased with the integration progress, and they have seen the light of the potential that ChampionX with the greater SLB can bring to their operation in the Permian.

So we are seeing the benefits on the financial results. We are seeing an exciting opportunity for Production Recovery as we commented on the summit that we hosted lately. And we see the enthusiasm of our team spending with the ChampionX employees and the customers that are appreciative and recognize this is something unique that we have and something that can unlock the potential of Production Recovery, partly in unconventional, but in all of our basins in the world as well.

Thank you. I will now turn the call over to SLB for closing comments.

So thank you very much. So ladies and gentlemen, as we conclude today's call, I would like to leave you with the following reflection. First, while recent events have created near-term disruption, they have also reinforced the need for secure and reliable energy, which will support oil price above pre-conflict levels and create an enduring backdrop for oil and gas investment.

Second, Production Recovery, Digital and Data Center Solutions are creating the foundation for accelerated growth.

And finally, I want to take the moment to recognize that this year marks 100 years of SLB. As we celebrate this milestone, I'm proud that we are not only honoring an extraordinary legacy, but also building the foundation for the next century of innovation, performance and leadership. With this, I will conclude today's call. Thank you all for joining.

This concludes today's conference call. You may now disconnect.

Good morning. My name is Megan and I'll be your conference operator today, and I would like to welcome everyone to the Fourth Quarter and Full Year 2025 SLB earnings call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Megan. Good morning, and welcome to the SLB Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being hosted from Houston, following our Board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause the results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our fourth quarter and full year earnings press release, which is on our website.

With that, I will turn the call over to Olivier.

Thank you, James. Ladies and gentlemen, thank you for joining us today. I will begin by reviewing our fourth quarter performance followed by an update on market conditions and the unique opportunities we see developing for our business. I will then share our outlook for the first quarter and expectations for the full year 2026. Stephane will then provide additional details on our financial results. And finally, we will open the line for your questions. Let's begin.

We ended the year with strong operational and financial performance in the fourth quarter, achieving sequential revenue growth, margin expansion and substantial cash flow generation. This performance reflects the breadth of our portfolio and the impact of our strategy in a challenging macro environment. Sequentially, revenue increased by 9%, driven by high single-digit growth internationally and mid-teens growth in North America. Excluding ChampionX, organic revenue increased by 7% internationally and 6% in North America. We saw sequential growth across all our geographies for the first time since the second quarter of 2024. This demonstrates that global upstream activity has stabilized with key markets showing early signs of a rebound. This helped us to deliver approximately $500 million of organic revenue this quarter in addition to roughly $300 million contribution from ChampionX, resulting from an extra month of consolidation.

Let me briefly discuss a few highlights from the quarter. First, we benefited from strong year-end product sales in production systems globally, higher exploration data sales and strong demand for digital operation across all areas. Second, activity increase across the Middle East, led by Saudi Arabia and with Momentum UAE due to a combination of sustained gas development and increased oilfield intervention activity. Third, we delivered strong results across Asia with increased activity in Australasia, East Asia and Indonesia as this market continues to benefit from offshore gas development. Notably, this quarter also marked the return of growth in Saudi Arabia and across Sub-Sahara Africa with flat revenue in Mexico. These 3 basins actually accounted for the entire organic revenue decline in the full year of 2025. And directionally, we expect activity in this market to improve as we move throughout 2026.

Turning to the divisions. In the fourth quarter, Production System and Digital led the way, where reservoir performance was up slightly and Well Construction revenue was steady. The strength in Production System was driven by increased demand for production chemicals, artificial lift and process technology and solutions as well as backlog execution completions and OneSubsea. When excluding the ChampionX contribution, this division still grew by double digits sequentially and maintained its momentum with several contract awards during the quarter, as you can see from today's highlights. Digital also continued to grow at a healthy rate. driven by strong growth in digital exploration with year-end sales in the Gulf of America, Brazil and Angola as well as robust increase in digital operations and platform application. Digital annual recurring revenue surpassed $1 billion, reflecting year-on-year growth of 15%.

We also announced several exciting digital milestones in the fourth quarter, including launching Tela, an agentic AI assistant, purpose-built to transform the upstream energy sector and forming a partnership with ADNOC to launch an AI powered production system optimization platform. These underscore the opportunity for AI to continue to reshape industry populations. Meanwhile, in reservoir performance, sequential growth was a result of increased stimulation activity in Middle East and Asia and higher intervention activity in Europe and Africa. In Water construction, higher offshore drilling activity in North America and Europe and Africa was offset by declines in some land markets. Additionally, our fourth quarter revenue benefited from the resumption of production in APS projects of Ecuador. Overall, our fourth quarter results are a positive indication of the opportunity that lies ahead. I want to thank the entire SLB team for delivering excellent performance for our customers throughout 2025 and finishing the year on such a strong note.

Turning to the market environment. Near-term oversupply may continue to exert downward pressure on commodity price throughout the first half of 2026, while elevated geopolitical uncertainties should provide a price floor. E&P operators are therefore expected to remain cautious and to backload their 2026 jet. As supply and demand continues to rebalance into 2027, conditions will likely support a gradual recovery in upstream investments acting key international markets and offshore deepwater exiting 2026 at higher less level than 2025. Indeed, economic growth, including population and large-scale manufacturing and infrastructure investments, partly in the U.S. and China related to AI will inherently drive more demand in both oil and gas, coupled with the natural decline of existing oil and gas assets, we believe this will be the key drivers for the rebalancing of supply and demand. In the meantime, our customers are focused on delivering the lowest cost incremental buyers. This means capturing efficiencies at scale. And in our view, that requires more technology, more integration and more digital solutions. Today, operators are increasingly prioritizing performance assurance across the asset life cycle, reducing development time lines and accelerating optimization through digital solutions.

SLB is uniquely positioned today by value in [indiscernible] by integrating equipment with intelligent and autonomous digital capabilities to reduce downtime, improve efficiency and increase productivity as witnessed a rapid uptake in our digital operations. Additionally, production recovery has made as a critical domain for value creation, not only in brownfield and mature assets, but also across greenfield developments and tiebacks. This is not an either/or proposition between CapEx and OpEx, but an opportunity to increase our share of CapEx spend and capture OpEx white space with new solutions. With SLBs expanded production portfolio, including the addition of ChampionX, we are uniquely positioned to meet the developing demand in the production space.

Globally, the international markets are stabilizing and trending upwards directionally, with Latin America and Middle East and Asia leading the rebound in 2026. Regionally, Middle East continues to robust on the largest international market with positive investment outlook. Indeed, there is a resurgence of our production across vision, driven by OPEC+ policy while gas remains a strategic priority to meet regional demand and long-term capacity expansion. In 2025, we witnessed double-digit growth in the United Arab Emirates, which was more than offset by the decline in Saudi Arabia. In 2026, the device market will be characterized by a rebound in drilling and more cover activity in Saudi Arabia, with rig counts potentially returning to early 2025 levels by the end of 2026. And this has already bagger.

Offshore also continues to plan on compelling long-term growth opportunities for SLB partly in deepwater, where we expect activity to inflect towards the end of 2026 as what space subside. With OneSubsea, we have the unique ability to combine subsea processing capabilities digital solutions and SLB is integrated both to process expertise across subsea intervention and to well construction to create differentiated value for customers. Specific to the subsea market, more than 500 subsidiaries are expected to be awarded across 2026 and 2027, about 20% higher than 2025 run rate, and this is an opportunity we aim to capitalize on. In 2025, OneSubsea was about approximately $4 billion in subsea bookings, and we see a path for cumulative bookings exceeding $9 billion over the next 2 years, supported by this tendering activity.

Finally, we're excited about the strong progress in our data center solution business since it launched less than 2 years ago. This year, we plan to expand our range of offering our customer base and the geography we serve, paving the way for [indiscernible]. The opportunity is growing faster than anticipated, and we expect to exit the year at a quarterly revenue run rate of $1 billion per year. Overall, SLB is clearly positioned to fully benefit from a rebound in international activity as supply-demand rebalance supported by ongoing investments for all capacity, gas expansion project and a constructive long-term outlook for deepwater. Asian activity dynamics further reinforce this fiber directional trajectory beginning in 2026.

Let me now share our outlook for the year. The headwinds we face in 2025 in certain markets may become tailwinds for our business this year. We anticipate this will translate into higher fourth quarter revenue exit rate in 2026 compared to the fourth quarter of 2025. For the full year, assuming oil price remains range bound in high 50s to low 60 range. We expect 2026 revenue to be between $36.9 billion to $37.7 billion. In North America, we will benefit from the addition of 7 months of activity from ChampionX, stronger offshore activity tied to customer plans and accelerated growth in data centers, while upstream land activity will continue to decline younger. In international markets, revenue is expected to trend upwards over the year, resulting in a slight year-over-year increase. growth will come from Latin America and the Middle East and Asia, while Europe and Africa is anticipated to decline slightly.

Let me now describe how these dynamics will unfold across the divisions. In Digital, revenue is expected to go at the same pace as 2025, payment by digital operations. Production System will increase, mostly benefiting from the full year of ChampionX revenue, as our performance will be flattish, while well construction will decline slightly. Revenue in the all of our category will be flat year-on-year, considering the loss of revenue from the divested Palliser asset will be offset by growth in the data center solutions. This revenue outlook translates into adjusted EBITDA between $8.6 billion to $9.1 billion for with margins remaining in line with full year 2025 levels. Finally, with visibility into [indiscernible] strong cash flow, we will return more than $4 billion to shareholders in 2026 to the combination of the increased dividend that we announced this morning and share repurchase.

Turning to the first quarter. We anticipate revenue to decline by high single digits sequentially, similar to the prior year due to outsized year-end product sales and project milestones in Production System in the prior quarter. We also expect adjusted EBITDA margin to decrease by 150 to 200 basis points versus the prior quarter. This seasonal dip will be followed by a rebound activity during the second quarter with further expansion into the second half driven primarily by international markets.

Finally, before I hand over to Stephane, let me briefly touch on Venezuela. SLB is the only international service company actively operating in Venezuela today as we are delivering a diverse set of services for NIC under their license, with near a center of experience in Venezuela. We did maintain active facilities, equipment and local personnels on the ground. Historically, we have been leader in a country. And we remain confident that with appropriate licensing, safety parameters and compliance measure in place, we can rapidly ramp up activities in support of the oil and gas industry in Venezuela. We are excited and we are already receiving a lot of [indiscernible] from our customers.

I will now turn the call over to Stephane to discuss our financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. Fourth quarter earnings per share, excluding charges and credits, was $0.78. This represents an increase of $0.09 sequentially and a decrease of $0.14 compared to the fourth quarter of last year. We recorded $0.23 of net charges during the fourth quarter. This includes $0.11 goodwill impairment charge relating to our carbon capture business, $0.08 of merger and integration charges, $0.07 related to workforce reductions and $0.03 of other charges. Offsetting these charges is a $0.06 credit relating to the reversal of a valuation allowance that was recorded against certain deferred tax assets. .

Overall, our fourth quarter revenue of $9.7 million increased $817 million or 9% sequentially. Approximately $300 million of this increase is due to an additional month of activity from the acquired ChampionX businesses. Excluding the impact of this transaction, SLB's fourth quarter global revenue increased 6% sequentially. The sequential revenue step-up was higher than expected and was driven by strong year-end digital sales, significant backlog deliveries and project milestones in production systems, as well as higher reservoir performance activity in international markets. Fourth quarter adjusted EBITDA margin of 23.9%, increased 83 basis points sequentially, primarily driven by very strong digital performance. Margin growth during the quarter was, however, constrained by a loss in a carbon capture project that negatively impacted margins by approximately 50 basis points.

Let me now go through the fourth quarter results for each division. Fourth quarter digital revenue of $825 million increased 25% sequentially, while pretax operating margin expanded 557 basis points to 34%. These results were driven by strong year-end sales in digital exploration and increased revenue in both digital operations and platforms and applications. Notably, for the full year, digital revenue of [ $2.7 million ] grew 9%. The combination of the growth rate and the full year EBITDA margin well exceeded the widely recognized Rule of 40. In addition, digital annual recurring revenue surpassed $1 billion, reflecting year-on-year growth of 15%. Finally, trailing 12 months net recurring revenue was 103% at the end of the fourth quarter. Reservoir performance revenue of $1.7 billion increased 4% sequentially, driven by strong international activity particularly in Saudi Arabia, East Asia, Qatar, Indonesia and Gula. Pretax operating margin of 19.6% increased 105 basis points largely due to a favorable activity mix in the Middle East. Well construction revenue of $2.9 billion decreased 1% sequentially, primarily driven by declines in Middle East and Asia, while pretax operating margin of 18.7% was slightly down. Production Systems revenue of $4.1 billion increased 17% sequentially, reflecting a full quarter of activity from ChampionX. Excluding the impact of this acquisition, Production Systems revenue increased 11%, driven by strong sales of completions and artificial lift as well as project milestones in process technologies, Subsea and valves. Pretax operating margin of 16% increased 20 basis points due to improved profitability in completions and production chemicals.

Now turning to liquidity. During the fourth quarter, we generated $3 billion of cash flow from operations and $2.3 billion of free cash flow. This strong performance was due to the unwinding of working capital and significant customer collections and reduced inventory driven by year-end product deliveries. For the full year, we generated free cash flow of $4.1 billion, marking the third year in a row with free cash flow at or above $4 billion. As a result, net debt reduced by $1.8 billion during the quarter to end the year at $7.4 billion. Capital investments, including CapEx and investments in APS projects and exploration data were $716 million in the fourth quarter and $2.4 billion for the full year. For the full year, we returned a total of $4 billion to our shareholders with approximately $2.4 billion in stock repurchases and $1.6 billion in dividends.

Looking ahead, let me now provide some additional color on our outlook for 2026, building on the details Olivier shared earlier. We expect revenue to benefit from a full year of ChampionX, which will result in incremental revenue of approximately $1.8 billion in 2026. This increase will be partially offset by the effects of the 2025 divestitures of our interest in the Palliser APS project in Canada and of our REIT business in the Middle East. These 2 businesses accounted for approximately $350 million in combined revenue in 2025. As Olivier mentioned, adjusted EBITDA margin for 2026 will be relatively consistent with 2025 levels with different dynamics by division. Digital margin will increase slightly year-on-year on continued top line growth. Production Systems margin will increase, primarily driven by synergies from the ChampionX acquisition, where we still expect to achieve approximately half of the $400 million of total synergies by the end of 2026, [ $30 million ] of which were achieved in 2025. About 75% of the synergies will benefit production systems, with the remaining portion benefiting well construction and reservoir performance. The positive effect of ChampionX synergies and production system margins will be partially offset by unfavorable technology mix within the division.

In Reservoir Performance and well construction, despite activity levels stabilizing, margins will be down year-on-year due to activity mix and pricing headwinds in select markets. From a below-the-line perspective, corporate costs will increase year-on-year, driven by an incremental $70 million of intangible asset amortization expense as a result of a full year of ChampionX. Additionally, we expect our effective tax rate to be approximately 20%, representing a slight increase from 2025. While we expect overall activity to stabilize and increase from today's level in certain key international markets, we will remain disciplined in our capital allocation. In this regard, we expect our total capital investments to be approximately $2.5 billion in 2026. This should lead to another year of strong free cash flow generation. As a result, today, we announced a 3.5% dividend increase, and we expect to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. We are currently targeting to buy back the same $2.4 billion that we repurchased in 2025. However, this amount could increase as the year unfolds, depending on our free cash flow generation progress and our visibility on the business outlook.

I will now turn the conference call back to Olivier.

Thank you, Stephane. I believe Megan, that we are ready for the Q&A session. .

[Operator Instructions] Your first question comes from the line of Steve Richardson from Evercore ISI.

I was wondering if we can talk a little bit about CapEx. I understand -- I appreciate you've given some outlook here on 2026. There seems to be something with investors of an old rule of thumb about your CapEx leading revenue expectations, I thought it would be helpful if you could maybe give us some context around the trend line of CapEx, but also -- how is the capital intensity of your forward business different than perhaps it was in the past?

Thanks for the question. Yes. So we increased CapEx slightly compared to last year to -- in total, with APS and exploration to $2.5 billion, as I just said. We think this is what we need to operate this year and to capture new opportunities as activity recovers gradually throughout the year, particularly in the international markets. So yes, compared to the past, our capital efficiency has improved quite a bit in the last few years. We can do more with less, basically. But clearly, we will not miss any opportunity if activity recovers faster. We want to be ready for a ramp-up and we'll bring more equipment and tools as needed. By division, clearly, reservoir performance is probably the highest capital intensity followed by well construction and production systems, especially with the addition of ChampionX as quite lower capital intensity.

And on the Middle East, your comments are appreciated about the other regions picking up the slack in Saudi in your view on the full year improving. I was wondering if you could talk what we're seeing is the IOCs are seeing a lot more opportunity across North Africa and the Middle East. And I was wondering if you could talk a little bit about your mix or your expectation of your kind of customer mix as you go into '26? And how much of that is driving some of this optimism on improvement versus some of your traditional customers on the national oil companies?

No. First, I will comment -- reinforce the trust and the confidence we have a national company to continue to their execute the capital program. And I think indeed, we are foreseeing and already witnessing the rebound of the Saudi rig and doing and workover activity, which is very favorable. And I think, as I said, coming from a deep in 2025, rebounding at the end of 2026 to as we expect to the level of entry of 2025, which is a V-shape recovery. I think that will set the year very well and also the 2027 is a much stronger year going forward. So beyond that, obviously, the region is still continuous momentum, high momentum in Kuwait, in UAE and has been witnessing significant growth. But coming to international, indeed, Libya, I think is attracting and there's conference this week, next week, and Libya is attracting a lot of investment, and we have been the early benefit of this, and we see Libya high trajectory of growth. We have seen it in the last couple of years, and we foresee this will continue in -- well into '26 and '27, driven by investment coming back in country from an international company. .

Algeria has been successful in licensing round, and I think is exploring on commercial in the South and also gaining additional independence coming back into countries. So we see a rebound in Algeria that will strengthen in 2027. Egypt in the region, I think, is back in offshore. Additional rigs will mobilize in deepwater offshore Egypt as well as in Egypt due to the support that Gabon has provided and again, the return of investment into Egypt. And for Iraq, I think, has been a lot of growth last year. We continue to be significant going forward, like is where some international companies are investing. I think we are associated with this directly. So we have a strong exposure in all of these markets where international company are joining. And finally, I would say that the unconventional UAE is a place where newcomers are appraising the resource and ready to scale their investments from appraisal in '26 to '27 development going forward. So a combination of oil attractiveness in the region, Libya, Iraq, partially for international company. And gas in the region, Qatar, obviously steady but also the upcoming UAE and commercial and deepwater offshore is met. So that's the template, and I said the favorable outlook from NOC and international company in the Middle East.

Your next question comes from the line of James West with Melius Research.

So Olivier, curious, so with the headwinds bottoming here, Saudi, Mexico, some of the white space in deepwater, sub-Saharan Africa, and everything looking kind of up and to the right, how are you thinking about the exit rate for '26 versus the exit rate we saw in '25. Certainly, it's going to be higher, but what kind of if you give us some observations or thoughts on kind of magnitude of how this up cycle will begin.

I think first, I think we have guided into our prepared remarks that we expect the fourth quarter of 2026 to be higher than the fourth quarter of 2025. And this will be led by the international rebound. Secondly, as we guided the first quarter has a marked decline compared to last year Q4, we will see a gradual recovery, again, driven mostly by international market throughout the year that is setting the scene, as we said, for 2027 to be favorable driven by first and foremost continues to regain momentum in Middle East with the addition of the rebound activity in Saudi and the combination of what the factor I mentioned before.

Asia, I think, has been on the momentum and Latin America as well. I think a bit offshore base in Latin America albeit in Argentina. We are experiencing a slight rebound of Mexico driven by deepwater activity in Mexico coming back. And we will see -- we expect that gradually and into 2027, the activity in sub-Sahara deepwater will resume to a higher level -- visibly higher level, the combination of FID in Namibia, in Mozambique, in Angola and the early pickup of activity in Nigeria are already showing sign of a very promising '27, '28 cycle. So international gradually recovering and the exit rate in the end of this year to be driven by international addition so that it will result into Q4 of this year being higher than last year.

Okay. That's helpful. And then maybe a follow-up on the digital side of the business. Obviously, strong results in the fourth quarter. But my sense is we're still fairly underpenetrated on Lumi and Delphi and the cloud platforms and the AI platform that you have? My numbers may be a little bit dated, but I think a couple of 300 or so customers out of our 1,500 or so customers were on the cloud as of maybe a year ago. Could you give us a sense of kind of where that stands now? Or where you see that heading? I'm assuming everybody eventually goes there, most everybody goes there. but just the magnitude of what that could mean for your digital business. I'm assuming that it's pretty -- pretty accretive.

No, long term. I think we believe that the potential digital to transform industry from the asset team productivity to the efficiency of digital operation between drilling or producing assets, I think, is very significant. I think we are just touching the early innings of that transformation, and we're using a multipronged approach towards this first and foremost strategy built on a platform approach to it. And I think you mentioned the combination of Delphi, Lumi and Tela, and we have been indeed gradually gaining a lot of traction for our customer to recognize that platform is the approach to have the most benefit to combine the geo sounds, the production, the drilling, the operation workflow improvement that everybody is looking for. But if we look at the momentum that we are benefiting from today, the amount comes from digital operation, that I think you have seen is getting significant benefits because it's where I think the river hit the ground and where the customers are seeing and materializing the savings in drilling performance in production and PT reduction in production optimization, and we are benefiting on that. But obviously, we are pursuing adoption of data and AI Lumi, which we launched 4 or 5 quarters ago. It's already having more than 50 customers of an adoption. Tela, that we launched less than 3 months ago, has already on and a dozen customers that are engaging and working with us to create this foundation model that can transform their geoscience that can automate detect and optimize autonomously some producing assets, as you have seen with ADNOC announcement that we have done. So we are pleased with the progress surprised with the tact on digital operation, believe this moment continues and very confident that the secular trend that the industry is continuing to witness will benefit our platform approach and that Lumi, Delphi and Tela will be at the core of this industry transformation going forward.

Your next question will go to the line of Arun Jayaram with JPMorgan.

I was wondering if you could frame -- I was wondering if you could frame your thoughts on the near-term and longer-term opportunity for SLB in Venezuela, you mentioned you're the only international service company now actively operating, but talk to us about what type of product lines could benefit if we do get a revitalization of the oil industry in Venezuela?

Obviously, we have to preface this with the condition, the right conditions, including licensing, including payments and operating license will have to be put in place. But assuming that the condition asset for investment to resume and to accelerate, not only from the customers that we are serving to them and for new customer reentering or entering the country. We have kept -- we have historically been the largest supplier, the largest partner of the national company and the largest supplier in service technology in-country, historically, we have had about 10 years ago, more than 3,000 people, and we were recording visibly more than $1 billion revenue at that time. So we have the track record in integration. We have a unique subsurface digital leading role that we had at that time that we can resume. And we have today a significant set of assets that are ready to be deployed across the drilling services, across production with no less than 10 portion set across rig operation with rigs that we are ready to mobilize. And I think across intervention, across drilling, for infill drilling or production optimization, we believe to have the capacity in country, and we believe that we have the access to the Venezuela nationals about 80 of them are already in country. We have more than 1,000 Venezuelan [indiscernible] employee in the company and some of them will be welcoming to bought back in Venezuela, and we have almost 2,000 alumni that I think we have kept in touch with that will be also ready to be joining us as we move forward. So as I said, long term under the right conditions, we can be the partner for our customers there. And I think I've quoted the number where we were before. And I think the future will tell us when and as this can accelerate to already, and we're already seeing a lot of incoming calls, as I would say, to explore options going forward.

Great. That's helpful. Olivier, my follow-up. I was wondering if you could talk a little bit about your data center infrastructure business. You mentioned that you expect to reach a $1 billion run rate in revenue, if I heard you correct, by year-end. Can you talk a little bit about the solutions you're providing today and maybe how you're thinking about organic and even inorganic opportunities to grow that business over time?

Yes. I think -- and you hear me correctly. I think this is amazing what we have put together in less than 18 months. I think the rate of growth the customer engagement that we are getting, the traction we're getting with hyperscalers and I think is amazing. And yes, we put together a setup that is focused on the modular manufacturing capability co-engineering of data center solutions from several and cooling solutions. And we are aiming at increasing not only our scope, but also our footprint, as we announced last quarter, doubling our capacity to respond to the pipeline and to respond to the backlog we have, and we continue to be expanding both in terms of scope in terms of around this manufacturing design capability for modular data center solution will be this year going and growing internationally. We'll be this year, adding new customers to our portfolio and preparing ourselves to go in throughout the year in 2027, $1 billion is the run rate, but it will be significantly both this in 2027. And we believe that we see -- we see growth the rest of the decade internationally. And indeed, as we explore and respond to the request from our customers who are looking for integrator in this space. We will look for complementing our current capability that we have bid organically and to look at what could help complement this and accelerate our market penetration and make us as a fulfilled partner of our customers going forward. technology for the life cycle of the data center for construction and operation.

Your next question comes from the line of David Anderson with Barclays.

If we compare -- if we compare SLB today versus 10 years ago, in addition to digital, I think the biggest shift is now the emphasis on production recovery. I was wondering if you could talk a little bit more specifically about the growth opportunity in the next few years as we think about OneSubsea, ChampionX, artificial lift. If I think about OneSubsea, I'm thinking about backlog conversion accelerating. Guyana, Venezuela, potentially Venezuela could be growth engines in chemicals and then artificial lift in the Middle East. Could you sort of frame this growth opportunity for us over the next few years on this side of your business?

No. Absolutely, Dave. I think portion recovery, as we call it, is a new chapter for the company, something that we have decided strategically to invest because we believe that first is a market that has significant opportunity for value creation through technology, through integration, through digital, and we believe that we need to own and have access to a broader portfolio, hence the access to the ChampionX chemical, OpEx and fulfilled lift technology and the digital platform addition that put us very well paced into that market. So now the customer response is very positive. Indeed, I think if you look at the priority of our customers today into a challenging committee on pricing online, it's all about getting more from the assets that have on the production. And hence, the return of the higher barrier for lower cost is a priority. So I'm getting a lot of intake into our lift solutions, into our digital production as you have heard, and indeed trying to realize and realizing today the benefit of chemistry. Chemistry for not only production assurance, chemistry for -- but also chemistry for as performance or recovery. So we believe that the integrated capability that we have built together will give us opportunity to create solutions for the market, end-to-end solution that will help to improve the performance of existing producing assets will help transform existing assets into -- with a solution for recovery, solution for optimization and will have a cost to bring digital solutions. So yes, led solution in the metro basin or into the most producing oil basin in the world, including Middle East. Yes, Subsea as a beneficiary for the long-term deepwater, but also the boosting processing capability we have in subsea that are quite unique and contribute to this recovery production gain and goal we have. So yes, it is a new story for us. It's a new chapter. We're excited. Customer feedback is very strong because they believe that they need somebody that have the subsurface have the technology and has a full integrated portfolio to respond to the transformation of portion recovery landscape as we have contributed and had the industry transformed the well construction or exploration historically.

That makes a lot of sense. Shifting gears a little bit to another area of potential growth in geothermal. You've been dabbling there for a number of years, but now as you noted in the release here, you're working with Ormat on a pilot project, I believe, later this year. in enhanced geothermal. It looks a lot of this, when we look at geothermal, a lot of this sounds a lot like shale in the early 2000s. We know the resource is there, but it's a matter of process and technique to suffer the economics. Do you agree with that conceptually? And -- and where is your confidence that this can be scaled up to create, say, 100-plus megawatt geothermal plants in the next few years?

Let me know absolutely. I think Dave, I think -- let me first step back and explain the reason why we have partnered with Ormat and the potential we see in this partnership first, is to put together the 2 leading companies in the field. We are subsurface leader in geothermal helping to characterize the geothermal source and then develop the wealth and they have the section to produce the heat and the hot water from those and Ormat is leaders into building a geothermal power plant and understanding the full life cycle. So putting this together and providing industry for one integrated offering, I think, is -- was very well received by the industry and will have accelerated providing conventional geothermal bridge power or base power for some of the data center in the future. So that's -- that's clearly one -- the first aspect.

The second, obviously, we have put this together because we believe that we want to together optimize, explore and optimize through a development of an asset or 2 assets in the future in -- in the near future into the commercial geothermal. And yes, we believe this is a field that has significant potential. But we want to lead right, we want to do sense, we want to do this technology, we want to do with digital modeling of the process so that we get it right, and we understand how to scale it economically, how to make it viable, how to make it safe and then how to offer it together to the market in the near future. So that's the ambition. So we have done this for a reason. And I think we will be developing these assets. It will be experimenting this asset appraising and then getting ready for risk technology, digital and with joint offering to offer this at scale to the market in the U.S. and beyond.

Your next question comes from the line of Neil Mehta with Goldman Sachs.

I guess the first question is more of a macro question a unique perspective on this big debate that's in the market right now about how much OPEC spare capacity really lives there in markets like the Middle East and of course, recognizing that there's probably limitations about what you could say. Your perspective on that question, I think, would be helpful for us as we think about the back end of the oil curve.

No, I think you have been reading what I'm reading, and I think I want to read it more, but I think OPEC has been unwinding $2.2 million. I think when you fast forward a year from now when the imbalance that still exist in today will start to subside and then the market will balance itself. I don't think there will be much spare capacity available, sign of which you see by the reinvestment into all capacity system investments that are happening today across -- across the Middle East and all intervention and international activity in which we have a strong exposure is benefiting from this. So yes, I don't think -- and you have some of the OPEC members beyond the Middle East that are not necessarily having an easy path towards sustaining their existing production. So all in, I think it bodes very well to focus on production recovery, which is focusing on providing the technology, the integrated capability to sustain production, enhanced recovery. And I think that's where we will see adoption of this. But I don't think there is significant spare beyond what has been released back to the market. Hence, the market will tighten in balance into '27 and beyond. Hence, we set the condition for a better outlook as an investment backdrop for the industry from '27 and beyond.

Yes, that makes sense. And then another market, I would love to get your perspective on is Mexico. Olivier, this is probably the most constructive. I've heard you on Mexico in a little bit, but we're in a bottoming phase and maybe even a cash recovery phase, your perspective on that market and how it should evolve from here as we think about SLB.

Yes. The market that we say has normalized from a market that has dropped significantly and has had a need for getting the confidence of the whole industry to reinvest. I think has normalized in a few months. I think it's -- we bet to be steady from the land activity for the free short to midterm, and we expect the condition are trade in place, getting in place for reinvestment going forward in 2026, however, where we see the upside is in offshore activity in Mexico, where the deepwater asset that we are developing with, that is being developed by the with side will give us an upside whereas the activity in land now will make the assumption, it is steady, but we got the [indiscernible] to start to strengthen as we move into 2027.

Your next question comes from the line of Marc Bianchi with TD Cowen.

I wanted to ask on -- got this activity you've got these activity increases in your outlook for certain international markets. Earlier, I think a few months ago, there was some discussion of some pricing potential weakness. Can you talk about what that looks like today and what your expectation is embedded in the outlook here?

Yes. I think first to comment that I think the industry has been under pricing pressure in the last couple of years, starting with North America, and I don't see one change there. I think although we believe North America, we are shifted to the mix of the portfolio we have and exposure were data center and digital and our exposure in deepwater and Gulf of America is proportionally bigger and also the OpEx exposure where ChampionX is a little bit of shed towards some of the pricing pressure in North America internationally. The matter has been -- and I keep repeating every time I get to comment on this, has remained highly competitive for a large tender in international markets, and the market has been keeping pressure considering that the market has been declining the last 18 months or 12 months in the international market, and the pricing pressure has sustained and in some clinical markets. And we have been responding with this -- to this is pressure when we felt it was the appropriate -- appropriate things to do to keep upswing to the market at the same time. I think we are able to maintain our margin steady in 2026 compared to 2025, building on the ChampionX synergy, building on the digital growth margin accretive business. and therefore we are doing to continue to use technology performance as differential to protect where we can margin against the pricing pressure.

Okay. And the other question I had was related to the offshore outlook. You've talked about an expectation for improvement in offshore. And I think if we go back a year or 2, there was an expectation for offshore improvement that didn't really materialize. So what are you seeing now that you think is different from that prior period and gives you the confidence to make those comments?

No, the comment I'm making is that I believe that the FID and the booking will improve in 2026, setting the right setup and context for 2027, 2028 offshore cycle rebound. Whether this is material in 2026, yes, in certain markets in East Asia, the activity of Indonesia the market will strengthen in deepwater. And I think this reflects into this year. In Sub-Sahara Africa, this is more a trend of FID of project from Namibia to Angola and Mozambique that will set the context for a market rebound going forward. And this FID happening as we speak, being negotiated and being spending. And in Americas, I think the continuous momentum in Brazil, in Guyana, Surinam, and I think are here to stay with the metro basin Gulf of America, metro basin of the North Sea, remaining steady somehow, although a slight decline in the North Sea. So we believe that the FID, the economics are favorable and the pipeline of FID across Africa and Asia are set to create a rebound of activity going forward from -- as we turn into 2027.

Your last question comes from the line of Scott Gruber with Citigroup.

So I want to come back to the Data Center Solutions business. Olivier, you mentioned expanding the business abroad is the $1 billion target capture any of the international growth opportunity, would that be future upside? And how equally could this materialize? And ultimately, as you leverage your global relationships, could the international opportunity become even larger than your U.S. business?

Difficult to say what it could become larger, but easy to tell you that it will grow. And this year will be the first step into establishing ourselves in Asia and to provide this modular manufacturing solution to our customer there. Also, we initiated partnership to design a next-generation data center in one country in the Asia region. And then we expect to also look at our relationship to embed and go further, including Middle East in the near future. So these are the -- these are the places where we have ambition to leverage our hyperscale relationship and our modular manufacturing capability ability to source locally, it manufacture where, I think it's something unique that not so many companies can do and scale and replicate what we have done in the last 18 months. So that's what we look forward, and that's where we are excited about the international market. But U.S. is still the hot market. And U.S. is where we believe we have the seating pipeline in '26 and in '27 coming our way and not [indiscernible] market.

Got it. Appreciate that color. And I want to come back to the question Stephen asked at the beginning on CapEx. So your $2.5 billion of CapEx this year will support the second half growth rate that you'll achieve, which we led by digital and data center solutions, some contribution from the core. But overall, the capital intensity of the portfolio is improving. So my question is, can you sustain similar growth rate for a couple of years into the future at a CapEx level that's still broadly around $2.5 billion given those kind of less capital-intensive drivers of growth? Or do you think CapEx would need to creep a bit higher?

Look, as I said before, we do what it takes to not miss any opportunity, but again, we have really improved our capital efficiency over the last 5 to 6 years, so we can really operate with less. But if growth really comes at high growth rates, we will have to increase beyond the $2.5 billion for [indiscernible]. But as a percentage of revenue, that will still remain pretty low compared to what we were doing before and still quite in the low range -- in the low end of the range we had guided before, 5% to 7% of revenue. that's excluding APS and exploration data. So yes, we'll increase as necessary, but it will go with increased cash flow as well. And some of the growth that we will be seeing is production and recovery as we elaborated on before as well as digital. And that doesn't require as much CapEx as the web-centric businesses. So this is how we can maneuver within [indiscernible], basically.

So without some acceleration in the kind of core business, you would expect the CapEx to sales ratio to continue to improve over the next couple of years? Is that fair?

It will be more or less as a percentage of revenue, it will stay within that 5% to 7%, we've guided before, but it's more below. As you have seen, we've been closer to 5% and 7%. So we will be -- we will remain at the low end of that range in the future.

Ladies and gentlemen, as -- yes. Thank you. Thank you, Megan. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, our strategic focus on production recovery in ChampionX, digital and data center solutions present new pathways for growth supporting our full year revenue and margin guidance. Second, I'm confident that we'll continue to generate strong cash flows enabling us to return more than $4 billion of shareholder return in 2026. Third, in the longer term, the outlook is becoming more positive for SLB. The recovery of Saudi Arabia, the positive pipeline in Subsea, the growth dynamic in both digital and data centers are all catalysts. And Venezuela represents an upside. In summary, the current cycle is recovering towards the strength of SLB. With this, I will conclude today's call. Thank you all for joining.

This concludes today's conference call. You may now disconnect.

Good morning. My name is Megan and I'll be your conference operator today. I would like to welcome everyone to the third quarter SLB earnings call. [Operator Instructions] As a reminder, this call is being recorded.

I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Megan. Good morning, and welcome to the SLB Third Quarter 2025 Earnings Conference Call. Today's call is being hosted from Houston following our Board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.

Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our third quarter earnings press release, which is on our website.

With that, I will turn the call over to Olivier.

Thank you, James. Ladies and gentlemen, thank you for joining us on the call. I'll begin today by discussing our third quarter performance, then I will describe the near-term outlook for oil and gas markets. And finally, I will share our guidance for the fourth quarter. Stephane will then provide more details on our financial results and the structure of our new digital division. After that, we'll open the line for your questions.

Let's begin. Our fourth quarter and followed in line with expectations. As we achieved sequential revenue growth driven by the addition of 2 months of activity from ChampionX, our digital business and the resilient performance of our core. In the International markets, revenue rose 1% sequentially, with notable increases in several countries across the Middle East and Asia. Across this region, sequential growth was seen in Iraq, the United Arab Emirates, Oman, Egypt, China, East Asia, Indonesia, Australia and India, alongside broader improvement in offshore activity across Guyana, Sub-Sahara Africa and Scandinavia.

Meanwhile, revenue in North America grew 17% sequentially. This was driven mainly by the contribution of ChampionX, followed by higher offshore activity, which more than offset a decline in U.S. land activity as U.S. share operators focus on further efficiency gains and cash conservation during the quarter. We also experienced strong growth in our data center solution business, extending our reach with APS getting us to a new market for SLB. This quarter marks the first time we have disclosed our data center revenue, which has more than doubled year-on-year. Looking ahead, we foresee expansion beyond the U.S., along with the onboarding of new customers.

Next, let me discuss the performance of our divisions. I'll begin with digital. This is the first quarter we are reporting digital as a stand-alone division. As you have seen in our release this morning, our digital business is comprised of 4 categories where SLB offers a solution that help unlock productivity for geoscientists and engineers, driving step change in efficiency and safety in operations and help our customers in delivering better wells and higher producing assets. The solutions embedded in platform and applications digital operations, digital exploration and professional services, each of which Stephane will describe in more detail a little later in this morning's call.

Specific to the third quarter, digital revenue increased 11% sequentially. This was driven by a 39% increase in digital operations, which enables digital services and automation capabilities augmenting our offering from our core divisions. Of note, automated drilling footage increased by more than 50% year-on-year. This was also supported by the addition of new connected assets from ChampionX. Following the integration, we now have a combined total of more than 20,000 connected assets deployed in the field, providing additional digital insights and optimization for our customers. One of the reasons digital operation is such an exciting growth because it presents the opportunity to enhance every service and piece of equipment that we deliver by embedding digital capabilities, that enhance performance and unlock the power of autonomous operations, creating an adjacent and fast-growing digital market that strengthens our core offering.

The earnings release previous this morning, you would have seen a broad range of examples of platform and application being adopted by customers across all basins, customer types and life cycles. These examples demonstrate global reach of our digital brand, the impact of our platform strategy and the emergence of AI as a transformative force in our industry. This quarter, for example, we secured key contracts awards for our OptiSite production suite, which enables customers to process comprehensive data streams through cloud-based applications to drive productivity and efficiency across assets and facilities in the field. We've also announced a collaboration with AIQ to deploy its energy agent AI solution for ADNOC, powered by SLB Lumi data and AI platform. These are meaningful milestones that speak to the momentum behind our digital business, and you can expect to hear more announcements in the weeks ahead that further demonstrate the impact and scale of these solutions.

Turning to the financial performance of this business. We expect our digital revenue to continue growing at a rate that visibly outperforms global upstream spending and that exceeds the growth rate of our core business by double digits. At the same time, we expect digital to continue delivering highly accretive margins to the company. In the core, I was very pleased with the resilient performance of this quarter, given the challenging macro environment. Excluding the impact of the ChampionX contribution, the core divisions of reservoir performance, well construction and production systems were essentially flat sequentially. This demonstrates how our global footprint and both portfolio helps us to navigate regional uncertainties and offset localized headwinds.

Specific to our Production Systems division, we are already benefiting from the addition of ChampionX, which delivered revenue growth and margin contribution ahead of expectations. We are very pleased with the integration so far. And in addition to the strong delivery of the team, we continue to receive positive feedback from our customers. For example, we recently delivered a combined ESP string using a ChampionX pump with an SLB induction model for a main operator in the [indiscernible]. By bringing together these 2 best-in-class technologies, we improved performance for uncommercial waste and enabled faster installation, reducing downtown and strengthening project economics per customer. And in the Middle East, we have received several contract awards for artificial lift well testing and production chemical technologies that leverage the combination of SLB and ChampionX solution and engineering capabilities.

Moving forward, in the context of tighter industry economics and mounting pressure from production declines, our customers are placing greater emphasis on production recovery solutions to unlock additional barrels at the lowest possible cost and with maximum capital efficiency. This presents an exciting growth opportunity for companies who can offer solutions and technology to optimize production and maximize recovery from maturing assets and technology will be the key. This is where SLB has a distinct advantage and why we have made production recovery, a strategic focus for our business. By combining our deep subsurface expertise, the industry brought us lift [indiscernible] and chemical technology portfolio with unique integration and digital capabilities, we offer a differentiated value proposition to our customers. This offering now includes ChampionX which brings unique technical capabilities and strong track record of customer success from production chemicals to artificial lift enhanced with digital capabilities. I will continue to develop portfolio with strategic investments, including our recent acquisitions of RESMAN Energy Technology and Stimline Digital. Altogether, our production recovery offerings, adds another level of growth to our business. With combined exposure to CapEx and OpEx spend, complementing our leadership in upstream exploration and development.

Now turning back to our quarterly results. and considering the market conditions we faced during the past few months, I'm pleased with our performance. We achieved resilient results across the core divisions, delivering early success with ChampionX and continuing the momentum in digital, and there are several bright spots on the horizon. Thank you to the entire SLB team, including our new colleagues from ChampionX for your excellent contribution this quarter.

Next, I will discuss the ongoing macro environment and the near-term outlook for oil and gas markets. In an environment with increasingly challenging commodity prices and insolvency on the demand supply bands, the industry has so far proven discipline and most long cycle and international activity demonstrating resilience. While it is difficult to predict the exact outcome of further production increases and ongoing geopolitical developments the fundamentals for oil and gas remain constructive. Global inventories still resides at multiyear lows and the need to offset natural production decline accounts for nearly 90% of annual upstream investment. These dynamics create a supportive environment for stable investment in near to midterm buying dermatic shift in commodity prices. Against this backdrop, with the exception of 3 to 4 well-known markets where activity has recessed. Global activity has stabilized in many locations still on the rise. To touch on international markets, many countries remain poised for investment growth tied to long-term capacity expansion plans and assurance of energy supply, particularly for gas. Notably, while OPEC+ production release are currently being filled using capacity behind the pipes, additional release will eventually require new infill drilling or new development to meet the higher supply output from these countries. This caused a positive catalyst for activity in member countries and reinforces the potential for higher activity in 2026.

Specific to deep other markets, the pipeline remains very healthy with favorable economics. We expect further investments in countries across the Atlantic supported by oil and in Asia driven by gas. And while short-term scheduling uncertainties have resulted in white space, partly in Sub-Sahara Africa. We expect this to progressively disappear as there are a number of FID planned for 2026 and early 2027. Meanwhile, in North America, operators continue to prioritize production magnets as a result of commodity prices. underpinned by efficiency improvements, leading to muted activity in the near to midterm. In this context, considering current industry dynamics and commodity price environment, we believe the conditions are set when the supply/demand rebalances for the international markets to lead the future activity rebound and SLB is well positioned to benefit from search and events.

Now as we have discussed the market conditions. Let me describe how we see the fourth quarter unfolding for our business. We expect that we'll achieve a sequential step-up in results in the fourth quarter of high single-digit top line growth. as we report a full quarter of ChampionX and generate seasonally higher year-end digital and product sales. With the third quarter results behind us, we're now in a position to consider that second half revenue will be within the midpoint of our previous guidance range of $18.2 billion to $18.8 billion. We also expect the fourth quarter adjusted EBITDA margin to expand 50 to 150 bps sequentially. This was driven primarily by increased earnings contribution from both digital and production system and PSL, including a full call or ChampionX results and fully restored operations on our APS equal assets. Specific to the digital business, we expect a significant increase in the fourth quarter on seasonally higher sales across the portfolio. As a result, we believe our digital division will be able to achieve double-digit growth for year with EBITDA margin reaching 35% on a full year basis. Overall, SLB continues to demonstrate resilience in navigating the challenging market environment. and flanks digital, coupled with our growing presence in the production recovery space, will expand our leadership in the sector and help us drive positive outcomes for customers.

I will now turn the call over to Stephane to discuss our financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. Third quarter earnings per share, excluding charges and credits, was $0.69, which represents a decrease of $0.05 sequentially and $0.20 when compared to the first quarter -- the third quarter of last year. We recorded $0.19 of charges during the third quarter. This includes $0.12 of merger and integration charges, largely related to the ChampionX acquisition that we closed during the quarter, as well as approximately $0.04 related to workforce reductions and $0.03 related to the impairment of an equity method investment. Overall, our third quarter revenue of $8.9 billion increased $382 million or 4% sequentially. I recognize that there are a lot of moving pieces this quarter.

So let me bridge our Q3 revenue to Q2 at a high level. $579 million of the sequential revenue increase comes from the 2 months of activity we recorded this quarter. from the acquired ChampionX businesses. This increase was partially offset by the loss of approximately $100 million of APS revenue due to production interruptions arising from a pipeline disruption in Ecuador and the absence of approximately another $100 million of revenue following the divestiture of our interest in the Palliser APS project in Canada at the end of the second quarter. In other words, after considering the revenue contribution from ChampionX and the impact of the lower APS revenue due to the 2 factors I just mentioned, revenue was essentially flat on a sequential basis.

Our pretax segment operating margin declined 42 basis points sequentially to 18.2%. The impact of the 2 months of ChampionX was accretive to these margins, as ChampionX contributed $579 million of revenue and $108 million of pretax income in the quarter. Company-wide adjusted EBITDA margin for the third quarter was 23.1%, representing a sequential decrease of 92 basis points. The effect of the pipeline disruption in Ecuador negatively impacted our EBITDA margin by approximately 60 basis points. In addition, the divestiture of our interest in the Palliser project resulted in a further 30 basis points reduction. I will now go through the quarterly results for each divisions.

And let me begin by sharing more detail about our new digital reporting structure. As Olivier described earlier, digital is a fast-growing business, and SLB is at the forefront of this industry transformation. We expect our digital business to grow faster than our core business for the foreseeable future with margins visibly accretive to the rest of the company. As such, our intent is to increase transparency around our digital business and better highlight its strategic value. To device, we are now reporting digital as a stand-alone division. At the same time, our APS business is now being reported in the all other category, together with our data center solutions and SLB capturing businesses. To provide you with better insight into these reporting changes as well as the impact of ChampionX, we have included supplemental pro forma financial information going back to the first quarter of 2024 as an exhibit to the Form 8-K we filed this morning for our earnings press release.

Getting back to digital. Revenue is captured and will be reported across 4 categories where SLB offers solutions for our customers, platforms and applications, digital operations, digital exploration and professional services. Let me briefly describe each of these categories. Additional details can be found in question 11 to be FAQs at the back of our earnings release. The first category is platforms and applications. Platforms and Applications include SLBs cloud technologies, such as the Delfi and Lumi platforms, along with a suite of specialized domain-focused applications such as petrol and tech offered as SaaS subscription or perpetual licenses. These platforms and applications automate complex models unlock data and utilize AI and machine learning to reduce cycle time and improve efficiency of workflows. This allows our clients to make better, faster decisions to improve their project economics and reservoir performance. With the exception of one-off license sales, revenue in this category is recurring in nature, underpinned by a globally installed software base built over 4 decades and complemented by growing adoption of cloud-based capabilities and IoT-enabled solutions. As a result, platforms and application has high retention rates and very limited churn. As illustrated by the fact that the net revenue retention rate was 103% at the end of the third quarter. This represents the percentage of recurring revenue retained from our existing customer base over the last trailing 12 months, relative to the prior trailing 12 months.

The second category is digital operations, which combines the unique strength of SLB's core oilfield services and products with advanced digital technologies to deliver more reliable and more efficient field operations. By integrating connected solutions with performance live, digital service delivery centers, Customers gain real-time monitoring, remote decision-making and automated execution across their workflows from autonomous drilling to automated well intervention. Revenue in this category is generated from the same client base as our core divisions and is, therefore, repeatable. Additionally, a portion of the revenue is recurring in nature. To incentivize the 3 core divisions, well construction, reservoir performance and production systems and digital to develop and promote this offering, the resulting revenue is recognized in both the respective core division as well as in the digital division. This revenue is then eliminated in consolidation. The third category is digital exploration. Digital exploration represents our exploration data business, our differentiated library of seismic surveys and other subsurface data covers key exploration and producing basins worldwide. These licensed data sets are refreshed and reprocessed to benefit from the latest imaging algorithms and AI technologies enabled by high-performance cloud computing. Revenues are generated from onetime nontransferable license sales and are therefore nonrecurring in nature.

Professional services makes up the fourth revenue category. This includes consulting and overall services required to support our clients' digital transformations. These services include transition support from on-prem to cloud-based digital solutions data cleanup and migration and workflow automation, including deployment of solutions built using our global network of innovation factories. Professional services revenue is largely project-based, and repetitive engagements with the same customers are common. These services generate pull-through opportunities across the overall digital revenue streams. In addition to reporting revenue across each of these 4 categories, we will also share annual recurring revenue or ARR on a quarterly basis. ARR represents the annual value of recurring subscription and maintenance revenue from platforms and applications, along with the recurring portion of digital operations, providing a measure of predictable revenue over the next 12 months.

Now that I have described our digital reporting structure in more detail, I will walk through our third quarter digital results. Third quarter digital revenue of $658 million increased 11% sequentially, and adjusted EBITDA was $215 million, reflecting a margin of 32.7%, up 123 basis points sequentially. Third quarter sequential revenue growth was driven by robust sales of digital exploration coupled with increased digital operations. It also reflects 2 months of activity from ChampionX, which contributed digital revenue of $20 million. Annual recurring revenue stood at $926 million at the end of Q3, representing year-on-year growth of 7%, highlighting our ability to continuously expand our offerings in platforms and applications and digital operations as well as secure new customers.

Turning to the core divisions. Reservoir performance revenue of $1.7 million declined 1% sequentially as higher activity in Europe and Africa was more than offset by lower revenue in the Middle East and Asia, primarily in Saudi Arabia. Pretax operating margin of 18.5% was essentially flat sequentially. Well Construction revenue of $3 billion was flat sequentially as higher revenue in Offshore, Guyana and North America were offset by lower drilling activity in Saudi Arabia and Argentina. Margins of 18.8% were essentially flat sequentially. Production Systems as reported revenue of $3.5 billion increased $542 million or 18% sequentially. This reflects 2 months of activity from the acquired ChampionX production chemicals and artificial like businesses, which contributed $575 million of revenue. Pretax operating margin of 16.1% declined 66 basis points sequentially, driven by an unfavorable geographic mix in completions and lower subsea margins. This decline was partially offset by the accretive margin contribution from ChampionX.

On a pro forma basis, Production Systems revenue of $3.8 billion was flat sequentially with lower completion sales, offset by increased sales of valves and production chemicals. While it is still early days, we are quite pleased with the performance of ChampionX, which recorded another quarter of year-on-year revenue and margin growth, demonstrating the resilient nature of this production and OpEx-based business. Going forward, these results will be further enhanced by $400 million of annual pretax synergies that we expect to generate within the first 3 years after us. We will remain confident that we will be able to realize 70% to 80% of the synergies within the first 24 months of the transaction. As a result, we expect the transaction will be accretive to both margins and earnings per share on a full year basis in 2026.

Now turning to our liquidity. During the quarter, we generated $1.7 billion of cash flow from operations and $1.1 billion of free cash flow. These amounts include the payments of $153 million of acquisition-related items during the quarter. Capital investments inclusive of CapEx and investments in APS projects and exploration data were $581 million in the quarter. For the full year, we still expect capital investments, including the impact of ChampionX to be approximately $2.4 million. We expect that following our historical patterns, free cash flow will increase in the fourth quarter on the back of lower inventory as a result of year-end product sales as well as higher customer collections. The extent of the sequential step-up in free cash flow will largely depend on cash collections in certain countries. And finally, we repurchased $114 million of our stock during the quarter, which brings our total stock repurchases to $2.4 million on a year-to-date basis. When combined with our $1.6 billion dividend commitment for the year, this will result in us returning a total of $4 billion to our shareholders for the full year.

I will now turn the call back to Olivier.

Thank you, Stephane. Megan, I think we are ready to open the floor for the questions. .

[Operator Instructions] Your first question comes from the line of Dave Anderson with Barclays.

On the IEA put out a report highlighting the increased global decline rates and the need to spend capital just to offset these barrels each year. You know ChampionX in the fold and you've created really what is to be the largest production-focused business in services. When you think about chemicals, lift, subsea, something like 40%, 45% of your revenue. Can you talk about how you see this part of your business growing? I'm a little confusing when I think about your core business because this seems a little bit different, but how are you thinking about this part of your business growing particularly with deepwater development running up? And I'm just wondering, are you thinking the production should outpace upstream-driven part of your portfolio through the end of the decade? Is that the right way to think about it in terms of the opportunity set?

I think the right way to think about it, first is what a customer is looking for. And I think as you pointed out, I think it's clear that the natural decline that are waiting on the on the industry that have to be offset not only by infill drilling and new development but increased recognition by the -- in the customer that production and recovery is a new theme that needs reinvestment, that needs technology that is innovation that is integration, analysis capability to lift and increase production, enhanced recovery through technology, through disruptive solution, I think the industry needs. So we are positioning ourselves with this acquisition of ChampionX to not only address both the OpEx and the CapEx market as a larger market and hence, as a larger share of the wallet of our customers. but also as a more resilient space as the OpEx is indeed growing as -- has been growing at a higher pace than CapEx lately, and we continue to do so.

But what is more important, I believe, is that we are able to unlock a new solution because we have the broadest portfolio with this addition. We have the broadest lift portfolio where we have the largest intervention portfolio in the market. And we have now since in chemistry and capability industry that not only touch the production from the well up to the process, but also the reservoir. And I think when combining this establish integration capability of digital. I think we have something that I think the industry was looking for. And I think the customer feedback we are getting is actually extremely good because they're all focused increasing on production recovery as a way to add to their production target. And it's an and, it's not an or. The end of upstream exploration development will be complemented by production recurring. It's a market that will expand long term in this market, we believe we have a leadership position that we have established.

And so shifting over to digital. I'm thrilled to see a breakout here. I have a million questions here. I'm going to try to keep it to a handful of things to focus on. Stephane, you talked that we have the 4 different segments here. I was wondering if you could kind of just talk a little bit about how you should be thinking about those 4 segments, how they should be trending and kind of what the drivers are for those 4 sites, I guess, the exploration part, but kind of the rest of it. And then secondarily, you highlighted $900 million in recurring revenue year-to-date, up 7% from last year. I'm just curious, are you picking us to accelerate? Do you think it was going to grow more or less this year? And how should we think about that going forward?

So the -- thanks for all the questions. Indeed, it's a lot of additional info. So the ARR above $900 million already. Yes, it's growing, and we clearly anticipate this to continue growing as we not only offer more to our existing customers, but also secure new customers. So probably going into Q4, we can be looking probably at a high single-digit growth for ARR. And -- and with the kind of number you see now, we are not too far, I believe, from getting into next year, getting to $1 billion of ARR, which really provides a very good baseline of revenue. For the rest of your questions, I will pass it to Olivier.

Yes. No, thank you, Stephane. No, Dave, clearly, I think, yes, there's a different dynamic for the 4 buckets. But I think if you have to look at the platform application, these were the customer adoption and expansion of our offering will give us the opportunity to continue on our journey to accompany our customers from the -- across the subsurface, across pollution drilling and across their data and AI capability. So the expansion of AI into that space, and you have seen several announcements during the -- in the earnings press release this morning, showing that this is the early innings will be a driving force for further growth. The deployment of clouds, both hybrid and public cloud continuation of our platform transition that we have sent. And the continuing adoption of the capability we keep adding to our offering, the application you have seen. So this is all about customer adoption. They had a technology transition from desktop to cloud AI.

Secondly, the digital operation is all driven by adoption of -- for every well we touch for every equipment we deliver, we'll continue to add digital services automation, autonomous capability to complement this offering. So this will be added to the core. It's jointly to the core, but it's an exciting adjacent space to the core that we grow and fast-paced growth ahead of the core. You have seen this quarter, you have seen the year-on-year, we're talking about 50% year-on-year growth. This is remarkable. The digital exploration is linked to exploration market, but it's increasingly becoming digital because the customer recognized they need to use more digital insight before they drill the first well. Hence, it would believe and it will be up and down, highly variable from quarter-to-quarter, but yet trending in our opinion, positively.

And turning to service, professional services, I think, are here to support the 3 buckets and I hear the capability we put inside the customer office ahead of the large engagement or consulting engagements or doing transition of that data space into our offering. This is what drives this. So it's a different driver. But altogether, we believe over time, this will all be positive, leading to each other to create a sustainable growth going forward, as you say, outpacing the CapEx spend.

Your next question is the line of James West with Mellus Research.

So curious on 2 key markets here for you guys, where you have a nice dominant position. I'd love to get your thoughts on. First is deepwater. As we look out into '26. Obviously, it's been very resilient although some white space, but it looks like we're going to hit a lot of campaigns next year. I just love to hear your thoughts on how we should think about that unfolding in Schlumberger's position or SLB's units position.

No. First and foremost, I think deepwater remains easy to say and easier to grow as a market. It has several economics, and it is seen as a place to invest to unlock new resource. You see development, FID, but it's also exploration. Deepwater is going on and is steady and is growing. So now if we look at the activity and the schedule of the rigs that we foresee going forward, actually, we are foreseeing that the white space that developed in the last 18 months are starting to dissipate. And we are at -- we believe from a reactivity -- drilling activity we may say that we are at bottom this quarter in Q4 of 2025. we expect, although the gradual, we expect the strengthening of the rig activity to support this -- both exploration and development FID come in the pipeline with a gradual strengthening and uptick in the later part of the year that is currently scheduled and strengthening further in 2027. And we see it from the call from our customers to prepare the subsea pipeline that correspond. We are happy with our subsea position. We'll be closing the year with growing both our booking and backlog to be ahead of last year, both and to place us to a position where subsea should go not in '26, but materially in 2027 as a consequence of this pipeline. So we are confident that it's on the horizon. And I think we'll start to see the strengthening happening step by step.

Got it. Okay. And then the other market, the Kingdom of Saudi Arabia has gone through some gyrations here in recent quarters. But it seems to me like at least we may have found somewhat of a bottom and maybe looking to add activity next year. Is that consistent with what you're seeing in that market? I know it's a sizable market for yourself.

Now I will comment on the activity. I think it is our assessment indeed that we have reached a stabilized activity if not bottom in the current level of activity we see. And we are anticipating a likely rebound in near to midterm. And directionally, we are anticipating that we should expect increased activity in the first half of 2026. for both gas and oil for different drivers, we have to continue to support the expanded capacity commitment to 2030 and then commercial of [indiscernible] and other assets in the country. And for oil in relation with supporting the extra supply that is delivered to the market an assurance of supply to intervention and possibly to some additional oil drilling as well.

Your next question comes from the line of Scott Gruber with Citi Research.

I want to ask about the data solutions business. So the data center solutions business, it's growing pretty quickly here. It's actually becoming sizable. Can you talk about the strategy for the business? Is it in here to develop a skill set and take a global as data center construction goes global. And overall, how do we think about the growth of the data center solutions business in '26 and beyond?

Yes, I think it's early days, and we're very pleased with the market position we gain in very fast pace. I think based on our first, our relationship and partnership that [indiscernible] has gave us the opportunity to step in into that market, building on our manufacturing engineering process technology and global supply and logistics that I think we have pulled to make it a reality. Now going forward, yes, the ambition is to expand beyond the U.S. train, we have established, and we already have a pipeline of of expansion here in Asia has been agreed and to also expand to more customers and diversify our hyperscalers and colocators as we call them to complement our offering. But as we will add technology. We'll add the critical technology that make it unique to go beyond the first day we have. So yes, we have an ambition to grow it to expand customers to expand geography to broaden our [indiscernible]. And remember, this is clearly not driven by oil and gas customers. It's driven by hyperscalers partners that reach out to us to help them respond to this AI bot and data center growth that I think will last beyond these decades, clearly.

Got it. No, very interesting. It's a bit of a different business. Is it fair to assume that there's little CapEx and balance sheet commitment with the business? Or is there an investment needed to grow this business?

Absolutely. Investment is competencies that I think we have at scale in the organization. it's technology, creating a repeatable, scalable modular solutions that differentiate us for fast employment. And -- but it's not CapEx, no. I think we are not -- this is a very low CapEx intensity business that we have set up here.

Your next question comes from the line of Josh Silverstein with UBS.

Thanks for the new digital details here. You have the 7% growth in the annual recurring revenue. This growth predominantly coming from new customers or growing the new customer base -- sorry, the existing customer base. Obviously, the 100% net retention rate shows how sticky the revenue is, but I'm curious about if you need to keep adding customers to drive that growth going forward.

I think we already have 1,500 customers, and I think we have a lot to grow with each customer we have. But yes, we are adding -- we're adding new customers in every new space where we develop technology. I think the digital operation, I think, is a discovery for many customers, and we are doing it every day. the platform application. I think the new offering, Lumi and -- Lumi data and AI platform, I think, is being delivered fresh launch last Q4 to new customers and as adoption has been already more than 50 customers in last than a year, I think it's remarkable. So I think we are very proud of this. So it's a combination of enhancing the adoption within customers developing enterprise solution and enhancing the consumption and they bring more to an existing customer set and also expanding and broadening our customer access for part of our offering that we are more confined to a few customers in the past. So I think we are broadening our offering with more access across all our customers, and we are strengthening for raising large customer, and you have seen announcements in the last and you will see more announcement coming soon on customer adoption, large customer adoption that reflect our success with those customers.

Great. And then just as a follow-up, I wanted to go back on the EBITDA margin comments that you guys have made. You highlighted it was around 32% for the first 9 months, but the -- I think you said you expected to reach 35% for the full year, which implies a very large job towards 45% in the fourth quarter. So I wanted to just picture that was right. And then where you think margins can kind of go to if we look at 2026 versus '25?

Yes, yes. We -- I confirm we did say that we think we can reach 35% EBITDA margin for the full year. And yes, it's a step up for the fourth quarter. If you look at actually at the pro forma statements we provided for the -- which includes the digital division by quarter back to 2024, it's this variability and seasonality is quite common. Actually, we always start very low in the first quarter and margins as well as revenue by the way grow quarter after quarter. So Q4 is always the best revenue quarter and is always the best EBITDA quarter as well. So we are pretty confident we can get there. And if you look into the future, 45% EBITDA margin is a good baseline to start from basically. By the way, if I can add something we've not discussed before on the EBITDA margin except for the -- sorry, digital exploration part of it is a very good proxy for free cash flow. There's obviously no CapEx in the digital business, again, excluding exploration data.

Your next question comes from the line of Arun Jayaram with JPMorgan.

Yes. That was my question on kind of digital margins and kind of the capital intensity of that segment. So I was just wondering about as you think about longer-term growth from that segment. I mean you mentioned that you think that it could outstrip the core business by double digits. I was wondering if you could maybe elaborate on that commentary on growth from digital.

I think there are 2 comments on to it. One, as I said, is the adoption of our customers, existing and new customers, we developed in the last question. I think the market expansion itself, the digital is being seen as a critical -- mission critical for many customers to transform the way they operate to add productivity to add efficiency to their geoscientist engineer and asset team. And I think this trend is here to stay, and we are leveraging our market leadership to leverage and to continue to grow market position into that superior trend. But secondly, and I think more importantly or equally importantly, our ability to continue to add digital operation capability, digital growth and hence, this one will outperform the core because the principle we are sitting here is essentially for every service we provide for every well site to touch for every equipment we deliver will progressively add building on our platform and connecting to our live performance center will add a set of digital services that enhance this offering that enhance the operation, the performance and get differentiation, get the customer to create more value. So this will ultimately and mechanically be growing at a higher rate than the core because it will be a market penetration of digital into our core business. So you add this to the underlying trend of digital transformation with the earnings that we have witnessing in AI. I think you get the combination give us the confidence that we will clearly outperform the market growth of CapEx and outperform the core as a combination.

Great. One follow-up, Olivier, I wanted to see if you could elaborate on your commentary on what would happen in the recovery. Your commentary suggest you expect that international would lead in a recovery historically, it's been North America. So I was wondering if you could maybe just elaborate on that thought behind that commentary.

Yes. I think we believe that the tightened economics that we are under, and we believe we don't see them necessarily changing very much with them improving slightly as soon as the demand supply rebalance. And under those conditions, I think we believe that the situation in North America is such that we don't anticipate significant gain of activity based on the efficiency [indiscernible] based on the I would say, the challenged economics of some basin and also of the continued consolidation happening in this market by contrast and international, you have several trends that are here to stay. I think deepwater as a base solid pipeline that drives the international growth, you have gas and as a security of supply that has led to capacity deployment exploration capacity expansion and on commercial development internationally. And you still have the commitment to oil capacity expansion. If not, the necessity to offset the decline in many international locations and aging pacing that combined to make international, I would say, getting a better outlook and the first leg for the rebound as activity strengthened.

Your next question comes from the line of Neil Mehta with Goldman Sachs.

So Sir, I just wanted your perspective on the oil macro and is more of a near-term question. Certainly, the market has flipped into oversupply. And I think with a lot of market participants are trying to figure out, which you have a unique perspective on is what is the rebalancing mechanism to get the market back into balance? And there are a couple of different levers. Certainly, the U.S. could be part of it and part of it could just be time and demand can grow into it. But how do you guys see the market rebalancing from this current period of oversupply?

Yes. I think first, you have to assume that I think the release of supply that happen -- that have happened, I think will align and moderate and/or be managed to not create a further, I think, I would say, further stretch, okay, to the demand supply to the oversupply market. You have to assume this first. And I think that's an assumption we're making. Secondly, we are making the assumption that indeed, the demand will -- over time, and we are talking about -- we're not talking years, we're talking a months, okay, will catch up. And hence, we believe that with the buffer of supply being behind us or the decline of this excess of supply being beans. We believe that sometime next year, I think that's one update is that the bond supply will be sufficiently rebalanced to allow the market to have the investment incentive to indeed consolidate from this steady -- steady solution or steady situation in which we are today to start to rebound. So there are some plus and minus, obviously, increase. There is some China adding some silos of liquid inventory. There are some OPEC country that currently are not fulfilling their quota despite the rise, and I think there is some U.S. shale production anticipation that could also be starting to create a deficit of supply on the horizon. So you combine this and you get a situation where the demand supply will balance itself in the future. And under those conditions, we believe that the drivers of activity will prompt reinvestments and rebound of activity first in the international market.

Yes. You have a unique perspective to what's going on in the oil market. The follow-up is just on M&A, Champion X, I think in retrospect, really helped to balance out the portfolio on the production side. Just your extent we are in a period of softness, do you see an opportunity for SLB to continue to be a consolidator or given the softness in the equity, do you feel like a more organic approach is the right strategy?

I think the first, we are focusing on executing the strategy ChampionX the benefit of this addition to our portfolio to consolidate and execute approach on recovery strategy. And you have seen we have done 2 more add-on bolt-on strategic acquisition, RESMAN for the tracer technology and used chemistry actually, okay, to enhance and to help enhanced recovery development and Stimline Digital, which is technology, digital technology addition to our portfolio and application, cloud application that helps to plan and execute well intervention for our customers. So all this pertains to the production recovery portfolio and this is one focus that we have. And we believe that aside from bolt-on acquisition, we don't see any further need for consolidating this but executing through integration through our unique capability set and expanding internationally, getting the full benefit of this -- that's our current focus.

Your last question look to the line of Steve Richardson with Evercore ISI.

I was wondering if you could talk a little bit about the addressable market in digital. I think you just talked about the longer-term growth. But how should we think about the addressable market? I mean, I think we've seen consultants talk about a mid-$30 billion number for total revenues in 2030? Or should we think about it as a proportion of total upstream spend. How do we think about the total pie here? And I appreciate that it's various objectives in terms of how you define the -- what is digital and what is...

It's very subjective, but I would consider it unconstrained. I will consider that I think the digital solution will create the space for their own. And I believe that the scale of offering the capability and the opportunity we have, I don't see constraints into the market. So I believe that okay, the growth potential we have from both the digital operation today, if you compare the digital operation if you were to do the math, okay? We could say that this represents 1% of revenue of core, why not 50% of revenue for core in the future. So that's the way you could look into it, okay? We have 1,500 customers, only a few portion of them have adopted the platform. We had an early news of AI. I've seen a handful of announcements on Lumi and AI in this quarter. Why not 1,000 customer using Lumi and AI in the future and using Agentic AI to supplement and get companions to help them execute their workflows with digital capabilities. So this is okay? Digital is a new wireline, I could say, okay? So I think I believe that you should consider is unconstrained for now, and it's only limited viability to create the right solution that I think the customers are keen to adopt because it has a net impact on their productivity for the geoscientists has a net impact on the effectiveness and decision-making, and it creates value and they organize the value. So one-on-one, we'll continue to work and power for our customers, continue to develop and use our platform to both address the office workflow, the back-office workflow and the digital operation to expand the offering, and we will use the technology portfolio we have at our disposal, both on-premise public cloud, by cloud, edge and obviously, accelerate GenAI and Agentic AI for the future. So it's unconstrained, and I wouldn't want to put a constraint. I'm just willing to keep supporting our customers into their digital journey, and we believe we are the partner of choice in this card, and we continue to lead the industry for our technology, our solution and capability of it.

That's great, Oliver. I mean I think a quick follow-up, if I may. On the commercial push here, do you find that you are -- is it fair to assume that you're coming in to your customer and providing a new solution that's outsourcing or replacing something that they're doing internal. Are you finding that you're bidding against a competitor? And then as a follow-up there, how much of digital would you think right now is bundled with something that comes out of the core. So does that create the commercial entry to then make the digital sale? Or should we think about them completely separately?

No, I think it's all in. I think we have -- we are the leader in the space and it's recognized with our customers. And I think they work with us, they desire to work with us and panel to understand how they can get a better use of the product -- the new product they have, most of the product -- most of the customers have one of our products, one of our applications, and they are then sitting with us and we are partnering to see how we can expand and help them go along the journey to adopt more of our offering. So it's sometimes it complements because you have taken an approach of an open strategy for our platform. It complements what they have, and we are able to preserve and build on what they have developed internally. Sometimes it sits side by side with competitive offering that is an integral part of their workflows, and we are not here to push everything out to be perceived as a platform integrator in our industry. And yes, it builds on the core because whenever we are delivering new take drilling operation, we can offer autonomous zero steering as an option. I think it obviously have a mutual pull through on the digital to sell this value added [indiscernible] capability and put through of hardware services that get the benefit of a better performance of digital services. So it's all in. And I think that's the reason why we are optimistic that it will continue to grow at a faster pace than the industry global spend and hence, it's a bright future ahead of us. .

Thank you. I will now turn the call over to SLB for closing comments.

Thank you, Megan. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, upstream oil and gas remains investment remains resilient with pockets of growth in many international markets. SLB's unique footprint and portfolio provides us with leading exposure to many of these regions enabled us to deliver steady financial results to all market conditions. Second, the addition of ChampionX is already making a meaningful impact as customers remain focused on increasing production from legacy assets. Our expanded portfolio position us to capture a larger share of their spending and under greater value across the production life cycle, both in OpEx and CapEx spend categories. And finally, our digital business is a true differentiator for SMB. This is the fastest-growing part of our business and I look forward to showing the continued growth of this business through our new digital division. With this strength, SLB is exceptionally well positioned to continue delivering for our customers and our shareholders I look forward to diving a strong fourth quarter to close the year. With this, I conclude today's call. Thank you all for joining.

This concludes today's conference call. You may now disconnect.

Good morning. My name is Megan, and I'll be your conference operator today, and we'd like to welcome everyone to the second quarter SLB earnings call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to James MacDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you Megan. Good morning, and welcome to the SLB Second Quarter 2025 Earnings Conference Call. Today's call is being hosted from Paris, following our Board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our second quarter earnings press release, which is on our website.

With that, I will turn the call over to Olivier.

Thank you, James. Ladies and gentlemen. Thank you for joining us on the call. Before we begin, I would like to officially welcome the ChampionX team to SLB. Earlier this week, we shared the news that our transaction is now complete, and this is the start of an exciting new chapter for our company. I could not be prouder to lead the company at this juncture, building on an unmatched talent pool and portfolio of technologies to serve our customers and create value for our shareholders.

Now as we move in to this call, I would like to start by walking you through our second quarter performance. Then I will share how we see the broader macro environment evolving, come out on our new chapter with ChampionX and what that means for our business in the second half of the year. After that, Stephane will provide more details on our financial performance and then we will open the line for your questions.

Let's begin. This was a solid quarter for SLB and as we delivered steady revenue and slight EBITDA margin expansion despite the considerable headwinds and market volatility over the past few months. These results are a clear reflection of our broad operating footprint, our technology leadership and our strong execution. In international markets, revenue grew by 2%, benefiting from pocket of growth in the Middle East, Asia and North Africa full offsetting sequential headwinds in Saudi Arabia and certain offshore markets. Specific to the Middle East and Asia, long-term fundamentals for oil remains strong, and both conventional and uncommercial gas are providing an additional tailwind for activity across the region.

During the quarter, we experienced strong growth in Iraq, the UAE, Kuwait, East Asia, China and Australia. Meanwhile, in North America, although revenue declined sequentially, we continue to outpace the market, led by increased sales across most of our business lines in production systems and higher digital sales in U.S. land. The revenue decline stems mostly from the seasonal spring breakup in Canada and non-repeat of exploration data sales in U.S. offshore. In the offshore market, certain projects have pushed it right, most notably in Sub-Sahara Africa. However, we continue to maintain a steady backlog in OneSubsea and is a significant number of offshore projects preparing for FID. Altogether, these dynamics reinforce our confidence in the long-term growth for this market.

Next, let me discuss the performance of our divisions. In the core, Production Systems led the way again this quarter, benefiting from increased sales of artificial lift and midstream production systems. Overall, our service quality and availability continue to differentiate our offering in this space, and we have been awarded several new projects during this quarter. Meanwhile, in Well Construction, revenue was flattish sequentially with growth in Iraq, the UAE, North Africa and Nigeria, offset by lower activity in Namibia and North America. In Reservoir Performance, revenue declined slightly due to lower evaluation and stimulation activity, partially offset by solid interventional work.

Turning to digital and integration. Our digital revenue remained steady with double-digit growth across the combination of our platforms, application and digital operations, offset by lower exploration data this quarter. We now have more than 7,800 users across the Delfi platform, representing double-digit growth year-on-year. This is a continued reflection of our customers' focus on unlocking through digital higher level of performance and efficiency in the assets.

Finally, we continued to exhibit growth in CCS where we successfully executed several large-scale projects in the carbon market this quarter. We are now participating in the entire value chain from point of capture with SLB Capturi to [indiscernible] storage with SLB Sequestri. This combined offering is being successfully utilized at the long ship CCS project in Norway and believe this will continue to present new opportunities for our carbon solutions business. All in all, this quarter was challenging with lots of moving parts, yet we produced solid results. Considering the uncertainty and market volatility, the entire SLB team has delivered remarkably well. And having met with clinic customers during the quarter, I'm assured of our differential performance and the trust that our customers continue to place in us.

Next, I will discuss what we are seeing in the macro environment, how we expect this to evolve over the second half of the year. During the first half of the year, the oil and gas industry demonstrated its strength and resilience, proving that it can operate through uncertainty without a significant drop in upstream spending, highlighting the different attributes of this cycle. As we look to the second half of the year, the macro environment continues to be uncertain, particularly with the announcement of the OPEC+ supply releases into well-supplied market. For the moment, incremental buyers are being absorbed by peaked [indiscernible] demand China restocking and the replenishment of global crude inventories that are sitting below 5 years historical average. All in, while sustained release could exert pressure on community price in the near term, the removal of the overhang of OPEC+ monitary cuts will allow for market stabilization over time. While it is difficult to predict the outcome from the combination of further super release, persistent geopolitical risk and lingering type negotiations. It is fair to assume sustained resilience in the market outlook absent of a dramatic shift in commodity price. Regionally, the Middle East and Asia will continue to display the most resilient in the short term, driven by lower potent and sustained focus on energy security. Meanwhile, advantage offshore projects will lend support to a steady market across Europe, Africa and Americas. In contrast, land activity across North America and Latin America have the greatest downside risk due to short cycle spend. Globally, we expect operators to remain focused on critical in-flight development projects and an acceleration of efficiency gains with a heavier focus on production recovery and continued investments in digital and AI.

Next, let me describe this growing market and the opportunity that we see with ChampionX. Today, customers are on a quest to unlock and optimize the full production potential of the assets, while improving efficiency in the reservoir recovery phase of their operations. This is creating a less typical and growing market opportunity that is more OpEx driven and is less sensitive to short-term commodity cycles. The addition of ChampionX enhanced our portfolio by providing the capability we need to lead this effort. ChampionX strength in production chemicals and artificial lift enhanced our portfolio in 2 essential and fast-growing segments that are critical to long-term asset performance. In production chemicals, ChampionX adds scale vertical integration and a strong global manufacturing footprint to deliver solutions to address the rising demand from aging infrastructure and complex west. Now combined our service portfolio has the breadth to optimize production across the full life cycle of the well. Additionally, ChampionX brings a unique digital production technology portfolio that will expand into new markets and new applications. Integrating these capabilities in SLB existing portfolio will allow for greater innovation and customer value creation. As we take a further step towards delivering a fully integrated service offering anywhere in the world from reservoir to suppress facility from completion to decommissioning. Geographically, this acquisition also expands our broad global reach. ChampionX deep presence in North America plays well with SLB's international leadership, enabling us to bring their technologies to new markets while also deepening our capabilities in the U.S. Taken together, this is a highly [indiscernible]. One that strengthens our portfolio accelerates our growth in Brazilian markets, and reinforce our ability to deliver value at every stage of the production life cycle. And just as important, we are combining 2 organizations that share a strong culture of innovation, operational excellence and customer focus. Overall, this would enable us to integrate the full production landscape for the best people, the deepest domain expertise and most innovative technology solutions, gathered by a shared passion for innovation and a commitment to delivering for customers in every basin around the world. I'm truly excited to welcome the ChampionX team to SLB and look forward to what we will achieve together.

Now before I hand over to Stephane, let me quickly share our guidance for the second half of the year. Starting August 2025, we will begin consolidating ChampionX into our results. Therefore, we expect second half revenue to be between EUR 18.2 billion and EUR 18.8 billion for the second half. This second half increase would be a result of the 5-month contribution of ChampionX combined with steady revenue in our legacy SLB business compared to the first half, driven by growth in production systems and digital, fully offsetting the anticipated activity decline in the U.S. and certain deepwater markets. Moreover, revenue will be backloaded in the fourth quarter, affecting a full call of ChampionX as well as a seasonal uplift from year-end digital and product sells. We also expect second half EBITDA margins to be flat compared to the second quarter, inclusive of the ChampionX contribution and inclusive of about 20 to 40 basis points for tariff impact.

I will now turn the call over to Stephane to discuss our financial results and the plan for ChampionX financial integration in more details.

Thank you, Olivier, and good morning, ladies and gentlemen. Second quarter earnings per share, excluding charges and credits, was $0.74. This represents an increase of $0.02 sequentially and a decrease of $0.11 when compared to the second quarter of last year. While the net amount of charges and credits recorded during the quarter had no impact on our EPS. We did incur $0.09 of charges relating to head count reductions and the impairment of an equity method investment as well as $0.02 of merger and integration charges related to the ChampionX and OneSubsea transactions. These charges were offset by an $0.11 gain relating to the sale of our interest in the Palliser EPS project in Canada. Overall, our second quarter revenue of $8.5 billion increased 1% sequentially, driven by 2% growth in the international markets. Our prepack segment operating margins increased 20 basis points sequentially to 18.5% as margins increased in 3 of our 4 divisions. Company-wide adjusted EBITDA margin for the second quarter was 24%, representing a sequential increase of 21 basis points. .

Let me now provide you with more details for each division. Second quarter Digital & Integration revenue of $1 billion decreased 1% sequentially. Digital revenue was flat as double-digit sequential growth from the combined effects of platforms, applications and digital operations was offset by lower exploration data sales following a strong first quarter. Lower APS revenue in Canada drove the overall 1% revenue decrease for the division. Digital & Integration margins expanded 240 basis points to 32.8%, driven by greater digital adoption and efficiency gains. We expect digital revenue growth and margin expansion to continue in the second half of the year with a significant uptick in the fourth quarter, benefiting from year-end sales. In order to provide you with increased visibility into this business, as it continues to go. 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.

Turning to our Reservoir Performance division. Revenue of EUR 1.7 million declined 1% sequentially due to a slowdown in evaluation and stimulation activity across international markets, partially offset by strong intervention activity. Margins improved 203 basis points to 18.6% as a result of the higher intervention activity and the absence of start-up costs that impacted the first quarter. While construction revenue of $3 billion was essentially flat sequentially, while margins of 18.6%, decreased 119 basis points, primarily due to an unfavorable technology and geography mix internationally.

Finally, Production Systems revenue of $3 billion increased 3% sequentially, driven by strong sales in artificial lift, midstream production systems and valves as well as increased data center infrastructure solutions revenue. Margins increased 28 basis points to 16.4%, primarily due to continued growth and a favorable activity mix.

Now turning to our liquidity. We generated $1.1 billion of cash flow from operations and free cash flow of EUR 622 million during the quarter. This represents a [ EUR 519 million ] increase in free cash flow compared to last quarter, which is largely due to seasonal improvements in working capital. Consistent with our historical trends, we expect our free cash flow in the second half of this year to be materially higher than in the first half and improved earnings, higher customer collections and lower inventories. Capital investments, inclusive of CapEx and investments in APS projects and exploration data were EUR 520 million in the second quarter. For the full year, we now expect capital investments to be approximately EUR 2.4 billion, reflecting the impact of the ChampionX acquisition.

Regarding our M&A activity, as I mentioned earlier, we completed the sale of our Palliser asset in Canada, near the end of the second quarter. As a result, we received EUR 316 million of net cash proceeds in the second quarter and an additional EUR 22 million in the third quarter. For reference, we generated EUR 215 million of revenue in the first half of the year from the Palliser asset with EBITDA margin in the low 50s and pretax margin in the low 30s.

Let me now turn to the ChampionX acquisition and what it means for SLBs future financial performance. First, from a financial reporting perspective, we will begin consolidating ChampionX effective August 1, 2025. This means we will consolidate 2 months of ChampionX results in the third quarter of 2025. The ChampionX activities will be reported under our Production Systems division, which is where SLBs legacy production chemicals and artificial led businesses currently sits. The only exception to this relates to ChampionX's digital activities, which will be reported under our new digital division. It is worth mentioning that we will be aligning ChampionX with SLBs definition of digital. As a result, the digital revenue that we will report coming from the ChampionX business, will be lower than what was previously disclosed by ChampionX. We will provide you with pro forma historical financial information to assist with modeling the combined businesses together with the additional granularity into our digital business in our third quarter earnings release.

As it relates to synergies, we spent the past 12 months refining our preliminary estimates and developing actionable plans. We are now even more comfortable with our initial assessment that we will be able to generate EUR 400 million of annual pretax synergies within the first 3 years after closing. The largest portion will come from cost synergies, which represent approximately 75% of the EUR 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 SLBs existing cost base, including the chemical spend in our legacy businesses. The over half of the cost synergies will come from operating costs and G&A savings. With regard to the expected annual revenue synergies of approximately EUR 100 million when translated into incremental pretax income. We have only included opportunities with the highest probability of realization. These have been identified at the country and customer level.

Let me now conclude with the direct impact of the acquisition on our financial metrics. As it relates to margins, we have demonstrated this quarter the resiliency of SLBs margins despite a challenging macro environment. This resilience will be reinforced by the addition of ChampionX, which has delivered continuous margin expansion over the last few quarters. For that matter, when excluding the drilling technology business that was disposed of concurrently with the closing of the SLB transaction, ChampionX finished the second quarter of 2025 with revenue of approximately EUR 850 million and adjusted EBITDA of approximately EUR 190 million, delivering visible margin expansion both sequentially and year-over-year. We expect both the legacy SLB businesses and ChampionX to continue delivering strong margin performance in the second half of this year. This will, however, be partially offset by the impact of tariffs. Assuming no changes to the tariffs that are currently in place, we estimate that this will cost us between 20 and 40 basis points of margin in the second half. Altogether, this will result in our company-wide adjusted EBITDA margin in the second half of the year being essentially flat when compared to the second quarter of the year. Said another way, our adjusted EBITDA margins, including the contribution of ChampionX, would have expanded by about 20 to 40 basis points in the second half, if not for the impact of the tariffs. Looking forward, our margins will be further enhanced by the EUR 400 million in synergies that I previously discussed.

With the detailed plans our integration teams have developed, we believe that we will be able to realize at least half of the synergies within the first 18 months of the transaction. As a result, we expect the transaction will be accretive to both margins and earnings per share on a full year basis in 2026. This reflects certain assumptions regarding the purchase accounting which will be finalized in the coming months. Based on these assumptions, we have estimated the incremental annual recurring pretax intangible asset amortization expense to be approximately EUR 80 million over and above ChampionX historical annual intangible asset amortization expense of approximately EUR 50 million. This incremental amortization expense equates to approximately $0.04 of EPS on an after-tax basis. The calculation also reflects the fact that we issued 141 million shares of SLB stock in connection with this transaction. It is worth mentioning that since the announcement of the ChampionX transaction in April 2024, we have been accelerating the repurchasing of our shares. To that end, since the announcement we have reduced our total shares outstanding by EUR 78 million. This represents 55% of the shares we just issued in this transaction. Finally, I wanted to briefly come back to the second half guidance that Olivier shared earlier, where we expect second half revenue to be between $18.2 billion to $18.8 billion. If we are to compare this H2 outlook to H1, by including ChampionX and excluding Palliser in H1 and considering ChampionX on a full 6-month basis in H2, this would result in second half revenue growth from flat to low single digits when compared to the first half driven by both our legacy portfolio and ChampionX.

I will now turn the call back to Olivier.

Thank you, Stephane. I believe we are ready for your questions. .

[Operator Instructions] Your first question comes from the line of David Anderson with Barclays.

Thank you for the detail, Stephane, I was rapidly doing the math here. Thanks for taking care of that. So kind of essentially 2 assets, second half is flat with first half. I was just wondering, Olivier, if you could provide a little bit more detail kind of behind this. You had mentioned customers selectively adjusting activity. I was curious if this is primarily just related to the shorter cycle programs in the U.S. land and Saudi slowing down. But more broadly, I'm curious if you've seen a noticeable change in customer behavior since OPEC started bringing barrels back. It feels like we're in a bit of a wait-and-see mode with respect to oil prices and customer spending. Just something you could provide some insight into how you see this energy macro developing over the next few quarters?

Thank you, Dave. So first to be coming back to the guidance. I think the guidance reflects from the low to the high guidance, flat to LSD with potential to go even beyond this. So we have definitely growth -- project growth in the second half compared to the first half when accounting for the moving parts in and out of our portfolio, clearly, okay? And driven -- as we said, driven by the production system, ChampionX combination getting an uplift in the second half of the year, partially in the third -- fourth quarter and also for digital year-end sales. This combination more than offsetting, if you like, some of the headwinds that are in selective markets still affecting the drink activity and, to a lesser extent, the reservoir performance portfolio. So all of this to -- coming back to your question about selective customer adjustment, I believe that the major adjustments in international markets are largely being [indiscernible], and people have been prepared and adjusting their spending rates and the activity outlook to account for uncertainty and some of the declining commodity price that they have seen in H1. However, as we have seen more recently, the short cycle market have been more reactive to the persistent slightly lower commodity price anticipated. Yes, all in, we are seeing this as a resilient market. going forward, assuming that the price will stay range bound to what we have seen between 60 and 65 or 60 and high 60s. And I think we believe that there are a few things at play that could change this. But most of the cuts and most of the adjustment in selective market and selective country have been done with exception, as I said, of the low -- of the short cycle, partly in North America and in some markets internationally that are short cycle. So hence, we are -- that's the reason why we guided the way we guided the second half.

And then in your release and also in your commentary, you noted a few things going on in deepwater. You had called out in Namibia for some slowing, but I was just wondering, just broadly speaking, in deepwater, are you concerned about just kind of near-term activity just slowing here? Is Namibia sort of a one-off or are you worried that you're starting to see some of these projects pushing to the right. Because if you look at kind of rigs, rig schedules, subsea deliveries, pipe orders, it looks like deepwater is sort of poised for a pretty good uptick in kind of by mid-2016. So I'm just wondering if that's -- if you agree with that or if things are sort of sliding to the right a little bit.

Yes. First, not on what we have seen for the last 12 to 18 months, we have seen white space developing and indeed the least clinical projects to ship to the right, but we still have seen the rich pipeline of advantage projects that are key for the portfolio of international operators part the IOCs to be going forward with anticipated FID. And you see it in Surinam, then the Namibia effect is an effect of a long period of appraisal exploration success that is now going into a deep, I would say, learning and decision for the way forward. I will not -- I will not try to overreact on to the Namibia temporary effect, but I'm more excited about what I see in Americas at large for oil, be it on some of the Africa assets that are going in Phase 3 or that are reaching FID. Obviously, in Central America, the Surinam assets, the Brazil very sustained activity and Vienna axis activity as we go from Mexico. Combined, I think it is a market that has only upside going forward. And by contrast, in the Eastern Hemisphere, driven by gas market from Indonesia big discovery to Mozambique soon to be relaunched and still it is made as a very prolific and exciting basin. I think I see the conditions that are set for indeed a rebound directionally in the years to come. And certainly, I think the hypothesis of 2026, I think, is a valid hypothesis that I think we'll have to look forward to see unfolding.

Your next question comes from the line of Scott Gruber with Citigroup.

I'm curious about how you view the growth outlook for your now larger production business, how would you dimension both the underlying growth for the production market and then how you can enhance that growth with revenue synergies, especially as you apply your digital applications when you put those 2 factors together, what's medium-term reasonable growth outlook for the production business?

I think I will not try to comment on because the definition of the production market is something that I think we'll have to come back and give you a little bit more detail on our combined portfolio. But I would say there are 3 trends that we drive synergy that will drive this market to grow in our mind. First and foremost, I think the customers -- our customers have told us, our customers and operators are focused on trying to extract more value from production recovery phase of the asset to compass with land completion of development phase of the assets are trying to get the most of this aging assets to make sure that they extend the plateau they improved the performance and they improve the recovery to extract more from leasing assets. So the unique combination that we have access to the addition of the ChampionX give us an unmatched portfolio. And I think I'm not talking about only production system. I believe our production chemistry, I'm talking about intervention. I'm thinking about the surface equipment and talking about the ability that we have to integrate innovate and add digital. So what will drive growth in this is our ability to partner with our customers to provide integrated offering beyond the specifics of this artificial lift pollution chemistry and add digital capability to it and of end-to-end solution that includes well services, one intervention and includes equipment at the surface that can help enhance the production capabilities. So we see this as a market that will have more resilience, less cyclicality because it's inclusive of OpEx expense and the long-term resilience and long-term growth that will certainly outpace the global CapEx market for the decade. That's what we see, and we see this as a white space as an innovation space. And as a space where customers are very pleased to see and the feedback we have got the engagement we had. They look forward to see what we can put together by innovation, by integration and with digital in this market. So we are quite excited.

That's great color. And then your portfolio changes, they're pushing the company to become less capital intensive, more free cash generative. How do you think about kind of where you can take CapEx to sales free cash conversion in '26 and beyond, especially as you realize the synergies. For instance, can you push that free cash conversion rate toward something like a 60% level on a sustained basis? How do we -- how do we think about this capital intensity and free cash metrics over time now?

Scott, first, maybe on 2025 as a reference, we kind of anticipated the soft activity and and brought down the total capital investment 10% lower compared to last year. So we are basically at maintenance CapEx level this year and at the very low end of our 5% to 7% CapEx as a percentage of the revenue range. So going forward, if we see growth, we will certainly have the growth CapEx to that. We have that agility and ChampionX clearly brings down that percentage a bit more, but we are already very low. We may or may not change the range, but ChampionX is clearly helping with with the low capital intensity. Regarding EBITDA to free cash flow conversion, we don't really track it that way. We prefer looking at free cash flow margin. You know that we are looking on a full cycle basis to be above 10% of revenue in terms of free cash flow margin, and we are exceeding this now as we speak and intend to do the same going into the following years, partially because of the positive contribution from ChampionX.

Your next question comes from the line of Arun Jayaram with JPMorgan.

First question, global upstream spending is on track to decline in 2025 versus 2024. I was wondering if you could share with us your views on how you see this playing out for SLB across different regions internationally. I was wondering if you can comment on Mexico and Saudi in North America, and perhaps the timing of a potential inflection point in spending trends.

Okay. Quite a lot packed into the question here. First, indeed, I think it is clear now that the market is in -- the total market is in slight decline in 2025 compared to '24. We see both more in North America than we see it internationally. There is more resilience in Middle East and Asia market due to the -- both the commitment to a capacity expansion, the development of unconventional and commercial gas across the region and the focus on energy security in Asia. So that provides a bit of a buffer and I think that's very visible. As we have counted before internationally, the other international market, I think, is impacted by 2 aspects this year, the white space in deepwater market the Mexico that has been reducing significant activity based on restructuring and reaching a new bottom in terms of activity and some of the I would say, short cycle activity in the rest of partly in Latin America. North America, I think there is no secret that the short cycle has been declining in the last the last couple of months, more deeply than everyone will anticipate. So it will represent certainly the has, I would say, drag on to the total CapEx for the year. Now before we talk about the inflection, I would like to talk about resilience. Now that this adjustment has been done in the first half. I believe as we have demonstrated into our second half outlook when correcting for the in and out, we are anticipating growth. And this is because we believe that there is resilience on some part of the international market. there is still appetite for executing the most advantaged project with some uncommercial development or some large gas or oil development that are under play. And we believe that our market position that we have, which is hedged across different business lines across different [indiscernible] give us the resilience that I think you see in our numbers in [indiscernible]. So I think now inflection, if we look at trying to look ahead and directionally, I think looking beyond 2025, we believe that continue to see the attribute of cycle rebound, okay? That will be driven by several -- first, the phenomena of energy market and the [indiscernible] I could use of the critical of oil and gas supply. So specifically, if I like to look directionally ahead and beyond 2025, we're anticipating that a combination of the lipid market rebalancing, the continued investment in capacity expansion in the Middle East the accelerating global gas supply, both conventional in commercial, and commercial and international or in North America and the robust pipeline that I commented before in offshore deepwater projects. And finally, the increase of production recovery focus for the customer we combine with digital and AI trend to lend support to growth investment going forward. we see that this is directionally shaping up. I will not comment on exact timing, but I think I will first remind everybody that there is resilience in this market despite this mile uncertainty and the future is still rich with a lot of projects nationally, rich with gas traveling back activity in many parts of the world and rich with a long-term dipole project that will add real intensity going forward.

Great. And my follow-up question, I appreciate the comments around your expectations around the second outlook plus some of the outlook comments on ChampionX. But Olivier, Stephane, could you help us maybe break down your expectations for how you see things playing out in 3Q versus 4Q?

I think let us give you a little bit more color on to this guide that we could give and share in Q3 versus Q4. So first, at the high level, we have guided that the second half will be back-end loaded. And now more specifically to the third quarter. We expect first -- this first quarter will impact that first by the addition of 2 months of ChampionX. That's a positive addition by negative addition of the full call absence of Palliser following its divestiture by also the impact negative, I would say, of activity decline in the U.S. and certain offshore market. And finally, and more recently, by an incident that we have had on Ecuador pipeline disruption. This would translate all in into a slightly higher revenue sequentially from Q2 to Q3. Now trying to contrast this in Q4. With respect to the fourth quarter, we see revenue to be higher by high single digits versus the third quarter as an uptick, reflecting, first, a full quarter of ChampionX. And secondly, the seasonal uplift we'll see from year-end digital and product sales. I hope I gave you a little bit more color the top line and Q3 and uptick in Q4 that will help cackle back the relative revenue in Q3 and Q4.

Yes. Let me just start -- Okay. Yes, I just wanted to add -- sorry for that. What Olivier described that Q3 and Q4 directional split is what leads us to say that when you when you exclude the Palliser operations from H1, reinstate ChampionX in H1 and our ChampionX for 6 months in the second half. This is where you see growth, and there's a range where this is the range of flat to low single digit between H1 and H2 when you compare like-for-like. I hope -- it's a lot of moving pieces, but I hope it's clear.

Our next question goes to the line of Neil Mehta with Goldman Sachs.

A couple of questions. First on ChampionX. I appreciate all the comments around synergies, but maybe you can unpack as you spend more time on ChampionX assets as part of this integration process and talking to customers about the application of some of their products any incremental thoughts, particularly on leveraging the platform, leveraging the products into your international platform.

No, absolutely. I think we are very blessed to have 2 very highly complementary portfolio, both technically and geographically. And I think the strength of ChampionX in the U.S., their ability to innovate locally with the customers. I think it's something that we want to expand, apply to some of the other business we are running into North America to also have better impact more focused impact than our fit technology to our customer base in the U.S., and hence, benefit as a level of site synergy, if you like, from our porting model and engagement model customers in North America. But secondly and clinically, I think using the broad portfolio, both of artificial lift and obviously, of chemical production of -- and the ability to innovate of ChampionX into the international market well have established go-to-market access and establish customer relationships. So yes, we will expect this first from the complementary to our portfolio and from the market access. But secondly, as I mentioned before, I think the customer feedback we got beyond access to certain technologies that exist today. They believe that by combining our domain subsurface recovery capability, including Federal performance intervention are digital and our integration track record, the belief that I think we can help them unlock the value of some assets internationally, and they are very much interested to see what is next in our value proposition beyond just an expansion of our product folio into international markets. So integration, digital domain subsurface integration, I think, will be what will drive the synergy going forward beyond the geographical expansion, as I mentioned.

All right. And we appreciate the color around margins being relatively flattish in the back half. Can you provide any segment level perspective on the margins? Where do you see things trending better? Or do you think trending softer, just so we can get a little more granularity for the model?

So in the second half, you will -- directionally, you will clearly see digital and integration, but you will see it's actually digital. In the second half, the margins will continue to increase. That's really on the back of the year-end sales, including exploration data sales. Production systems, we are quite happy with the margin journey so far. So we will probably at least maintain that level with ChampionX, the production systems, EBITDA margins will actually increase. championX will be accretive to production system. And the other 2 core divisions, Reservoir Performance and Well Construction, we are expecting to be relatively flat with the second quarter, in line with the overall guidance of the company.

Your next question comes from the line of Roger Read with Wells Fargo.

And thanks again for [indiscernible] all the outlook. I guess 2 questions I'd like to come out. In terms of the pace of synergies with ChampionX, you've had a lot more time, obviously, from the -- when the deal was announced to closing here. what might look different or more accelerated on synergies? And what might look better in terms of the integration process as we look at what you may do with the top line of this business over the next, say, 18 months?

So as we discussed on the prepared remarks, first, the majority of synergies is cost, right? And -- and the work is both supply chain savings. So this is -- compared to our initial estimates, it has -- they are more or less in terms of overall envelope the same as what we had initially. And the pace can be a bit faster actually because now we have done the homework. It is literally by product code than supplier and geography. So we can execute those supply chain synergies faster. So this is why initially, if you recall, it's one of the reasons why we had said at the time that the transaction will be accretive in the second year following the transaction. And now we think within the first 18 months. So on a full year basis for 2026, the transaction will be accretive. And this requires about half of the total EUR 400 million synergies to to be achieved in 2026, which we think is realistic based on our plans. On the integration itself, I'll leave it to Olivier.

No. Integration, I think the team has worked hard for the last 12 months to do integration planning. I think we were very pleased to launch it yesterday life with the older ChampionX employees. And I think the reception is very strong. I think we have a very strong workbook and playbook for integration that will touch all aspects of our organization, process and onboarding, but obviously, much more importantly, I think, the way we face together the customers and trying to create this revenue synergy, this white space with the combined portfolio. So there is really an effort that has been made to prepare this from day 1, and I think we will be in the next few weeks and months rolling out this integration playbook and be in a position to start to capture revenue synergy clearly very soon and add to the established cost synergy that have -- that will be executed from immediately. So I would say, very pleased with the progress, very pleased with the reception of the -- the ChampionX team and also very pleased, extremely pleased with the feedback that we're receiving when engaging with customers that don't preserve the ChampionX strength. But at the same time, I'm excited to see the innovation, to see the expansion. As I said, integration, digital capability that we can add and subsurface domain that did unlock some more value, both in North America and internationally. So good progress, strong team, fully aligned and quite an exciting start.

Very helpful. Follow-up question is Mexico has been a big topic over the last several quarters. The most recent comments from the President of Mexico, she indicated they would like to grow gas supply out to 2030. Doesn't look like what they've been doing recently would lead to that. So any insights in terms of what you're seeing out of the political leadership of Mexico, PEMEX itself and then what's been the -- obviously, the issue in terms of getting accounts receivable and all that in.

No, I'm not here. I will not want to comment on behalf of the decision that the government or PEMEX will do. I think they need to go through the motion of restructuring and addressing the critical issue what are facing and finding a bottom and then rebounding. We believe we are there. We are just waiting now to see what are the next steps that could help unlock the value of, obviously, the assets in Mexico and the dynamic of PEMEX to rebound from this we stand ready. We have been in a country for decades. And we are really to respond it on the gas development or other development. We are not only working for PEMEX in Mexico. We are working with independents, local independents that have been pretty active. And we have a very exciting project for Woodside, Deepwater Mexico starting early next year that we are all prepared for both subsea and well construction that I think we're excited about, that is adding dimension to the Mexico rebound. So difficult to predict what is next. We continue to work very closely with partnership with PEMEX and trying to get some more diligence from the from the government, but I don't want to be commenting more on this. And again, we remain focused on doing the best and adapting to the market activity there. .

Your last question comes from the line of Josh Silverstein with UBS.

I appreciate you stripping out the business, the digital business, sorry, as a standalone unit to highlight the value here. You had previously talked about top line stand-alone digital growth kind of in the mid- to high teens this year. I want to see if you're still on track for that level. And then if you could provide any details around the growth contributions from Delfi cloud and the AI platforms within that outlook?

Yes, we don't split typically. I think we have been commenting just this quarter that I think the combination of cloud legacy application that is desktop and digital operation is growing at double digits. We have a significant uptick in the second half of the year. we said mid- to teens in the past. I think we are continuing to our ambition to be a committed to go and certainly to outpace significantly that's what matters is to outpace significantly the rest of the market and be it in mid-teens or by [indiscernible] with a much lower and declining CapEx. So the couple the activity, the couple the investment profile is what we are accessing. And yes, I think it's a long -- as I said, it's a long digital transformation. It's a long journey we have started with the industry. And I think our leadership between cloud, between digital operation, between legacy, desktop or in exploration data as a combination. We continue to do everything to make sure that it's a highly different sell in term of growth rate compared to the -- and we expect this to be the case for the foreseeable future. And as you have seen, the market -- the margin has improved. We expect the margin to further improve in the second half, the back end of the year, partly in the fourth quarter, hence becoming accretive remaining accretive highly in terms of margins and continue to be accretive in terms of top line cost. So I think we commented on some users characteristics that are linked to the cloud adoption. We have seen this quarter to just give you a data point 40 million CPU hours being consumed, 50% more than Q2 last year at the same time. We have seen also almost 1,000 of wells being drilled using drill plan, one of our planning cloud application that we use and with our customers. So I think we continue to see momentum, and we are confident that I think it will be for sure [indiscernible] growth and the rest and one of the highest growth business line we have in -- in SLB and new wells from Q3, get more detail. And we will disclose this transparently so that the value that we can expect on this we recognized by investors.

And maybe just a follow-up, and I know there's more detail to comment on third quarter, but are there any additional types of disclosures you might be able to provide here on these kind of key AI and SaaS-driven products towards companies that are more specifically focused on this as well?

No, obviously, we have, as you know, decided to establish a new platform called Lumi, for data and AI adoption across our customers. And I think we are very pleased with the early impact this had a lot of POV, as we call it, a lot of early, early tests and adoption across really all the segment of our customer base, attracted by the ability to connect and to integrate data and to have a toolbox of AI capability that we offer from our partners so that AI workflows can be enabled through our platform by customers and let the customers play with their data and using our toolbox to then use Gen AI or to use AI capability on top. That's -- that's what is exciting. That's what customers are coming to our platform for, and that's why the early success of Lumi is giving us. So yes, I think continued momentum there, and this is only the early, early steps of that adoption.

Thank you. I will now turn the call over to SLB for closing remarks.

Thank you, Megan. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, SLB diverse portfolio and broad operating footprint enabled us to overcome regional wins and evolving macro dynamics to deliver solid results as we demonstrated in this quarter. Second, we're increasing our exposure to the growing production recovery with the addition of ChampionX. Our combined portfolio, technology capability and digital leadership will position SLB to unlock value for our customers while delivering best-in-class workflow integration across production chemicals and our [indiscernible]. And finally, global oil and gas market have this power program regime, and we are optimistic about the opportunities ahead and our ability to deliver steady growth in the second half of the year. With this, I'll conclude today's call. Thank you all for joining.

This concludes today's conference call. You may now disconnect.