Exchange: LSE | Sector: Energy | Industry: Oil Gas Equipment Services
Q3 2025
Published: Oct 21, 2025
Earnings Highlights
Revenue of $5.60B down 1.7% year-over-year
EPS of $0.02 decreased by 96.9% from previous year
Gross margin of -30.4%
Net income of 20.00M
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Halliburton Company (0R23.L) QQ3 2025 Results – Margin Pressure and Cash Flow Resilience in a Cyclical Oilfield Services Market
Executive Summary
Halliburton reported Q3 2025 revenue of $5.60 billion, representing a YoY decline of 1.7% and a QoQ increase of 1.63%. A striking feature of the quarter is a negative gross profit of approximately $1.70 billion, yielding a gross margin of -30.4%. Despite the gross loss, operating income was positive at $356 million, translating to an operating margin of about 6.36%. Net income was modest at $20 million (EPS $0.02), with a notable drag from interest expense of roughly $0.49 billion and a tax line that shows a counterintuitive tax benefit in the period. Cash flow metrics convey resilience: operating cash flow per share of $0.57 implies roughly $490 million of operating cash flow for the quarter, while free cash flow per share of $0.265 points to about $230 million of free cash flow. Cash per share stood at $2.36, supporting a healthy liquidity profile alongside a current ratio near 2.0 and a moderate leverage footprint (debt-to-capitalization about 45.5%). The combination of negative gross profit and elevated financing costs highlights the cyclicality and cost-structure challenges within Halliburton’s currently stressed margin environment, even as the company preserves cash generation and balance-sheet strength. Absent a clear positive shift in activity mix or stabilization of input costs, the near-term profitability trajectory will likely hinge on cost discipline, favorable project mix, and continued monetization of digital and AI-enabled solutions across Subsurface, Drilling, and Production segments.
Revenue and profitability dynamics in Q3 2025 show a challenging margin backdrop despite top-line stability. Key metrics include:
- Revenue: $5.60 billion; YoY change: -1.7%; QoQ change: +1.63% (per reported metrics).
- Gross profit: -$1.704 billion; Gross margin: -30.4% (negative due to cost of revenue exceeding revenue).
- Operating income: $356 million; Operating margin: 6.36%.
- EBITDA: -$0.822 billion; EBITDARatio: -14.68%.
- Net income: $20 million; Net margin: 0.36%.
- Earnings per share (EPS): $0.02; Diluted EPS: $0.02; Weighted avg shares: ~857 million.
- Interest expense: $0.487 billion; Depreciation & amortization: $0.561 billion.
- Free cash flow per share: $0.265; Operating cash flow per share: $0.569.
- Cash per share: $2.36; Current ratio: 1.96; Quick ratio: 1.44; Cash ratio: 0.34.
- Debt metrics: Debt ratio 34%; Debt-to-capitalization 45.5%; Long-term debt-to-capitalization 43.5%; Interest coverage: -0.73 (negative).
- Valuation benchmarks (period end): P/B ~ 2.06; P/S ~ 3.76; P/E ~ 263.5 (noting earnings are minimal in this period).
- Dividends: Dividend payout ratio ~ 7.2%; Dividend yield ~ 0.68%.
- Efficiency: Receivables turnover ~ 1.09x; Payables turnover ~ 2.90x; Inventory turnover ~ 2.98x; Asset turnover ~ 0.223; Capex coverage ratio 1.87 (implies capex funded by cash flow).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
5.60B
-1.70%
1.63%
Gross Profit
-1.70B
-259.25%
-306.55%
Operating Income
356.00M
-59.13%
-51.03%
Net Income
20.00M
-96.50%
-95.76%
EPS
0.02
-96.92%
-96.36%
Key Financial Ratios
currentRatio
1.96
grossProfitMargin
-30.4%
operatingProfitMargin
6.36%
netProfitMargin
0.36%
returnOnAssets
0.08%
returnOnEquity
0.2%
debtEquityRatio
0.84
operatingCashFlowPerShare
$0.57
freeCashFlowPerShare
$0.27
dividendPayoutRatio
720%
priceToBookRatio
2.06
priceEarningsRatio
263.53
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings-call transcript highlights were provided in the supplied data. Transcript content and management quotes could not be extracted for thematic grouping or direct quotation.
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Forward Guidance
The data set does not include explicit forward guidance from Halliburton management for QQ4 2025 or beyond. Given the cyclical nature of oilfield services, the near-term trajectory will hinge on commodity price recovery or stabilization, improved project mix, and continued progress on cost control and productivity improvements. Key factors investors should monitor include: (1) the pace of activity rebound in North America and international markets, (2) stabilization of input costs and potential relief from higher-margin digital services monetization, (3) the company’s ability to sustain positive operating margins while financing high interest costs, and (4) any changes in capital allocation policy that could affect free cash flow generation and dividend sustainability.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0R23.L Focus
-30.43%
6.36%
0.20%
263.53%
0KAK.L
36.70%
24.60%
3.25%
10.54%
0QYE.L
45.90%
13.20%
4.91%
84.05%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Bottom-up assessment suggests Halliburton remains a financially resilient cash-generating entity in a cyclical industry, but QQ3 2025 exposed meaningful margin pressure. The stock’s valuation metrics reflect a very high price-to-earnings multiple and a modestly elevated price-to-book relative to some peers, underscoring that investors are pricing in optionality from digital offerings and downstream efficiency. The near-term investment thesis hinges on a rebound in activity and stabilization of input costs, enabling a return toward mid-single-digit operating margins and a normalized gross margin profile. Investors should monitor (1) activity recovery signals in major basins, (2) progress on cost controls and the realization of digital/AI monetization, (3) debt service capability as interest rates and financing costs evolve, and (4) the company’s capital allocation decisions, including dividend sustainability and any share repurchase activity. Given the current data, Halliburton offers upside if cyclical recovery and margin normalization occur, but the risk of ongoing margin compression and higher financing costs remains a meaningful consideration for investors.
Key Investment Factors
Growth Potential
Potential upside from expansion of Halliburton’s digital/AI-enabled subsurface analytics, integrated asset management, and remote/wireline services, plus incremental opportunities from energy transitions where deepwater and unconventional drilling spend recovers. Growth also tied to higher activity levels in key basins and improved project mix that supports margin recovery.
Profitability Risk
Major risks include cyclicality of oil demand and capex in the E&P sector, elevated financing costs (high interest expense) pressuring net income, potential further margin compression if input costs remain elevated, and competitive pressure from peers. The unusual negative gross margin in Q3 2025 underscores sensitivity to cost structure and project mix. Geopolitical and macroeconomic uncertainty could delay capex cycles and limit top-line recovery.
Financial Position
Solid liquidity indicators (cash per share of $2.36; current ratio ~1.96) with moderate leverage (debt-to-capitalization ~45.5%). However, negative EBITDA and negative gross profit in the quarter highlight near-term profitability headwinds. The company’s ability to sustain high levels of debt service in a more rates-sensitive environment will be a critical watch for investors.
SWOT Analysis
Strengths
Global scale with diversified service lines across Completion and Production, as well as Drilling and Evaluation.
Significant cash generation capability, evidenced by CFO per share and substantial cash per share even in a tough quarter.
Asset-light services growth opportunities linked to AI and cloud-based subsurface analytics emerging from the company’s digital roadmap.
Weaknesses
Material gross margin deterioration in QQ3 2025 (gross profit of -$1.704B; gross margin -30.4%), indicating sensitivity to cost of revenue and project mix.
High interest expense relative to operating income, resulting in negative interest coverage (-0.73x).
Low EBITDA and cyclicality of end-markets may cause earnings to swing with commodity cycles.
Opportunities
Expansion and monetization of digital and AI-enabled offerings for subsurface insights, reservoir management, and integrated asset management.
Potential upside from a rebound in drilling activity and healthier project mix in key regions (e.g., North America shale, offshore and international markets).
Efficiency improvements and cost containment could help restore margin discipline and cash flow.
Threats
Cyclicality of the energy markets and capex cycles within E&P firms.
Competitive pressure from other large oilfield service providers, potential pricing erosion in a weak cycle.
Macroeconomic risks and financing conditions impacting project investments and debt costs.