Executive Summary
Baker Hughes reported a solid Q2 2025 with revenue of $6.91 billion, delivering margin expansion and robust free cash flow despite a year-over-year revenue decline. The company posted gross profit of $1.615 billion on a gross margin of 23.37% and operating income of $0.887 billion, resulting in an operating margin of 12.84%. Net income reached $0.701 billion, or $0.71 per share, with year-over-year net income rising ~21% and trailing-quarter momentum supported by sequential improvement in activity and favorable product mix. Free cash flow stood at $510 million for the quarter, paralleled by a strong balance sheet featuring $3.087 billion in cash and equivalents and a net debt position of approximately $2.95 billion. Management commentary, supported by these metrics, points to disciplined cost control, ongoing capital allocation efficiency, and steady demand from subsea, digital solutions, and turbomachinery segments contributing to profitability despite cyclicality in oilfield services.
Looking ahead, Baker Hughes benefits from a diversified mix across OFS, Oilfield Equipment (OFE), Turbomachinery & Process Solutions (TPS), and Digital Solutions (DS). The Q2 results reflect resilience in pricing and operating leverage, with EBITDA of about $1.314 billion and an EBITDA margin near 19%. The company remains well-positioned to generate free cash flow, sustain a prudent payout, and invest selectively in high-return opportunities as upstream capex cycles evolve. Investors should monitor global oil demand trajectories, subsea project awards, digitalization adoption in asset management, and any shifts in capex itineraries that could influence order intake across segments.
Key Performance Indicators
Key Insights
Revenue: $6.91B (YoY -3.21%, QoQ +7.52%)
Gross Profit: $1.615B; Gross Margin 23.37% (YoY +8.39%, QoQ +9.49%)
Operating Income: $0.887B; Operating Margin 12.84% (YoY +4.72%, QoQ +17.95%)
EBITDA: $1.314B; EBITDA Margin ~19.02% (as reported: 0.190)
Net Income: $0.701B; Net Margin 10.14% (YoY +21.07%, QoQ +74.38%)
EPS: $0.71; Diluted EPS $0.71 (YoY +22.41%, QoQ +73.17%)
Cash Flow from Ops: $0.510B; Free Cash Flow: $0.510B; FCF per Share: $0.516
Cash at End of Period: $3.087B; Net Debt: $2.947B; Tot...
Financial Highlights
Revenue: $6.91B (YoY -3.21%, QoQ +7.52%)
Gross Profit: $1.615B; Gross Margin 23.37% (YoY +8.39%, QoQ +9.49%)
Operating Income: $0.887B; Operating Margin 12.84% (YoY +4.72%, QoQ +17.95%)
EBITDA: $1.314B; EBITDA Margin ~19.02% (as reported: 0.190)
Net Income: $0.701B; Net Margin 10.14% (YoY +21.07%, QoQ +74.38%)
EPS: $0.71; Diluted EPS $0.71 (YoY +22.41%, QoQ +73.17%)
Cash Flow from Ops: $0.510B; Free Cash Flow: $0.510B; FCF per Share: $0.516
Cash at End of Period: $3.087B; Net Debt: $2.947B; Total Debt: $6.034B; Debt/Equity 0.341; Interest Coverage 16.43x
Liquidity: Current Ratio 1.408x; Quick Ratio 1.000x; Cash Ratio 0.247x
Capital Allocation: Dividends Paid; Share Repurchases: $196M in the quarter; Payout Ratio ~32.4%
Valuation Context: Price/Earnings ~13.51x; Price/Book ~2.14x; EV/EBITDA ~31.07x; Dividend Yield ~0.60%
Balance Sheet Health: Total Assets $38.74B; Total Liabilities $20.87B; Total Shareholders’ Equity $17.70B; Cash + Working Capital support re-investment and debt service
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
6.91B |
-3.21% |
7.52% |
| Gross Profit |
1.62B |
8.39% |
9.49% |
| Operating Income |
887.00M |
4.72% |
17.95% |
| Net Income |
701.00M |
21.07% |
74.38% |
| EPS |
0.71 |
22.41% |
73.17% |
Key Financial Ratios
operatingProfitMargin
12.8%
operatingCashFlowPerShare
$0.52
freeCashFlowPerShare
$0.52
dividendPayoutRatio
32.4%
Management Commentary
Themes from the earnings narrative (management commentary summarized):
- Strategy and portfolio balance: Emphasis on a diversified mix across OFS, OFE, TPS, and DS to cushion cyclicality and monetize digital solutions and subsea offerings.
- Activity backdrop and pricing: Modest YoY demand softness in some oilfield services pockets offset by improving activity in others, with signs of better utilization and pricing in select regions.
- Capital allocation and cash generation: Focus on sustaining free cash flow generation and disciplined capital deployment, including modest buybacks and dividends consistent with balance sheet strength.
- Margin discipline and cost control: Ongoing cost discipline contributing to margin resilience amid volatile commodity cycles.
- Order pipeline and backlog visibility: Cautious optimism on subsea awards and long-cycle projects, with emphasis on adjacencies in DS for asset integrity and measurement solutions.
Forward Guidance
Forward guidance lacks explicit numeric targets within the provided transcript data. Management commentary suggests continued emphasis on cash flow generation and capital discipline, with a bias toward selective investments in high-return opportunities, particularly in TPS and DS where digital solutions and remote monitoring can enhance asset performance. The key uncertainty remains upstream capex timing and project awards, as well as geopolitical and macroeconomic conditions affecting energy demand.
Assessment: With a diversified product portfolio and solid balance sheet, Baker Hughes appears capable of sustaining free cash flow generation even through mid-cycle environments. Achievability of any implicit cadence hinges on subsea project awards, offshore activity restoration, and continued adoption of digitalization across the asset life cycle. Investors should monitor: (1) upstream capex signals from major oil majors, (2) subsea award activity and backlog evolution, (3) currency/headwind effects given USD sensitivity, and (4) ongoing efficiency gains from DS and TPS solutions.