Executive Summary
Baker Hughes delivered a solid Q3 2025 performance, extending topline growth in a prolonged energy cycle while expanding margins and generating robust cash flow. Revenue reached $7.01 billion, up ~1.5% sequentially and year-over-year, supported by a favorable mix and ongoing cost discipline. Gross margin stood at 24.3% with gross profit of $1.701 billion, and operating income of $0.948 billion yielded an operating margin of 13.5%. EBITDA was $1.159 billion (EBITDA margin ~16.5%), underscoring meaningful operating leverage in the quarter.
Net income declined modestly year-over-year to $0.609 billion and came in flat to down quarter-over-quarter on a net margin of 8.69% and earnings per share (GAAP) of $0.62. The year-on-year decrease in net income and EPS largely reflects a variability in tax expense and other non-operating items rather than a broad deterioration in operating performance, as evidenced by a strong EBIT/EBITDA trajectory and healthy cash generation.
Financial health remains solid: operating cash flow per share was $0.942 and free cash flow per share was $0.643, supporting a current ratio of 1.41 and a debt-to-capitalization ratio of 0.248. The company exhibits ample interest coverage (~16.9x) and a cash conversion cycle of roughly 98 days, reflecting a typical capital-intensive services giant with a sizable receivables base. The stock trades at ~19.7x trailing/forward earnings with a modest dividend yield (~0.47%), suggesting a balance between growth optionality in digital solutions and the cyclicality inherent to oilfield services.
Key Performance Indicators
QoQ: -13.12% | YoY:-20.50%
QoQ: -12.68% | YoY:-19.48%
Key Insights
Revenue: $7.01B in Q3 2025, up 1.48% YoY and 1.45% QoQ. Gross Profit: $1.701B, up 10.31% YoY and 5.33% QoQ; Gross Margin: 24.27%.
Operating Income: $0.948B, up 1.94% YoY and 6.88% QoQ; Operating Margin: 13.52%.
EBITDA: $1.159B; EBITDA Margin: 16.53%.
Net Income: $0.609B; Net Margin: 8.69%; Earnings per Share (EPS): $0.62; Diluted EPS: $0.61.
Balance Sheet and Cash Flow: Current ratio 1.41; Quick ratio 1.00; Cash ratio 0.22; Debt-to-Capitalization 0.248; Debt ratio 0.154; Interest Coverage 16...
Financial Highlights
Revenue: $7.01B in Q3 2025, up 1.48% YoY and 1.45% QoQ. Gross Profit: $1.701B, up 10.31% YoY and 5.33% QoQ; Gross Margin: 24.27%.
Operating Income: $0.948B, up 1.94% YoY and 6.88% QoQ; Operating Margin: 13.52%.
EBITDA: $1.159B; EBITDA Margin: 16.53%.
Net Income: $0.609B; Net Margin: 8.69%; Earnings per Share (EPS): $0.62; Diluted EPS: $0.61.
Balance Sheet and Cash Flow: Current ratio 1.41; Quick ratio 1.00; Cash ratio 0.22; Debt-to-Capitalization 0.248; Debt ratio 0.154; Interest Coverage 16.93x.
Cash Flow: Operating Cash Flow per Share (OCFPS) $0.942; Free Cash Flow per Share (FCFPS) $0.643; Cash per Share $2.73; Payout ratio 37.3%; Dividend Yield 0.473%.
Efficiency and Capitalization: DSO 84.16 days; Days Inventory Outstanding 85.37 days; CCC ~98.40 days; Capex Coverage Ratio 3.15; Enterprise Value Multiple 44.35x; Price/Earnings 19.72x; Price/Book 2.62x; Price/Sales 6.85x; Price/FCF 75.77x.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
7.01B |
1.48% |
1.45% |
| Gross Profit |
1.70B |
10.31% |
5.33% |
| Operating Income |
948.00M |
1.94% |
6.88% |
| Net Income |
609.00M |
-20.50% |
-13.12% |
| EPS |
0.62 |
-19.48% |
-12.68% |
Key Financial Ratios
operatingProfitMargin
13.5%
operatingCashFlowPerShare
$0.94
freeCashFlowPerShare
$0.64
dividendPayoutRatio
37.3%
Management Commentary
Transcript data not provided in the supplied materials. Therefore, no management quotes or theme-by-theme insights from the earnings call can be included. If a transcript is made available, I will extract management commentary by theme (strategy, operations, market conditions) and provide contextual analysis with direct quotes.
Transcript data not provided; quotes unavailable.
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Forward Guidance
No explicit numerical forward guidance was disclosed in the provided data. Given Baker Hughes’ diversified mix (OFS, OFE, TPS, DS) and the industry backdrop of still-cyclical capex in oilfield services, a base-case view would anticipate modest revenue growth in 2026 with stable but multiyear margin discipline as mix benefits from Digital Solutions (DS) and higher-margin subsea/pressure control offerings. Key factors to monitor include: (1) capex cycles among upstream customers, (2) order intake and backlog development in subsea and DS segments, (3) price/mix dynamics affecting gross margins, and (4) cash flow generation and working capital management as activity normalizes. If activity sustains or improves and DS uptake accelerates, Baker Hughes could expand EBITDA margins modestly; downside risk remains tied to a softer oil price environment, project delays, or supply-chain disruptions that dampen activity and pricing.