Halliburton (HAL) Q4 2025 earnings review
International Strength Rescues a North American Slide
Halliburton's Q4 2025 results highlight a sharp geographic divergence. While total revenue nudged up 1% YoY to $5.7B, the mix shifted dramatically. International revenue surged 7% sequentially (driven by a 12% jump in Europe/Africa), effectively offsetting a 7% sequential contraction in North America caused by lower stimulation activity. Despite the revenue stability, profitability eroded: Adjusted Operating Income fell 11% YoY to $829M. The company is successfully pivoting to international markets and technology (e.g., data center power), but the core North American pressure pumping business is dragging on margins.
🐂 Bull Case
The strategy to rely on international markets is working. International revenue grew 7% sequentially, with Europe/Africa/CIS delivering a standout 12% sequential gain. This segment now accounts for ~61% of total revenue, insulating the company from US shale volatility.
Despite margin compression, Halliburton generated $875M in Free Cash Flow in Q4, closing the year with solid liquidity ($2.2B cash). Shareholder returns continued with $250M in buybacks.
🐻 Bear Case
North America is reversing. Revenue dropped 7% sequentially to $2.2B. Management cited 'lower stimulation activity' in US Land, signaling that the efficiency gains or pricing power seen earlier in the cycle are fading.
Profitability is deteriorating. Adjusted operating income dropped from $932M in 24Q4 to $829M in 25Q4. The shift in mix and pricing pressures reduced adjusted operating margins from 16.6% a year ago to 14.7%.
⚖️ Verdict: ⚪
Neutral. The successful pivot to International growth is commendable, but the rapid deterioration in North America (-7% QoQ) and YoY margin compression prevent a bullish rating until US activity stabilizes.
Key Themes
North America Activity Reversing
The narrative of a 'resilient' US market is cracking. North America revenue fell 7% vs Q3 to $2.2B. Specifically, 'lower stimulation activity' in US Land drove the decline. While CEO Jeff Miller claims NA will be the 'first to respond' to macro improvements, the current trend is indisputably negative.
Europe/Africa/CIS Outperformance
Accelerating. This region was the star performer, growing 12% sequentially to $928M. Growth was driven by completion tool sales in the North Sea and stimulation activity in Angola. This diversification is critical as it counters the US slowdown.
Completion & Production Efficiency
Despite flat sequential revenue ($3.3B), the C&P segment grew Operating Income by 11% sequentially ($514M to $570M). This indicates strong cost control and a favorable mix shift toward high-margin offshore completion tools, offsetting weaker US land stimulation pricing.
Recurring Impairment Charges
Fiscal Year 2025 was messy. The company recorded $831M in 'Impairments and other charges' for the full year (vs $116M in 2024). Q4 included another $83M charge. While excluded from adjusted numbers, these persistent 'one-time' costs weigh on GAAP profitability and book value.
Tech Pivot: Data Centers & Automation
Halliburton is aggressively marketing its tech beyond traditional fracking. Key moves: a collaboration with VoltaGrid for 400MW of power for data centers (delivery 2028) and the launch of StreamStar wired pipe. This signals a strategic attempt to re-rate the stock as an energy infrastructure player rather than just an oilfield services firm.
Latin America Momentum
Accelerating. Latin America revenue grew 7% sequentially to $1.1B, driven by Brazil completion tools and Mexico software sales. This reverses a weakness seen earlier in the year (LatAm was down 19% YoY in Q1 2025). The region has returned to growth mode.
Other KPIs
Decelerating. Down from 16.6% in 24Q4 and down slightly from 15.3% (implied) in 25Q1. While C&P margins held up sequentially, the YoY comparison shows the impact of pricing pressure.
Stable/Strong. A solid finish to the year, bringing FY25 FCF to ~$1.9B (Derived). This supports the shareholder return framework despite the earnings headwinds.
Decelerating. Full year revenue declined 3.3% compared to FY24 ($22.9B), confirming that 2025 was a contraction year for the top line.
Guidance
The press release contained no numerical guidance for Q1 2026. Management commentary was limited to 'confident in the outlook' and an expectation that North America will respond when macro fundamentals improve. Investors must wait for the earnings call for specific margin and revenue targets.
Key Questions
North America Bottoming Process
North America revenue dropped 7% sequentially in Q4. Do you forecast Q1 2026 to be the trough, or should we model further contraction given the 'schedule gaps' mentioned in previous quarters?
C&P Margin Sustainability
Completion & Production operating income grew 11% sequentially despite flat revenue. Was this driven primarily by year-end product sales mix (completion tools), and does this margin strength revert in Q1?
Impairment Charge Clarity
FY25 saw over $830M in impairments and charges. Can you walk us through the specific assets written down in Q4 ($83M) and whether we can consider the balance sheet fully 'clean' for FY26?
VoltaGrid Economics
Regarding the 400MW VoltaGrid agreement for 2028: What is the capex intensity for Halliburton in this partnership, and how do the target margins compare to the core D&E business?
Q1 2026 Outlook
With no explicit guidance in the release, can you provide a range for sequential revenue changes in International vs. North America for Q1?