NOV: Q2 TAKE THREE

NOV expects North American drilling to weaken and order bookings to decline. Offshore activity remains a relative bright spot, while cost control measures and supply chain adjustments aim to offset inflation and tariff pressures. Despite short-term softness, NOV sees long-term growth potential driven by rising global energy demand, particularly in the offshore sector. Its revenues increased in Q2, but cash flows remained lower than a year earlier.

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Q3 And Medium-term Outlook: During Q2 , NOV (NOV) recorded $420 million in new order bookings, representing a 0.66x book-to-bill ratio, a fall from 0.8x a quarter earlier. The company expects "revenues to decline between one to three percent" in Q3 compared to Q2. It also expects Q3 adjusted EBITDA to decrease by 5% (at the guidance midpoint) compared to Q2.

Oil-directed drilling in North America is declining, with only slight gains in gas activity. Offshore remains relatively strong, and unconventional tech is gaining traction internationally. NOV is tightening cost controls and adjusting its supply chain to manage inflation and tariffs. The company expects near-term softness but sees long-term growth driven by demand for secure, low-cost energy.

Revenue and Operating Income in Q2 : In Q2 2025, both the Energy Equipment and Energy Products & Services segments witnessed a year-over-year revenue rise (3% and 5%, respectively). Despite that, the Energy Equipment segment saw an operating income fall (9% down) from Q2 2024 to Q2 2025. Operating profit in the Energy Products and Services segment remained unchanged in this period.

Lower drilling activity resulted in lower demand for the company’s short-cycle consumable products in Q2. Also, sales mix deterioration and higher tariffs affected the Q2 results. However, better conversion of backlog into revenues and increased capital equipment offerings partially mitigated the adverse effects.

Cash Flows And Repurchases : NOV's cash flow from operations improved in Q2 but was still lower in 6M 2025 than a year earlier. FCF declined by 22% in the past year. Debt-to-equity (0.26x) has remained unchanged from a year earlier. The company repurchased 5.5 million shares in Q2 and returned a total of $176 million in capital to shareholders in Q2.

Thanks for reading the NOV Take Three, designed to give you three critical takeaways from NOV's earnings report. Soon, we will present a second update on NOV earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.

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