SLB N.V. (NYSE:SLB)

Profitability metrics exhibit a distinct cyclical pattern characterized by a period of sustained expansion from early 2022 through late 2024, followed by a progressive contraction throughout 2025 and 2026.

Margin Analysis

The gross profit margin displayed consistent growth over several years, rising from 16.43% in March 2022 to a peak of 20.56% in December 2024. This upward trajectory was subsequently reversed, with margins declining steadily to 16.33% by September 2026. The operating profit margin followed a similar arc, peaking at 16.55% in March 2024 before entering a sustained downward trend that concluded at 11.33% in September 2026. Net profit margins peaked earlier than the other margins, reaching 12.97% in September 2023, before gradually descending to 8.40% by the end of the analyzed period.

Return Metrics

Return on equity (ROE) experienced significant growth, climbing from 13.63% in March 2022 to a peak of 21.47% in March 2025. However, a sharp contraction is observed starting in mid-2025, with ROE falling to 14.22% by June 2025 and continuing a downward slide to 11.89% by September 2026. Return on assets (ROA) mirrored this behavior, increasing from 4.98% in March 2022 to a peak of 9.12% in December 2024, followed by a decline to 5.51% by September 2026.

The correlation between the various ratios indicates a period of peak operational efficiency and profitability during the 2023-2024 window. The subsequent synchronized decline in both margins and return ratios throughout 2025 and 2026 suggests a broad erosion of profitability across the organization's asset and equity bases.

An analysis of the profitability metrics between March 2022 and September 2026 reveals a distinct two-phase trajectory in the gross profit margin, characterized by an initial period of sustained expansion followed by a steady contraction.

Margin Expansion Phase (March 2022 – December 2024)

During this period, a consistent upward trend in the gross profit margin is observed, rising from 16.43% in the first quarter of 2022 to a peak of 20.56% by the end of 2024. This expansion occurred in tandem with significant revenue growth, which increased from 5,962 million to 9,284 million. The simultaneous increase in both revenue and margin percentage indicates improved operational efficiency and a strengthened ability to manage direct costs relative to sales growth.

Margin Contraction Phase (January 2025 – September 2026)

Following the peak in December 2024, the gross profit margin entered a period of gradual decline, falling to 16.33% by September 2026. This downward trend persisted despite revenue remaining at elevated levels, including a peak of 9,744 million in December 2025. The divergence between peak revenue and declining margins suggests a compression of profitability, likely driven by increasing costs of goods sold or pricing pressures that outpaced revenue gains.

Absolute Gross Margin Performance

The absolute gross margin increased from 949 million in March 2022 to a maximum of 1,961 million in December 2024. However, in the subsequent quarters, the absolute margin fluctuated and eventually declined to 1,566 million by September 2026. This indicates that the late-stage decline in the margin percentage had a material impact on the total gross profit generated, eroding the gains achieved during the initial growth phase.

The operating profit margin exhibits a distinct bell-shaped trajectory over the analyzed period, characterized by a sustained expansion phase from early 2022 through early 2024, followed by a consistent contraction through September 2026.

Expansion Phase (March 2022 – March 2024)

A period of steady margin improvement is observed, with the operating profit margin rising from 12.56% in March 2022 to a peak of 16.55% in March 2024. This growth was supported by a strong correlation between revenue increases and operating income growth. Revenue grew from 5,962 million USD to 8,707 million USD during this window, while operating income more than doubled, rising from 711 million USD to 1,386 million USD.

Peak and Plateau (September 2023 – June 2024)

Profitability reached a plateau between September 2023 and June 2024, with margins fluctuating within a narrow band between 16.31% and 16.55%. During this phase, operating income reached its highest absolute levels, peaking at 1,547 million USD in September 2024.

Contraction Phase (December 2024 – September 2026)

A downward trend in profitability is evident starting in late 2024. The operating profit margin declined from 15.99% in December 2024 to 11.33% by September 2026. Notably, this margin compression occurred even as revenue remained relatively high, reaching a peak of 9,744 million USD in December 2025. The decline in margin is primarily driven by a reduction in operating income, which fell from its 1,547 million USD peak to 1,084 million USD by the end of the period, suggesting an increase in operating expenses relative to revenue growth.

Overall, the data indicates that while the organization successfully scaled its operations and improved efficiency through 2023, the latter half of the period was marked by a reversal in operating leverage, resulting in margins that fell below the initial levels recorded in early 2022.

The net profit margin exhibited a cyclical trajectory over the analyzed period, characterized by an initial phase of rapid expansion, a period of relative stability, and a subsequent sustained decline.

Initial Margin Expansion (March 2022 – March 2023)

A consistent upward trend in profitability was observed during the first year, with the net profit margin increasing from 8.84% to a peak of 12.94%. This improvement was supported by simultaneous growth in both revenue, which rose from $5,962 million to $7,736 million, and net income, which grew from $510 million to $934 million.

Profitability Plateau (June 2023 – March 2024)

The net profit margin remained relatively stable, fluctuating within a narrow band between 12.44% and 12.97%. During this phase, revenue continued to scale, reaching $9,284 million by December 2024, while net income remained consistently above $1 billion per quarter, indicating a period of maintained operational efficiency as the business scaled.

Margin Compression (March 2025 – September 2026)

A significant downward trend in net profit margin is evident starting in the first quarter of 2025, falling from 11.62% to 8.40% by September 2026. This contraction is particularly notable as it occurred despite revenues remaining at historically high levels, including a peak of $9,744 million in December 2025. The divergence between elevated revenues and declining net income—which dropped to $735 million by the end of the period—indicates a substantial increase in costs or a reduction in pricing power that eroded the bottom line.

The Return on Equity (ROE) trajectory exhibits three distinct phases: an initial period of acceleration, a phase of stabilization, and a subsequent period of compression.

Initial Expansion Phase (Q1 2022 – Q1 2023)

A consistent increase in ROE is observed, rising from 13.63% in March 2022 to a peak of 21.39% by March 2023. This growth was driven by a rapid increase in net income, which climbed from 510 million USD to 934 million USD during this period, outpacing the steady growth in stockholders' equity.

Stability Phase (Q2 2023 – Q4 2024)

ROE remained relatively stagnant, fluctuating within a narrow range between 20.82% and 21.43%. During this window, net income generally stabilized around the 1.1 billion USD mark, while stockholders' equity continued a steady climb toward 21.1 billion USD, resulting in a neutralized effect on the profitability ratio.

Compression Phase (Q1 2025 – Q3 2026)

A significant downward trend in ROE began in the second quarter of 2025, falling from 20.16% to 11.89% by September 2026. This decline is attributable to two coinciding factors: a reduction in quarterly net income, which retreated toward the 700-800 million USD range, and a substantial expansion of the equity base, which surged from approximately 19.5 billion USD in March 2025 to over 26 billion USD by the end of the period. The combination of lower earnings and a significantly larger capital base led to a marked decrease in capital efficiency.

The Return on Assets (ROA) exhibits a cyclical trajectory characterized by an initial expansion phase, a period of high-level stabilization, and a subsequent contraction in efficiency.

Growth and Peak Performance (2022–2023)

A consistent upward trend is observed from March 2022 through September 2023, with ROA increasing from 4.98% to a peak of 9.07%. This growth was primarily driven by a significant rise in quarterly net income, which climbed from 510 million to 1.123 billion, outpacing the gradual growth of the asset base during this window.

Stabilization Phase (2024)

During 2024, ROA remained remarkably stable, fluctuating within a narrow range between 8.94% and 9.12%. Net income reached its highest observed quarterly point of 1.186 billion in September 2024, while total assets remained relatively constant around the 49 billion mark, maintaining a high level of asset productivity.

Performance Contraction (2025–2026)

A notable decline in ROA began in March 2025 (8.55%) and continued through September 2026, ending at 5.51%. This downward trend is the result of a dual negative impact: a general reduction in quarterly net income and a significant expansion of the balance sheet.

Asset Base Impact

Total assets grew from 41.97 billion in March 2022 to 56.20 billion by September 2026. A critical inflection point occurred between June and September 2025, where assets jumped from 48.77 billion to 55.09 billion. This rapid increase in the denominator, occurring simultaneously with falling net income, accelerated the compression of the ROA.

Net Income Correlation

The decline in profitability ratios mirrors a drop in net income attributable to SLB, which fell from the 1.1 billion range seen in 2023-2024 to levels between 735 million and 824 million in the 2025-2026 period. The inability of earnings to scale alongside the growing asset base resulted in a lower return on investment for the company's total resources.