NOV's Q4 2025 Earnings Show Strong Cash Flow but Profitability and Order Intake Raise Concerns

What happened

NOV reported mixed fourth quarter and full-year 2025 results, with Q4 revenue of $2.28 billion up 5% sequentially but down 1% year-over-year and a net loss of $78 million. Full-year revenue of $8.74 billion and Adjusted EBITDA of $1.03 billion were supported by robust cash flow, including $876 million in free cash flow, aligning with the DeepValue report's emphasis on cash generation. The ending backlog of $4.34 billion remains skewed towards offshore and international projects, providing visibility, though it is slightly lower than the $4.3 billion reported in June 2025. However, full-year bookings of $2.34 billion and a Q4 net loss highlight potential near-term challenges in order intake and margin sustainability. Despite these issues, NOV returned $505 million to shareholders, demonstrating commitment to its capital return framework amid volatile market conditions.

Implication

The earnings reinforce NOV's ability to generate significant cash from operations and its backlog, supporting shareholder returns and validating the capital-light model highlighted in the DeepValue report. However, the Q4 net loss suggests margin compression or execution hiccups that could undermine earnings stability if not addressed promptly. Bookings of $2.34 billion for the year, while positive, fall short of backlog levels, indicating potential moderation in new orders that may impact future revenue conversion. Offshore and international exposure offers resilience, but risks like oil price softness and supply chain issues, as noted in the DeepValue risks, require ongoing monitoring. Overall, while the long-term thesis around NOV's moat and cash flow remains intact, investors need to track margin recovery and book-to-bill trends closely to assess near-term health.

Thesis delta

The BUY stance from the DeepValue report is not fundamentally altered, as cash flow and backlog continue to underpin the investment case. However, the Q4 net loss and full-year bookings relative to backlog introduce caution, signaling that near-term profitability and order intake risks could limit upside. Investors should watch for margin improvements and sustained order growth to confirm the offshore upcycle's durability.