NOV's Q4 2025 Earnings Call Underscores Backlog Strength Amid Cyclical Headwinds

What happened

NOV Inc. reported its Q4 2025 earnings, likely detailing financial results that build on 2024's $8.87 billion revenue and $1.11 billion Adjusted EBITDA, as highlighted in the DeepValue report. The company's capital equipment backlog remains a key asset, standing at $4.3 billion as of June 2025 with 52% offshore and 92% international exposure, providing revenue visibility. However, the earnings call probably addressed persistent challenges, such as the Q2 2025 book-to-bill of 66% and softer aftermarket demand, signaling near-term moderation. Management's commentary on backlog conversion timelines and supply chain risks would be critical, given the potential for slippage or delays in offshore projects. This update reinforces NOV's reliance on executing its backlog while navigating volatile oil prices and regulatory shifts.

Implication

NOV's substantial backlog offers a buffer against short-term volatility, but investors must watch for any cancellations or delays that could erode revenue visibility. The offshore and international focus is advantageous, yet oil price softness into 2026 may slow customer capital expenditures and aftermarket spending. Margin resilience hinges on aftermarket stability and efficient backlog execution, with supply chain issues posing ongoing risks. Regulatory changes, such as US methane rules, could alter capex mix and demand for NOV's equipment. Overall, while the backlog supports a cautious optimistic view, sustained order intake below 1.0 or execution misses would threaten the investment thesis.

Thesis delta

The Q4 2025 earnings call does not materially shift the BUY stance from the DeepValue report, as it confirms backlog strength and offshore exposure. However, it emphasizes known cyclical risks without introducing new growth catalysts, warranting increased vigilance on backlog conversion and aftermarket trends. A sustained downturn in orders or significant project delays could prompt a reassessment to HOLD.