Baker Hughes Q3 Net Income Dips 20.5% Amid Acquisition Spend

TL;DR

**BKR's Q3 net income drop is a red flag, signaling that strategic acquisitions and share buybacks aren't immediately translating to bottom-line growth.**

AI Summary

Baker Hughes Co (BKR) reported a net income of $609 million for the three months ended September 30, 2025, a decrease of 20.5% from $766 million in the same period of 2024. Diluted income per Class A common stock also fell to $0.61 from $0.77 year-over-year. Total revenue for the quarter increased slightly by 1.5% to $7,010 million from $6,908 million, driven by a 4.5% increase in sales of goods to $4,613 million, partially offset by a 3.9% decrease in sales of services to $2,397 million. For the nine months ended September 30, 2025, net income attributable to Baker Hughes Company was $1,712 million, down 4.9% from $1,800 million in 2024, while total revenue decreased by 0.6% to $20,347 million. The company completed the acquisition of Continental Disc Corporation (CDC) during the third quarter of 2025, adding $228 million in goodwill and $269 million in other intangible assets to the Industrial & Energy Technology (IET) segment. Cash and cash equivalents decreased by $671 million to $2,693 million for the nine months ended September 30, 2025, primarily due to $800 million in net cash paid for acquisitions and $384 million for share repurchases. The company maintained a cash dividend of $0.23 per share for the quarter.

Why It Matters

Baker Hughes' Q3 performance, marked by a significant drop in net income despite a slight revenue increase, signals potential margin pressures and increased investment in strategic acquisitions like Continental Disc Corporation. For investors, the decline in diluted EPS from $0.77 to $0.61 is a key concern, suggesting profitability challenges even as the company expands its Industrial & Energy Technology segment. Employees might see shifts in resource allocation towards integrating new acquisitions, potentially impacting existing roles or growth areas. Customers could benefit from an expanded technology portfolio, particularly in the IET segment, enhancing Baker Hughes' competitive position against rivals like Schlumberger and Halliburton in a dynamic energy market. The broader market will watch how these strategic investments translate into future growth and profitability, especially given the ongoing energy transition.

Risk Assessment

Risk Level: medium — The 20.5% decrease in net income attributable to Baker Hughes Company for the three months ended September 30, 2025, to $609 million from $766 million in 2024, indicates a significant profitability challenge. Additionally, the company's cash and cash equivalents decreased by $671 million during the nine months ended September 30, 2025, largely due to $800 million in net cash paid for acquisitions, which could strain liquidity if not managed effectively.

Analyst Insight

Investors should closely monitor Baker Hughes' integration of recent acquisitions, particularly Continental Disc Corporation, and assess whether these strategic moves will generate sufficient returns to reverse the declining net income trend. Consider holding BKR shares if you believe in the long-term value of their diversified energy technology portfolio, but be prepared for potential short-term volatility due to profitability concerns.

Financial Highlights

revenue

$7,010M

net Income

$609M

eps

$0.61

cash Position

$2,693M

revenue Growth

+1.5%

Revenue Breakdown

Key Numbers

• $609M — Net income attributable to Baker Hughes Company (Decreased 20.5% for Q3 2025 compared to $766M in Q3 2024)
• $0.61 — Diluted income per Class A common stock (Decreased from $0.77 in Q3 2024)
• $7,010M — Total revenue (Increased 1.5% for Q3 2025 compared to $6,908M in Q3 2024)
• $4,613M — Sales of goods (Increased 4.5% for Q3 2025 compared to $4,413M in Q3 2024)
• $2,397M — Sales of services (Decreased 3.9% for Q3 2025 compared to $2,495M in Q3 2024)
• $1,712M — Net income attributable to Baker Hughes Company (Decreased 4.9% for the nine months ended September 30, 2025, compared to $1,800M in 2024)
• $800M — Net cash paid for acquisitions (Significant outflow for the nine months ended September 30, 2025)
• $384M — Repurchase of Class A common stock (Cash outflow for the nine months ended September 30, 2025)
• $2,693M — Cash and cash equivalents (Decreased by $671M from $3,364M at December 31, 2024)
• $0.23 — Cash dividend per Class A common stock (Paid for Q3 2025, up from $0.21 in Q3 2024)

Key Players & Entities

• Baker Hughes Co (company) — registrant
• Continental Disc Corporation (company) — acquired by Baker Hughes
• Industrial & Energy Technology (company) — segment of Baker Hughes
• Oilfield Services & Equipment (company) — segment of Baker Hughes
• FASB (regulator) — Financial Accounting Standards Board
• SEC (regulator) — Securities and Exchange Commission
• Nasdaq Stock Market LLC (company) — exchange where BKR is listed
• Schlumberger (company) — competitor
• Halliburton (company) — competitor

FAQ

Risk Factors

• Fluctuations in Energy Prices [high — market]: The company's financial performance is significantly tied to the price of oil and natural gas. Volatility in these commodity prices can impact demand for Baker Hughes' products and services, affecting revenue and profitability. For instance, 'Other (income) expense, net' was $71 million in Q3 2025, compared to a net income of ($134) million in Q3 2024, indicating potential sensitivity to market conditions.
• Supply Chain Disruptions [medium — operational]: Disruptions in global supply chains can affect the cost and availability of raw materials and components, impacting the 'Cost of goods sold' and 'Cost of services sold'. The cost of goods sold increased to $3,593 million in Q3 2025 from $3,459 million in Q3 2024, suggesting potential inflationary pressures or supply chain challenges.
• Environmental Regulations [medium — regulatory]: Increasingly stringent environmental regulations globally can necessitate significant investments in compliance and technology, potentially increasing operating expenses. Changes in climate policies and energy transition trends could also affect demand for certain products and services.
• Acquisition Integration Risks [medium — financial]: The acquisition of Continental Disc Corporation (CDC) adds $228 million in goodwill and $269 million in other intangible assets. Successful integration is crucial to realizing the expected synergies and avoiding potential impairment charges if the acquired business underperforms.
• Interest Rate Sensitivity [low — financial]: The company's interest expense, net, was $56 million in Q3 2025, up from $55 million in Q3 2024. While modest, rising interest rates can increase the cost of servicing debt, impacting net income, especially if the company takes on additional debt for future acquisitions or operations.

Industry Context

Baker Hughes operates in the highly competitive oilfield services and equipment sector, facing pressure from major players like Schlumberger and Halliburton. The industry is influenced by global energy demand, commodity prices, and the ongoing energy transition, which is driving investment in both traditional and renewable energy solutions. Technological innovation and operational efficiency are key differentiators.

Regulatory Implications

The company must navigate a complex web of environmental, health, and safety regulations across its global operations. Compliance with evolving climate-related policies and emissions standards is critical. Potential changes in international trade policies and sanctions could also impact its business segments and supply chains.

What Investors Should Do

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Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reporting period for the 10-Q filing, showing a decrease in net income but an increase in revenue for the quarter.
• 2025-09-30: Acquisition of Continental Disc Corporation (CDC) completed — Added $228 million in goodwill and $269 million in other intangible assets to the IET segment, impacting the balance sheet.
• 2025-09-30: Nine months ended — Year-to-date results show a decrease in net income and a slight decrease in total revenue compared to the same period in 2024.

Glossary

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its identifiable net assets. (The acquisition of CDC added $228 million in goodwill, impacting the company's asset base.)

Other intangible assets

Non-physical assets that have value, such as patents, trademarks, and customer lists. The acquisition of CDC added $269 million in these assets. (These assets contribute to the overall value of the acquired business and are subject to amortization.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company. It represents the ownership stake of outside shareholders. (Net income attributable to noncontrolling interests was $8 million for Q3 2025, reducing the net income available to Baker Hughes shareholders.)

Foreign currency translation adjustments

Gains or losses that arise from translating the financial statements of a foreign subsidiary into the parent company's reporting currency. (These adjustments contributed $77 million to other comprehensive income in Q3 2025, showing a positive impact from currency movements.)

Cash flow hedges

Financial instruments used to offset the risk of future cash flows associated with a particular commitment or transaction. (These hedges resulted in a negative adjustment of ($78) million to other comprehensive income in Q3 2025, indicating a cost associated with hedging strategies.)

Year-Over-Year Comparison

Compared to the prior year, Baker Hughes reported a 20.5% decrease in net income for Q3 2025 ($609M vs $766M), despite a 1.5% increase in total revenue ($7,010M vs $6,908M). This margin compression is partly due to a 3.9% decline in sales of services, which may carry higher margins than goods. The company also saw a decrease in net income for the nine-month period, down 4.9% year-over-year, while cash and cash equivalents declined significantly due to strategic outflows for acquisitions and share repurchases.

Key Financial Figures

• $0.0001 — stered Class A Common Stock, par value $0.0001 per share BKR The Nasdaq Stock Market L

Filing Documents

• bkr-20250930.htm (10-Q) — 1257KB
• bakerhughesex22120250930.htm (EX-22.1) — 6KB
• bkr20250930exhibit311.htm (EX-31.1) — 10KB
• bkr20250930exhibit312.htm (EX-31.2) — 10KB
• bkr20250930exhibit32.htm (EX-32) — 15KB
• 0001701605-25-000117.txt ( ) — 8357KB
• bkr-20250930.xsd (EX-101.SCH) — 50KB
• bkr-20250930_cal.xml (EX-101.CAL) — 94KB
• bkr-20250930_def.xml (EX-101.DEF) — 346KB
• bkr-20250930_lab.xml (EX-101.LAB) — 680KB
• bkr-20250930_pre.xml (EX-101.PRE) — 504KB
• bkr-20250930_htm.xml (XML) — 1278KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) Condensed Consolidated Statements of Income (Loss) (Unaudited) - Three and nine months ended September 30, 2025 and 2024 1 Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three and nine months ended September 30, 2025 and 2024 2 Condensed Consolidated Statements of Financial Position (Unaudited) - September 30, 2025 and December 31, 2024 3 Condensed Consolidated Statements of Changes in Equity (Unaudited) - Three and nine months ended September 30, 2025 and 2024 4 Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine months ended September 30, 2025 and 2024 6 Notes to Unaudited Condensed Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 37 Item 4.

Controls and Procedures

Controls and Procedures 37 PART II - OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 38 Item 1A.

Risk Factors

Risk Factors 38 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 39 Item 3. Defaults Upon Senior Securities 39 Item 4. Mine Safety Disclosures 39 Item 5. Other Information 39 Item 6. Exhibits 40

Signatures

Signatures 41 Baker Hughes Company 2025 Third Quarter Form 10-Q | i

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

FINANCIAL STATEMENTS (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Baker Hughes Company Condensed Consolidated Statements of Income (Loss) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share amounts) 2025 2024 2025 2024 Revenue: Sales of goods $ 4,613 $ 4,413 $ 13,273 $ 12,963 Sales of services 2,397 2,495 7,074 7,502 Total revenue 7,010 6,908 20,347 20,465 Costs and expenses: Cost of goods sold 3,593 3,459 10,525 10,392 Cost of services sold 1,716 1,749 5,031 5,286 Selling, general and administrative 607 612 1,751 1,873 Research and development costs 146 158 453 480 Other (income) expense, net 71 ( 134 ) 77 ( 182 ) Interest expense, net 56 55 161 143 Income before income taxes 821 1,009 2,349 2,473 Provision for income taxes ( 204 ) ( 235 ) ( 612 ) ( 656 ) Net income 617 774 1,737 1,817 Less: Net income attributable to noncontrolling interests 8 8 25 17 Net income attributable to Baker Hughes Company $ 609 $ 766 $ 1,712 $ 1,800 Per share amounts: Basic income per Class A common stock $ 0.62 $ 0.77 $ 1.73 $ 1.81 Diluted income per Class A common stock $ 0.61 $ 0.77 $ 1.72 $ 1.80 Cash dividend per Class A common stock $ 0.23 $ 0.21 $ 0.69 $ 0.63 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. Baker Hughes Company 2025 Third Quarter Form 10-Q | 1 Baker Hughes Company Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2025 2024 2025 2024 Net income $ 617 $ 774 $ 1,737 $ 1,817 Less: Net income attributable to noncontrolling interests 8 8 25 17 Net income attributable to Baker Hughes Company 609 766 1,712 1,800 Other comprehensive income (loss): Foreign currency translation adjustments 77 142 590 ( 50 ) Cash flow hedges ( 78 ) 8 ( 75 ) 6 Benefit plans 5 ( 5 ) ( 2 ) 4 Other comprehensive income (loss) 4 145 513 ( 40 ) Less: Other comprehensive incom