Baker Hughes
BKR · NasdaqChart supplied almost all of the revenue growth
Chart's $888M equals 12.7% of last year's quarterly revenue, against total growth of 14.5%, so the businesses already owned added little.
Q3 FY2026, the quarter to Sep 30, 2026 · 10-Q filed Oct 28, 2026
- Operating margin
- —
- Net income
- $411.0M
- Free cash flow, quarter
- $734.0M
Largest source of revenue: Sales of goods, 67.2% of the total.
Where Baker Hughes's money goes
- 01
Chart supplied almost all of the revenue growth
Chart's $888M equals 12.7% of last year's quarterly revenue, against total growth of 14.5%, so the businesses already owned added little.
Why it matters
Revenue rose to $8,025M from $7,010M, an increase of 14.5%. Chart, bought in July, contributed $888M from the closing date to quarter-end, 11.1% of the quarter's revenue. Measured against last year's base, Chart's $888M equals 12.7% of the $7,010M, most of the 14.5% growth.1
The filing describes the rest: IET grew on climate technology solutions and gas technology services, partly offset by lower gas technology equipment and the sale of the precision sensors business, while OFSE revenue "was broadly flat year-over-year."1
AnalysisAnalysis: the quarter reads as a step change from an acquisition rather than a rise in underlying demand. The base also shrank, because the precision sensors and surface pressure control businesses left earlier in the year, so like-for-like growth in the businesses kept is somewhat higher than the small remainder suggests. Until the first anniversary of the closing, year-on-year comparisons include Chart as added revenue.
- 02
Acquisition charges cut pretax income as sales rose
Amortization rose to $165M from $10M and net interest to $177M from $56M, pulling income before taxes down to $519M from $821M.
Why it matters
Amortization of acquired intangible assets rose to $165M from $10M, which the filing ties primarily to the intangible assets acquired with Chart. Net interest expense rose to $177M from $56M, driven by the senior notes and term loans raised for the deal. Other expense rose to $157M from $71M, mostly Chart transaction costs. Restructuring added $28M against none a year earlier.1
Income before income taxes fell to $519M from $821M. Amortization alone equals 31.8% of this quarter's pretax income, and net interest 34.1%. Net income attributable to the company was $411M, a 5.1% net margin, against $609M on $7,010M of revenue a year earlier, an 8.7% margin.1
A lower tax charge softened the fall: $97M against $204M. The filing attributes the difference in part to the discrete recognition of additional U.S. tax attributes, an item tied to this period rather than to the running business.1
AnalysisAnalysis: the charges differ in how long they last. Transaction costs belong to the closing, and the inventory step-up the filing records through cost of goods sold unwinds as acquired inventory is sold. Part of the acquired intangibles is backlog, amortized over a single year. The rest of the amortization, on customer relationships and trade names, and the interest on the new debt recur each quarter.
- 03
Operating cash ran 2.45 times reported profit
Operating cash flow of $1,005M was 2.45 times net income of $411M, because amortization costs no cash and customers pay ahead for work.
Why it matters
Operating cash flow was $1,005M against $929M a year earlier, while net income attributable to the company fell to $411M from $609M. Free cash flow rose to $734M from $634M, a 9.1% margin on revenue, as capital spending eased to $271M from $295M, 3.4% of revenue.1
Two features of the business open the gap. Amortization, $165M this quarter, is an accounting charge with no cash outflow. And the filing names payments from customers, "including advance payments or progress collections for work to be performed," as its largest source of operating cash; for the nine months it attributes working capital cash generation mainly to progress collections.1
AnalysisCaveat: quarterly cash is lumpy. In the first quarter of this year operating cash flow was $500M against net income of $930M, the reverse pattern, partly because that quarter's profit included gains on business disposals that brought no operating cash. One quarter's ratio says little on its own; the direction of the progress collections balance says more about whether cash comes from the business or from timing.
- 04
OFSE brings 45.6% of revenue, 7.3% of backlog
OFSE's $3.4B backlog equals 92.9% of one quarter's segment revenue, so its sales rest on orders won as customers set drilling budgets.
Why it matters
Of $46.4B in remaining performance obligations, IET holds $39.4B (84.9%), Chart $3.6B and OFSE $3.4B (7.3%). OFSE brought in $3,660M this quarter, so its entire backlog equals 92.9% of a single quarter's revenue. IET's backlog stands against quarterly revenue of $3,477M.1
The filing ties OFSE demand to customers' spending on exploration, development and production, which follows their oil and gas price expectations. The worldwide rig count averaged 1,901 against 1,798 a year earlier, yet OFSE revenue was "broadly flat," with North America at $955M, lower than a year earlier.1
AnalysisAnalysis: the company runs on two clocks. IET's revenue for years ahead is largely contracted, while OFSE resets with each budget cycle. That is why the filing frames its OFSE outlook around upstream spending and oil prices, and its IET outlook around LNG and gas infrastructure demand.
Sources
- 1.Baker Hughes 10-Q for the period to 2026-09-30 (the filing), Oct 28, 2026, read Nov 2, 2026
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Growth, profit and margin
Revenue went from $16.7B in FY2015 to $27.7B in FY2025, over 10 years.
- Revenue$27.7B
- Operating income—
- Operating margin—
- Period
- Q3 FY2026
- Revenue
- $8.0B
- Operating income
- —
- Operating margin
- —
- Net income
- $411.0M
- Free cash flow
- $734.0M
Does the profit turn into cash?
Q3 FY2026: free cash flow of $734.0M against net income of $411.0M in the quarter.
- Operating cash flow$3.8B
- Capital expenditure$1.3B
- Free cash flow$2.5B
- Net income$2.6B
Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.
Financial data and sources
How the revenue mix has shifted
Each breakdown the filing reports, as shares of revenue, for every period it restates.
Condensed Consolidated Statements of Income. The filing restates this breakdown for 1 period.
Click a member to isolate it across the years shown.
The figures
Margins, cash and growth for the period, each with what it was computed from.
Not reported, or not derivable
- gross margin: the company reports expenses by nature: no cost of revenue or gross profit line exists
- operating margin: no operating income line is reported
Where revenue comes from
Every breakdown the filing reports for the period, with each item's share.
Revenue streams
| Sales of goods | $5.4B | 67.2% |
| Sales of services | $2.6B | 32.8% |
Segments
| Ofse | $3.7B | 45.6% |
| IET | $3.5B | 43.3% |
| Chart | $888.0M | 11.1% |
Geographic markets
| Middle East/Asia | $1.3B | 15.7% |
| North America | $955.0M | 11.9% |
| Europe/CIS/Sub-Saharan Africa | $770.0M | 9.6% |
| Latin America | $674.0M | 8.4% |
These items do not sum to total revenue; the filing states them beside it. Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-28
What it costs
The cost lines beneath operating income, each as a share of revenue, then the operating result.
The filing's cost lines could not be read beneath operating income.
Operating figures the company states
From the text of the filing rather than its statements, each with the sentence that states it.
View source
We conduct business in more than 120 countrie s and employ approximately 65,600 employees.
View source
As of September 30, 2026, RPO totaled $46.4 billion, of which IET totaled $39.4 billion, Chart totaled $3.6 billion, and OFSE totaled $3.4 billion.
View source
As of September 30, 2026, RPO totaled $46.4 billion, of which IET totaled $39.4 billion, Chart totaled $3.6 billion, and OFSE totaled $3.4 billion.
View source
As of September 30, 2026, RPO totaled $46.4 billion, of which IET totaled $39.4 billion, Chart totaled $3.6 billion, and OFSE totaled $3.4 billion.
View source
As of September 30, 2026, RPO totaled $46.4 billion, of which IET totaled $39.4 billion, Chart totaled $3.6 billion, and OFSE totaled $3.4 billion.
View source
Worldwide 1,901 1,798 6 % 1,831 1,825 - %
The statements, as filed
The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.
Income statement19 lines, as presented in the 10-Q
Cash flow statement4 lines, as presented in the 10-Q
Year to date, as a quarterly filing reports it.
| Line | Q3 FY2026 | A year earlier | Change | Source |
|---|---|---|---|---|
| Cash flows from operating activities: | ||||
| Net income | $422.0M | $617.0M | -32% | Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-28 |
| Adjustments to reconcile net income to net cash flows from operating activities: | ||||
| Depreciation and amortization | $505.0M | $282.0M | +79% | Source10-Q, us-gaap:DepreciationDepletionAndAmortization, as reported in the 10-Q filed 2026-10-28 |
| Gain on business dispositions (shown as a deduction) | ($0) | $0 | Source10-Q, us-gaap:GainLossOnSaleOfBusiness, as reported in the 10-Q filed 2026-10-28 | |
| Statement of Cash Flows | ||||
| Cash and cash equivalents, end of period | $4.07B | $2.69B | +51% | Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-28 |
Balance sheet28 lines, as presented in the 10-Q
About this data
- Source
- Baker Hughes 10-Q, accession 0001701605-26-000035, filed Oct 28, 2026, read on Nov 2, 2026.
- History
- From the SEC's XBRL company facts, the value from the latest filing that stated each period.
- Reading
- Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
- Version
- methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
What holds Baker Hughes's model up, and what could bend it
Competitive edge
Installed machines keep earning after the sale
Services brought $2,629M, 32.8% of revenue, from parts, upgrades, monitoring and repairs on equipment the company has already supplied.
The detail
Sales of services were $2,629M, up 9.7% from a year earlier. The company manages a wider services view: product service agreements cover "sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance, and repairs)," so part of the recurring aftermarket sits inside the $5,396M goods line.1
AnalysisAnalysis: the advantage comes from the installed base. A maker of gas turbines, compressors and cryogenic equipment holds the designs, field data and qualifications needed to keep critical machines running, which gives it a strong position in servicing them for the life of the asset. Services grew more slowly than goods this quarter, 9.7% against 17.0%, because Chart's first contribution is mostly original equipment.
IET's backlog books years of revenue ahead
IET holds $39.4B of contracted, undelivered work, 84.9% of the company's $46.4B backlog, while bringing 43.3% of quarterly revenue.
The detail
Total remaining performance obligations of $46.4B equal 167.3% of FY2025 revenue of $27,733M. The filing defines them as transaction prices allocated to performance obligations not yet satisfied, and IET, which holds the long equipment contracts and product service agreements, carries $39.4B of the total.1
AnalysisAnalysis: long contracts make IET's revenue visible well ahead and less tied to the drilling cycle than OFSE's. The filing notes that contract modifications can change both the timing and the amount received, so the backlog indicates future revenue rather than fixing it.
What to watch
Middle East/Asia carries 34.5% of OFSE revenue
Middle East/Asia brought $1,261M, 15.7% of company revenue, from the region where management expects upstream spending to decline this year.
The detail
Middle East/Asia was the largest OFSE region at $1,261M, against $955M in North America, $770M in Europe/CIS/Sub-Saharan Africa and $674M in Latin America. The filing says the region declined year on year, citing the surface pressure control disposition.1
Management expects lower Middle East upstream spending this year, partly offset elsewhere, and says supply constraints through the Strait of Hormuz and wider regional disruption add risk to customer spending, project timing and supply chain visibility. It calls this uncertainty "a structural feature of oil and gas markets."1
Net interest equals 34.1% of pretax income
Net interest of $177M equals 34.1% of income before taxes, against 6.8% a year earlier, a cost that does not fall when activity does.
The detail
Net interest expense rose to $177M from $56M, which the filing attributes to the senior notes offering and new term loans that financed Chart. Set against income before taxes of $519M and $821M, interest moved from 6.8% of pretax income to 34.1%.1
The filing warns that a significant fall in oil and gas prices, geopolitical events or a pandemic could cut revenue or raise costs, weaken cash flow and liquidity, and lead rating agencies to lower its credit ratings, which would raise the cost of borrowing under its credit facility.1
AnalysisAnalysis: part of this quarter's ratio reflects transaction costs that depressed pretax income, so the share is likely lower in a quarter without them. The interest itself recurs, and it sits on top of a revenue line that the filing ties to customers' oil and gas budgets.
Supply chain sets the pace of backlog conversion
The company flags tight aeroderivative supply and extended lead times, which govern how fast IET's $39.4B backlog turns into revenue.
The detail
The outlook names "continued signs of tightness in the aeroderivative supply chain, including extended lead times" as a factor to monitor and manage operationally. IET holds $39.4B of the $46.4B in remaining performance obligations, so the pace of its deliveries matters most.1
AnalysisAnalysis: if deliveries slip, revenue and the profit on the work arrive later, while the cash customers paid in advance stays on the balance sheet as an obligation to deliver. The filing also notes that in consortium projects a partner's failure to perform can bring extra costs, liquidated damages or contract disputes.
Sources
- 1.Baker Hughes 10-Q for the period to 2026-09-30 (the filing), Oct 28, 2026, read Nov 2, 2026
Baker Hughes, further in
Member research, then your own questions on ChatGPT.
What could change the outlook
What Baker Hughes's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
- What has to go right for Chart to cover its financing
Which lines in the coming quarters show whether the acquisition earns more than the amortization and interest it added, and which charges fade on their own.
- How much of the cash strength is timing?
What separates cash the business earns from cash customers paid ahead, and what a slowdown in orders would do to the gap between cash and profit.
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Have a question about Baker Hughes?
Explore its profit drivers, competitive edge, risks, or your own investment and business questions with CXProWealth on ChatGPT.
- How much of Baker Hughes' latest quarterly revenue growth came from Chart rather than its existing segments?
- Which of the charges from Baker Hughes' Chart acquisition recur each quarter, and which should fade?
- Why does Baker Hughes' oilfield segment hold so little backlog compared with Industrial & Energy Technology?
Business Lens describes Baker Hughes from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.