Baker Hughes Company

IET entered 2026 with a record remaining performance obligation of $36.1B, approximately 2.5x annual IET revenue, underpinned by long-term service agreements with durations of 10-20 years and over 60% of IET revenue from recurring services in FY2025. The OFSE segment is more project-driven and cyclical, with revenue declining in both FY2020 and FY2025, limiting overall company-level predictability to a mixed picture.

Revenue is divided roughly equally between OFSE, serving upstream oil and gas, and IET, supplying turbomachinery and compression to LNG and power markets, with both segments heavily tied to energy infrastructure. Data center-related orders reached $1B in FY2025 with management targeting $3B cumulatively through 2027, adding nascent exposure to an uncorrelated end market that has not yet materially diversified the consolidated revenue base.

Baker Hughes operates in over 120 countries, with North America generating roughly 26% of OFSE revenue in Q4 FY2025 and the balance spread across Middle East/Asia, Europe/CIS, and Latin America. IET revenue is similarly global, concentrated in international LNG projects, resulting in no single country likely exceeding 30% of consolidated revenue.

Baker Hughes manufactures capital-intensive equipment across both segments, requiring proportional investment in facilities, supply chains, and field workforce to grow. The IET services layer (over 60% of IET revenue in FY2025) provides modest operating leverage, and adjusted EBITDA margin reached a record 17.4% in FY2025, but manufacturing and labor intensity across OFSE limits the structural scalability profile.

Long-term contractual service agreements for installed IET turbomachinery represent mission-critical recurring revenue for LNG plant operators who cannot risk compressor downtime. OFSE revenue is more transactional and volume-dependent, tied to drilling activity and operator capital budgets, introducing meaningful discretionary risk in roughly half the business.