NOV Inc. (NOV)

How it makes money

Revenue comes from selling and renting physical equipment and from services billed by the job, not from subscriptions. NOV recognizes revenue when equipment ships or a service is performed; large capital-equipment orders carry a backlog delivered over one to three years and often require customer down payments. About 66% of 2025 revenue came from outside the United States. Margins depend heavily on the volume of oil and gas drilling worldwide, since fixed manufacturing costs are spread over a swinging order book.

Revenue by segment

NOV competes with national, regional and foreign manufacturers across every product line, and states in its own filings that some rivals have greater financial and technical resources. Its business depends on winning individual contracts rather than on a durable structural advantage, and its scale in a fragmented industry offers no clear pricing power over well-funded competitors.

Demand tracks worldwide oil and gas drilling activity, which in turn follows oil and gas prices, capital budgets of exploration companies, and OPEC production decisions — all of which NOV says it cannot control. The industry has swung between shortage and oversupply repeatedly; a backlog of $4.34 billion in equipment orders can still be delayed or cancelled if customer economics deteriorate.

Key risks

• Dependence on oil and gas drilling activity — NOV states that demand for its products and services depends primarily on the level of worldwide oil and gas drilling, which has historically been highly volatile and can swing sharply within a short period.
• Revenue concentrated outside the United States — About 66% of 2025 revenue came from operations outside the United States, exposing NOV to political instability, sanctions, currency swings and expropriation risk in the many countries where it does business.
• Fixed-price contract risk — NOV's capital-equipment backlog includes multi-year, fixed-price contracts. Cost overruns, supplier delays, tariffs or inflation in materials can erode margins on work already committed, and some customers cannot cancel for convenience but can still delay payment.
• Supply chain and tariff exposure — The company depends on third-party vendors for raw materials and components; shortages, higher prices, shipping delays or new tariffs — including Section 232 steel tariffs — can raise costs or interrupt production.
• Climate policy and sentiment pressure on oil and gas demand — Future laws restricting greenhouse gas emissions, carbon taxes, or negative investor and customer sentiment toward fossil fuels could reduce demand for oil and gas — and therefore for NOV's products — regardless of the company's own actions.