Baker Hughes Company generated $27.8 billion in revenue for fiscal year 2024, achieving record adjusted EBITDA of $4.6 billion with a 16.5% margin—the fourth consecutive year of margin expansion—while attributable net income surged 53.3% to $3.0 billion. The company operates through two segments: Oilfield Services and Equipment (OFSE, $15.6 billion, 56.2% of revenue) and Industrial and Energy Technology (IET, $12.2 billion, 43.8% of revenue), holding $33.1 billion in remaining performance obligations that provide multi-year revenue visibility.
Baker Hughes: Key Facts
- Founded: 1987 through merger of Baker International (1907) and Hughes Tool Company (1909)
- Headquarters: Houston, Texas, United States
- CEO: Lorenzo Simonelli (since 2017, also Chairman since October 2017)
- FY2024 Revenue: $27.8 billion, up 9.1% from FY2023
- Employees: Approximately 57,000 across 120+ countries
- Primary Segments: Oilfield Services and Equipment (OFSE), Industrial and Energy Technology (IET)
- Stock Listing: NASDAQ (BKR), approximately 992 million shares outstanding
- Key Backlog: $33.1 billion in remaining performance obligations ($30.1 billion IET, $3.0 billion OFSE)
How Does Baker Hughes Make Money?
Baker Hughes generates 56.2% of its revenue from the Oilfield Services and Equipment (OFSE) segment, which provides drilling, completions, production, and subsea technologies to oil and gas operators on a well-by-well or project basis. The Well Construction product line includes directional drilling, drill bits, and drilling fluids; Completions, Intervention, and Measurements encompasses wellbore construction, pressure pumping, and wireline logging; Production Solutions spans artificial lift and chemicals; and Subsea and Surface Pressure Systems includes subsea trees, flexible pipes, and surface pressure control. OFSE operating margin was 12.7% in FY2024.
The Industrial and Energy Technology (IET) segment contributes 43.8% of revenue and is the primary growth driver. Gas Technology Equipment ($5.7 billion) manufactures centrifugal compressors, gas turbines (LM6000, LM9000, NovaLT), pumps, valves, and modularized LNG systems. Gas Technology Services ($2.8 billion) provides long-term maintenance, upgrades, and digital monitoring for installed turbomachinery, generating nearly 50% of IET EBITDA at margins exceeding 25% despite representing only 23% of IET revenue. Industrial Technology ($3.1 billion) serves general industrial markets with pumps, valves, and automation. Climate Technology Solutions ($605 million) includes CCUS, hydrogen, and geothermal equipment. IET operating margin was 15.0% in FY2024, up from 12.9% in FY2023.
The IET business model is distinctive: long-term contractual service agreements (CSAs) spanning 10-25 years generate 1x to 2x the initial equipment revenue over the equipment's operational life. The $30.1 billion IET RPO includes $15.0 billion in Gas Technology Services and $11.8 billion in Gas Technology Equipment, providing revenue visibility that pure-play oilfield services competitors cannot match.
Who Founded Baker Hughes and When?
Baker Hughes was formed on April 5, 1987, through the merger of Baker International and Hughes Tool Company. Baker International traced its origins to Reuben C. "Carl" Baker Sr., who patented the Well Casing Shoe on July 16, 1907, and organized the Baker Casing Shoe Company in Coalinga, California, on August 14, 1907. Baker obtained more than 150 U.S. patents despite never advancing beyond the third grade, and his company grew from a machine shop generating $600-1,500 per month to a $2.4 billion enterprise by 1987.
Hughes Tool Company was founded in 1909 when Howard R. Hughes Sr. and Walter B. Sharp established the Sharp-Hughes Tool Company in Houston, Texas, after patenting the first two-cone roller cutter drill bit. The invention revolutionized rotary drilling through hard rock formations. When Sharp died in 1912, Hughes acquired his partner's stake and renamed the company Hughes Tool Company in 1915. The company dominated the global drill bit market for three decades and generated the fortune that funded Howard Hughes Jr.'s aviation, film, and real estate empire.
What Is Baker Hughes's Competitive Advantage?
Baker Hughes's primary competitive advantage is the $30.1 billion IET remaining performance obligations backlog, which provides multi-decade revenue visibility through long-term service agreements that no pure-play oilfield services competitor can replicate. SLB, with $35.5 billion in trailing revenue, has minimal long-term equipment backlog because its business is dominated by 90-day drilling contracts. Halliburton's $22.2 billion revenue base is similarly short-cycle.
The Gas Technology Services installed base has doubled since 2000 and is projected to grow another 20% by 2030. Each LNG train uses custom-engineered Baker Hughes compressors and turbines that are incompatible with competitor equipment, creating switching costs that lock in decades of service revenue. The 25-year service agreement with NextDecade for Rio Grande LNG and multi-decade Middle East LNG contracts are exclusive partnerships that generate $150-250 million per train over the contract life at margins exceeding 25%.
Baker Hughes also uniquely combines OFSE subsurface expertise with IET surface infrastructure. The Jafurah Phase 3 award from Saudi Aramco—where Baker Hughes supplied both subsurface evaluation and surface compression under a single contract—demonstrates an integration advantage that SLB (no turbomachinery) and Siemens Energy (no drilling) cannot match.
How Has Baker Hughes's Revenue Grown Over Time?
Baker Hughes's revenue trajectory reflects its transformation from a pure oilfield services company to a hybrid energy technology company. Following the 1987 merger, revenue was $3.5 billion. The 1998 Western Atlas acquisition grew revenue to $5.5 billion, and by 2000 the company reached $7.5 billion. The 2000s oil boom drove revenue to $19.8 billion by 2008, before the 2008-2009 financial crisis and 2014-2016 oil price collapse reduced revenue to $15.7 billion by 2016.
The 2017 GE merger added approximately $15 billion in industrial equipment revenue, and combined revenue reached $23.0 billion in 2018. Revenue declined to $20.7 billion in 2020 during the COVID-19 pandemic, then recovered to $21.2 billion in 2022, $25.5 billion in 2023, and $27.8 billion in 2024. The IET segment has driven recent growth, expanding from $7.9 billion in 2022 to $10.1 billion in 2023 and $12.2 billion in 2024—a 54% increase in two years—while OFSE grew from $13.2 billion to $15.6 billion (18% increase) over the same period.
Baker Hughes Business Model Explained
Baker Hughes operates a hybrid business model that combines cyclical oilfield services with stable industrial equipment and long-term service agreements. The OFSE segment generates revenue through well-by-well and project-based contracts, with pricing negotiated per job and limited long-term commitments. This creates cyclicality: when the U.S. rig count declined 9.7% in FY2024, North America OFSE revenue fell 3.9% to $3.96 billion. However, international OFSE revenue grew 3.8% to $11.67 billion, providing geographic diversification.
The IET segment operates on a fundamentally different model. Gas Technology Equipment is sold on a project basis with 12-36 month delivery cycles and 10-15% margins. But every equipment sale creates a decades-long service annuity through Gas Technology Services, which generates 25%+ margins and has $15.0 billion in RPO. This creates a subscription model disguised as capital equipment: the installed base compounds over time, and service revenue grows even when equipment orders fluctuate. The IET RPO of $30.1 billion represents 2.5x annual IET revenue, providing a revenue floor that insulates the company from commodity cycles.
Baker Hughes Key Acquisitions
The most transformative acquisition was Western Atlas in 1998 for $5.5 billion in stock, which added seismic data acquisition, wireline logging, and reservoir characterization. While the Western Geophysical division was later contributed to WesternGeco and sold, the Baker Atlas wireline business became a core OFSE capability. The 2017 GE Oil and Gas merger for $7.4 billion added gas turbines, compressors, LNG systems, and industrial equipment, creating the IET segment that now generates 43.8% of revenue. The 1990 Eastman Christensen acquisition added directional drilling capabilities essential for shale development.
What Are the Biggest Risks Facing Baker Hughes?
The most immediate risk is North American OFSE cyclicality. The U.S. land rig count averaged 689 rigs in FY2024, down from 763, and a sustained oil price below $60 per barrel could push the rig count below 600, reducing North America OFSE revenue by $400-600 million. The second risk is LNG project delay: if major projects like Woodside Louisiana or NextDecade Rio Grande Phase 2 slip by 12-18 months, IET revenue growth could decelerate from 20% to 8-10%. The third risk is energy transition uncertainty: new energy orders of $1.0 billion represent only 3.6% of total orders, and hydrogen and CCUS markets remain subsidy-dependent. The fourth risk is talent retention, with voluntary attrition at 6% but turbomachinery engineers being recruited by competitors at 20-30% salary premiums.
Bottom Line
Baker Hughes is in a margin expansion phase, not a revenue hypergrowth phase. FY2024 revenue grew 9.1% to $27.8 billion, but adjusted EBITDA surged 22.0% to $4.6 billion with margin expansion from 14.8% to 16.5%—the fourth consecutive year of improvement. The company generates $2.3 billion in free cash flow and returns $1.3 billion to shareholders annually. The $33.1 billion RPO provides revenue visibility that no competitor can match, and the IET segment's 20.3% revenue growth demonstrates the power of the equipment-plus-services model. The challenge is achieving 20% EBITDA margins in both segments by 2025-2026 while managing OFSE cyclicality and LNG project timing risk. Baker Hughes is not a high-growth stock, but it is a cash-generative, margin-expanding energy technology company with a defensible competitive position in the fastest-growing segment of the energy infrastructure market.
