Expro Group Holdings N.V. (XPRO) Income Statement

The top-line contraction appears driven by project timing and pricing pressure in the tubular running segment, as international offshore activity has not yet translated into sustained revenue. The sequential uptick from 2026Q1's $367.6M suggests some stabilization, but the year-over-year trend remains negative, indicating that the anticipated deepwater recovery is still in its early stages. Investors should monitor contract commencement dates in the Atlantic Margin to assess whether growth can reaccelerate.

The sharp decline in gross margin suggests that fixed overhead absorption is weak at current revenue levels, and the company may be absorbing pricing concessions to maintain market share. The 12.77% average gross margin over the last four quarters is well below the 15.4% achieved in 2024Q4, indicating that the shift toward higher-margin Well Management services has not yet materialized. Without a sustained increase in deepwater rig utilization, margin recovery appears limited.

The high fixed-cost base amplifies the impact of revenue declines, as SG&A has remained relatively stable around $20M per quarter while gross profit has fallen by over 35% year-over-year. This suggests that the company cannot easily adjust its cost structure in response to lower activity, leaving operating income highly sensitive to top-line fluctuations. The thin net margin of 0.5% in 2026Q2 leaves little room for error, and any further revenue softness could push the company into a loss.

The increase in COGS relative to revenue suggests that the company is unable to reduce its cost base in line with declining activity, particularly in personnel and equipment maintenance. SG&A has remained relatively flat, but the lack of R&D spending (reported as zero) may indicate a focus on cost containment rather than investment in future growth. The company's ability to manage costs will be critical to restoring profitability, but the current trend suggests limited flexibility.

The 2024Q4 period appears to be the inflection point, as it represented the highest revenue and gross margin in the trailing ten quarters, likely benefiting from a surge in offshore completions. Since then, the company has experienced a steady deterioration, with revenue falling to $393.2M by 2026Q2 and gross margin nearly halving. This suggests that the offshore cycle has turned, and the company's high fixed-cost structure has amplified the impact of the downturn.