AI Takeaway
Devon Energy reported a sharp Q1 FY2026 earnings decline with net income falling 75.7% YoY to $120M on revenue of $3.81B, reflecting lower commodity prices and the impact of its Grayson Mill acquisition, though the balance sheet remained solid with cash rising 47.2% to $1.76B.
Revenue
$3.81B
-14.49% YoY
EPS (Basic)
$0.19
-75.32% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue fell 14.5% YoY from $4.45B to $3.81B in Q1 FY2026, primarily reflecting weaker oil and natural gas prices that have pressured top-line results across the upstream E&P sector. This revenue compression was the primary driver of the significant earnings decline.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Net income dropped 75.7% YoY from $494M to $120M, with net margin contracting to just 3.15% from a higher prior-year level. This reflects both the revenue headwind and the cost structure associated with Devon's expanded asset base following the Grayson Mill acquisition.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Operating cash flow of $1.66B (down 14.8% YoY from $1.94B) demonstrates Devon's continued ability to generate substantial cash from operations even in a lower-price environment, supported by $904M in D&A add-backs reflecting the capital-intensive nature of the business.
Source: Source: 10-Q Cash Flow Statement (XBRL Financial Data)
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Upgrade to unlockDevon's revenue and earnings are highly sensitive to oil and natural gas prices, as evidenced by the 14.5% revenue decline and 75.7% net income drop in Q1 FY2026 despite relatively stable production. Sustained low commodity prices could further compress margins and free cash flow, limiting Devon's ability to fund dividends, buybacks, and capital programs.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
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Upgrade to unlockReported EPS of $1.04 versus the $1.07 analyst consensus — a -2.9% miss for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.81B | $4.45B | -14.49% |
Net Income | $120M | $494M | -75.71% |
EPS (Basic) | $0.19 | $0.77 | -75.32% |
EPS (Diluted) | $0.19 | $0.77 | -75.32% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $32.54B | $30.93B | +5.22% |
Current Assets | $4.76B | $3.9B | +21.95% |
Current Liabilities | $4.73B | $3.62B | +30.85% |
Stockholders' Equity | $15.43B | $14.54B | +6.07% |
Cash & Equivalents | $1.76B | $1.2B | +47.16% |
Long-Term Debt | $8.39B | $8.88B | -5.56% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $1.66B | $1.94B | -14.78% |
Investing Cash Flow | $-1.02B | $-802M | -27.18% |
Financing Cash Flow | $-254M | $-752M | +66.22% |
Share Buybacks | $69M | $301M | -77.08% |
D&A | $904M | $912M | -0.88% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Net Margin | 3.2% | — | — |
ROE | 0.8% | — | — |
ROA | 0.4% | — | — |
Current Ratio | $1.006 | — | — |
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Devon Energy reported Q1 FY2026 net income of $120M, down 75.7% from $494M a year ago, with revenue declining 14.5% to $3.81B. EPS came in at $0.19 (basic and diluted), compared to $0.77 in the prior-year quarter, reflecting significant pressure from lower commodity prices.
The primary driver was lower oil and natural gas prices, which compressed Devon's revenue by $645M YoY to $3.81B and caused net margin to fall to just 3.15%. The company's cost structure, including $904M in D&A and elevated long-term debt of $8.39B, left little room for profit when revenues declined.
Devon's balance sheet showed mixed signals: cash surged 47.2% to $1.76B and long-term debt declined 5.6% to $8.39B, which are positives. However, the current ratio of just 1.006 indicates very thin short-term liquidity, with current assets of $4.76B barely covering current liabilities of $4.73B.
Devon generated $1.66B in operating cash flow in Q1 FY2026, down 14.8% from $1.94B in the prior-year period. After investing outflows of $1.02B, implied free cash flow was approximately $635M, a notable reduction from prior-year levels.
Devon significantly reduced its share repurchase activity in Q1 FY2026, buying back only $69M in stock compared to $301M in the prior-year quarter — a 77.1% decline. This suggests management prioritized balance sheet preservation and liquidity over capital returns in the face of weaker commodity prices.