Archrock, Inc. (AROC): Business Model Canvas [Dec-2025 Updated]

You're trying to map out exactly how a critical midstream player like Archrock, Inc. (AROC) generates its predictable cash flow, and frankly, it's a masterclass in asset utilization. This company runs the essential compression backbone for natural gas, keeping its massive fleet humming at a near-perfect 96% utilization, which underpins a 2025 Contract Operations revenue guidance set between \$1.265 billion and \$1.280 billion. If you want to see the full strategic blueprint-from their investment-grade customer relationships to the heavy capital expenditures guiding their growth-check out the nine essential blocks detailed below.

Archrock, Inc. (AROC) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that keep Archrock, Inc. running strong and positioned for the next phase of growth. These partnerships aren't just handshake deals; they are quantified, strategic alignments that drive revenue stability and fleet expansion.

The relationships with top-tier energy companies are the bedrock of the Contract Operations segment. As of June 30, 2025, Archrock reported that 9 of 10 of its Top 10 customers held investment grade credit ratings, which speaks volumes about the quality of their counterparties. These top ten customers accounted for approximately 58% of Contract Operations revenue year-to-date through June 30, 2025. To be fair, the average relationship length with these top 10 customers was reported as >20 years as of March 31, 2025, showing deep, durable ties. Also, 82% of the Operating Horsepower was under a long-term contract or strategic agreement as of July 1, 2025.

A major recent partnership integration was the acquisition of Natural Gas Compression Systems (NGCS), which officially closed on May 1, 2025. This move immediately bolstered Archrock's scale. Here's a quick look at the numbers behind that integration:

This transaction was expected to be immediately accretive to Archrock's 2025 earnings per share and cash available for dividend per share. The integration is a key part of the 2025 guidance, which incorporates eight months of the financial impact of NGCS.

For future growth, Archrock is already securing capacity with equipment suppliers. As of February 24, 2025, due to sustained high utilization and a large contracted backlog for 2025, Archrock was actively booking units for 2026 delivery. Management believes strong customer demand for new equipment will continue well into 2026. Furthermore, Archrock is planning for significant capital deployment, with expectations for a minimum of $250 million in growth capital expenditures for 2026, primarily led by activity in the Permian Basin.

On the portfolio optimization side, Archrock executed a divestiture with Flowco Holdings Inc. to focus on core assets. This involved the sale of non-core compression assets, specifically 155 High-Pressure Gas Lift and Vapor Recovery Unit systems, comprising approximately 47,000 active and idle non-strategic compression horsepower. The closing date for this sale was August 1, 2025, and Archrock received cash proceeds totaling $71.0 million in the third quarter of 2025. This divestiture was factored into the full-year 2025 guidance for the months of August through December of 2025.

You can see the impact of these strategic moves in the Q3 2025 results, where the leverage ratio improved to 3.1x as of September 30, 2025, down from 3.6x as of September 30, 2024. Finance: draft the pro-forma leverage impact of the Flowco sale by next Tuesday.

Archrock, Inc. (AROC) - Canvas Business Model: Key Activities

You're looking at the core engine of Archrock, Inc. (AROC)-what they actually do every day to generate revenue and maintain their market position as of late 2025. It's all about keeping that massive fleet running and growing it smartly.

Operating and maintaining a large, high-utilization compression fleet at 96%

The utilization rate is the headline here; it shows you how hard the assets are working. For Archrock, Inc., the fleet utilization has been consistently high, hitting 96% at the end of the first, second, and third quarters of 2025. This high utilization, which is a structural feature of the market now, supports firm pricing power. The total operating horsepower base has expanded significantly to support this demand. At the end of the third quarter of 2025, the total operating horsepower stood at 4.7 million. This represents growth from 4.2 million horsepower at the end of the third quarter of 2024. The sequential growth in Q3 2025 alone was 56,000 horsepower after adjusting for asset sales.

Here's a quick look at the fleet scale and performance snapshot:

Deploying new compression units, backed by multi-year growth CapEx contracts

Archrock, Inc. isn't just running what it has; it's actively investing in new capacity, and that investment is de-risked by customer commitments. For the full year 2025, the company narrowed its growth Capital Expenditures (CapEx) guidance to a range between $345 million and $355 million. This investment is directly tied to securing future revenue, as the growth CapEx is underpinned by multiyear contracts. Looking ahead, Archrock, Inc. expects 2026 growth CapEx to be not less than $250 million. The company focuses on deploying large horsepower and electric motor drive units in stable infrastructure segments.

Providing comprehensive Aftermarket Services (AMS) for customer-owned equipment

This segment provides a crucial service layer for equipment not owned by Archrock, Inc., which helps stabilize revenue streams. Aftermarket Services (AMS) segment revenue for the third quarter of 2025 totaled $56.2 million. This was an increase from $46.7 million reported in the third quarter of 2024. To give you a sense of the recent quarter-over-quarter activity, AMS revenue in the second quarter of 2025 was $64.8 million. The adjusted gross margin percentage for the AMS segment in Q3 2025 was 23%. This activity is supported by the large base of owned compression, driving repeat contract maintenance and service work.

The AMS revenue performance looks like this:

• Q3 2025 AMS Revenue: $56.2 million
• Q2 2025 AMS Revenue: $64.8 million
• Q3 2024 AMS Revenue: $46.7 million

Digital transformation and telematics deployment across the fleet for efficiency

Archrock, Inc. is driving operational improvements through technology integration. The company is focused on its operational transformation, which includes investments in innovative processes and technology. This effort is aimed at generating sustainable efficiency gains. The long-term prospect involves leveraging technology for a more digitized, automated, and sustainable future. This digital focus is explicitly noted as a driver for future cost, service, and environmental benefits. The success of these operational activities is reflected in the profitability metrics, such as the Contract Operations adjusted gross margin percentage reaching 73% in Q3 2025.

The focus on operational execution is key to their strategy.

Archrock, Inc. (AROC) - Canvas Business Model: Key Resources

You're looking at the core assets Archrock, Inc. (AROC) deploys to generate its fee-based revenue stream. These aren't just pieces of equipment; they are the foundation of their stability in the midstream sector. Here's a breakdown of the hard numbers and capabilities that define their Key Resources as of late 2025.

The physical asset base is massive and modern. Archrock, Inc. owns and operates a compression fleet totaling approximately 4.7 million operating horsepower as of the third quarter of 2025. This scale is a significant barrier to entry for competitors. To be fair, this fleet is strategically weighted; 74% of it focuses on large horsepower (HP) applications, which are typically tied to long-term, stable midstream gathering and gas lift projects.

Revenue stability comes directly from contract structure. The company relies on long-term, fee-based contracts, which the model suggests cover approximately 80% of this operating horsepower. This structure helps insulate Archrock, Inc. from the volatility of commodity prices, ensuring predictable cash flow generation.

The financial foundation supporting these physical assets is robust. Archrock, Inc. maintains a strong balance sheet, evidenced by its recent leverage ratio. At the end of the third quarter of 2025, the leverage ratio stood at 3.1x, which is squarely within their stated target range of 3.0x to 3.5x. This disciplined leverage allows them to fund growth and maintain shareholder returns. For instance, their available liquidity was reported at $728 million at September 30, 2025.

Technical expertise and field service capability are critical for maintaining that high utilization rate, which Archrock, Inc. held at 96% at the end of Q3 2025. This requires a deep bench of specialized talent and a wide operational footprint across major US basins, like the Permian, where a significant portion of their HP is deployed.

Here's a quick look at the scale and financial health supporting these resources:

The operational strength is further supported by the longevity of customer relationships. Based on 2024 data, the average time a compressor stays on location is now more than 6 years, which is a 64% improvement since 2021. This suggests that the technical service network is highly effective at retaining assets on long-term assignments.

You can see the focus on high-quality, large-scale assets in their deployment strategy:

• Large HP Applications (over 1,000 HP): Approximately 74% of the fleet.
• Electric Motor Drive (EMD) Horsepower: Approximately 17% of operating HP as of early 2025.
• Average Unit Size: Increased to 927 horsepower per unit in Q3 2025, up from 899 HP in Q2 2025, due to strategic divestment of smaller units.

Finance: review the Q4 2025 CapEx plan against the Q3 2025 leverage of 3.1x by next Tuesday.

Archrock, Inc. (AROC) - Canvas Business Model: Value Propositions

You're looking at the core value Archrock, Inc. (AROC) delivers to its customers right now, late in 2025. It's all about keeping the gas moving reliably, which is a must-run service for energy infrastructure.

The operational proof point here is the utilization of their assets. For the third quarter of 2025, Archrock, Inc. (AROC) reported a fleet utilization rate of 96%. That high number directly translates to customer uptime and service reliability.

The composition of the fleet shows where Archrock, Inc. (AROC) is placing its bets for future growth and meeting evolving customer needs. Specifically, they are focusing on larger equipment and cleaner technology.

This focus on large HP and electric motor drive units supports the move toward lower-emission solutions for their customers, even as they manage power constraints in some areas.

Predictability in service costs for the customer comes from the contract structure, which locks in revenue streams for Archrock, Inc. (AROC). You see this in the pricing power they maintain.

• Monthly revenue per horsepower hit a company record of $23.75 in the second quarter of 2025.
• Growth capital expenditures planned for 2026 are underpinned by multiyear customer commitments.
• The core Contract Operations segment delivered an adjusted gross margin percentage of 73% in Q3 2025.
• The underlying operating profitability for that segment was 70.4% in Q3 2025.

Also, the financial strength supporting this service delivery is evident in the shareholder return structure. Archrock, Inc. (AROC) declared a quarterly dividend of $0.21 per common share for the third quarter of 2025, supported by a dividend coverage ratio of 3.7x. That's a solid foundation for long-term service agreements.

Archrock, Inc. (AROC) - Canvas Business Model: Customer Relationships

You're looking at how Archrock, Inc. keeps its customers locked in, which is the bedrock of their fee-based revenue model. Their approach is deeply relationship-driven, relying on high-quality, long-term contracts because compression is a must-run service for natural gas infrastructure. This stability is key; for instance, their Q3 2025 revenue from Contract Operations hit $326.3 million.

The commitment to existing clients is significant. Archrock, Inc. assigns dedicated account management to ensure long-term retention. This isn't just talk; as of March 31, 2025, the average relationship length with their top 10 customers was reported at >20 years. Furthermore, you should note the credit quality supporting these relationships: 8 of 10 top customers held investment-grade credit as of March 31, 2025. The stability of the fleet deployment reflects this trust, with 80% of Operating Horsepower under a long-term contract or strategic agreement as of January 1, 2025.

The nature of the service means units stay deployed longer, which naturally encourages longer-term agreements. Based on 2024 data, the average time an Archrock compressor stays on location is now more than 6 years, marking a 64% improvement since 2021. This operational longevity underpins their consultative sales approach, especially as they push newer, more efficient technology.

Archrock, Inc. uses a consultative sales process when discussing new builds and specialized equipment. They are heavily focused on specific, high-demand unit types:

• Large Horsepower (HP) units, which made up 74% of the fleet as of November 2025.
• Electric Motor Drive (EMD) units, representing 19% of the fleet as of late 2025.

This focus on large HP and EMD solutions is strategic, supporting midstream gathering systems and gas lift applications. The demand is so strong that Archrock, Inc. is already booking units for 2026 delivery.

Here's a quick look at the operational metrics that feed directly into the strength of these customer relationships:

The company's vision centers on providing superior compression services backed by unmatched technical expertise. That expertise helps them guide customers toward the right solutions, whether it's a new build or integrating EMD technology. Finance: draft 13-week cash view by Friday.

Archrock, Inc. (AROC) - Canvas Business Model: Channels

You're looking at how Archrock, Inc. gets its services-compression and aftermarket support-to the energy sector. It's a dual-pronged approach, mixing direct asset ownership with service contracts and direct support for third-party equipment owners.

Contract Operations segment: Direct deployment and maintenance of owned fleet.

This is the core channel for Archrock, Inc., relying on the direct deployment and full maintenance of its massive, owned compression fleet. As of the third quarter of 2025, the total operating horsepower (HP) stood at an impressive 4.7 million horsepower. This fleet maintained a record utilization rate of 96% at the end of Q3 2025. The deployment strategy focuses heavily on large horsepower units, with 74% of the fleet dedicated to large HP applications, often in high-growth basins. This channel drove the bulk of the revenue, with Contract Operations segment revenue reaching $326.3 million in Q3 2025. The adjusted gross margin percentage for this segment was 73% in the same period.

Aftermarket Services segment: Parts, maintenance, and overhaul for third-party owners.

The second major channel involves servicing equipment that customers own themselves. This segment provides parts, maintenance, and overhaul services, acting as a crucial support layer for the broader industry infrastructure. For the third quarter of 2025, the Aftermarket Services segment generated revenue of $56.2 million. This shows a clear path to monetize the company's technical expertise beyond just its owned assets.

Here's a quick look at the channel performance based on the latest reported figures:

Direct sales force focused on midstream and E&P (Exploration and Production) companies.

Archrock, Inc. uses a direct sales force to secure the long-term, fee-based contracts that underpin the Contract Operations segment. This team targets customers in the energy industry throughout the U.S., specifically focusing on midstream natural gas compression needs. The sales strategy prioritizes investment in profitable, high-return growth areas, particularly large midstream and electric motor drive compression projects supporting customers in premier plays like the Permian Basin. The company's focus on these relationships is what drives the high utilization and long-term contract visibility.

• Target customers include midstream operators and E&P companies.
• Focus on securing long-term, fee-based contracts.
• Sales efforts emphasize large HP units for gathering and gas lift.
• The acquisition of NGCS in May 2025 expanded customer relationships and scale.

Archrock, Inc. (AROC) - Canvas Business Model: Customer Segments

You're looking at the core of Archrock, Inc.'s (AROC) business, which is built on long-term relationships with high-quality energy producers and midstream players. This segment is all about scale and location, so let's look at the hard numbers defining who they serve as of late 2025.

The customer base is heavily weighted toward large, blue-chip energy companies with investment-grade credit. Honestly, this focus on credit quality is what provides the stability you see in their long-term contract structure. As of July 25, 2025, Archrock, Inc. reported that 9 of its Top 10 customers held investment grade credit ratings.

A major portion of the business serves midstream operators for gas gathering and processing applications. This is the bread-and-butter, providing the stable, fee-based revenue Archrock, Inc. relies on. For instance, based on operating horsepower as of October 1, 2025, about 60% of Archrock, Inc.'s operating HP was dedicated to gathering applications.

The third key segment involves producers needing gas lift compression, defintely concentrated in shale plays. This application supports enhanced oil production rates. The company's total operating fleet size as of the third quarter of 2025 reached approximately 4.7 million horsepower (HP). Furthermore, Archrock, Inc.'s strategic focus is on large horsepower (HP) units, with about 74% of that fleet dedicated to large HP applications.

Geographically, the concentration is clear, which is a key driver for their demand, even if it introduces some basin-specific risk. Archrock, Inc. is geographically focused on the Permian and Eagle Ford basins. These two areas represent approximately 75% of the company's operating HP as of late 2025. This concentration is supported by a fleet utilization rate that hit 96% at the end of the third quarter of 2025.

Here's a quick snapshot of the operational scale tied to these customer segments:

You should note that the average time on site for their contracts is quite long, which speaks to the stickiness of these customer relationships. The average time on-site was over 6 years as of the year ended December 31, 2024.

Also, consider the focus on technology within this segment:

• Electric Motor Drive (EMD) units make up about 19% of the fleet.
• Average unit size increased from 899 HP to 927 HP by Q3 2025.
• Monthly revenue per HP hit a record of $23.75 in Q3 2025.

Archrock, Inc. (AROC) - Canvas Business Model: Cost Structure

Archrock, Inc.'s cost structure is heavily weighted toward capital-intensive assets and ongoing operational support for its compression fleet. The ownership and maintenance of this large asset base drive significant fixed and variable costs.

The depreciation of the compression fleet represents a high fixed cost component. This reflects the long-term investment in the physical assets necessary to generate revenue. To support and grow this fleet, Archrock, Inc. commits substantial capital.

For the 2025 fiscal year, Archrock, Inc.'s capital allocation guidance shows significant investment planned:

The growth capital expenditure guidance was recently narrowed to between \$340,000,000 to \$360,000,000 of investment in the fleet, underpinned by multiyear contracts with blue chip customers. Furthermore, looking ahead, Archrock, Inc. expects 2026 growth CapEx to be not less than \$250,000,000.

Beyond the large capital outlays, day-to-day operating costs are material. These costs cover the essential services that keep the fleet running and meet customer needs. Archrock, Inc. employs field service technicians throughout the U.S. and operates shops to support its Aftermarket Services.

Key operating cost elements include:

• Operating costs for field services.
• Labor expenses for technicians and support staff.
• Costs for new, OEM, and remanufactured parts.

The company defines its gross margin as total revenue less cost of sales, excluding depreciation and amortization, which helps management focus on the current operating performance excluding the impact of historical asset costs. For the full year 2025, Selling, General & Administrative (SG&A) expenses are projected to fall between \$148,000,000 and \$150,000,000.

Archrock, Inc. (AROC) - Canvas Business Model: Revenue Streams

You're looking at the core of Archrock, Inc.'s financial engine, which is built on long-term, contracted service revenue. This structure is what gives Archrock its utility-like characteristics, making it less susceptible to the wild swings of the commodity markets.

The primary revenue driver is the Contract Operations segment. This is where Archrock owns and operates the compression fleet under agreements with customers. For the full fiscal year 2025, the guidance for this segment is set between \$1.265 billion to \$1.280 billion. This stream is the bedrock of the company's financial visibility.

To give you a sense of the scale, Q3 2025 Contract Operations revenue alone hit \$326.3 million, with the operating fleet reaching 4.7 million horsepower and a utilization rate of 96% at the end of that quarter. The adjusted gross margin percentage in this segment for Q3 2025 was 73%.

Revenue streams are diversified through Aftermarket Services. This segment provides maintenance, parts, and service support for customer-owned compression equipment, offering a secondary, though smaller, revenue component. The 2025 guidance for Aftermarket Services revenue is projected to be in the range of \$210 million to \$220 million. For comparison, Q3 2025 revenue for this segment was reported at \$56.2 million.

The stability you're looking for comes directly from the nature of the underlying agreements. Archrock, Inc. relies heavily on fee-based revenue from multi-year contracts. This structure means that even if natural gas prices fluctuate, the contracted service fees keep the cash flowing, which is defintely a key differentiator in the energy sector.

The strength across these revenue streams is reflected in the profitability outlook. Archrock, Inc. has raised its full-year 2025 Adjusted EBITDA guidance to a range of \$835 million to \$850 million. This reflects strong operational execution and favorable pricing power.

Here's a quick look at how the key financial metrics stack up against the guidance and recent performance:

The business model's reliance on contracted horsepower means Archrock, Inc. is focused on maximizing the value of its fleet through high utilization and strategic growth. You can see the commitment to growth in their capital deployment:

• Total operating horsepower reached 4.7 million at the end of Q3 2025.
• The company returned \$159.1 million to stockholders through dividends and share repurchases in the first three quarters of 2025.
• The quarterly dividend was declared at \$0.21 per common share for Q3 2025.
• Dividend coverage remained robust at 3.7x.

Finance: draft 13-week cash view by Friday.