Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments and trading activities [1]. Group 1 - The website provides general news, personal analysis, and third-party content intended for educational and research purposes [1]. - It explicitly states that the information does not constitute any recommendation or advice for investment actions [1]. - Users are advised to perform their own research and consider their financial situation before making decisions [1]. Group 2 - The website includes information about complex financial instruments such as cryptocurrencies and contracts for difference (CFDs), which carry a high risk of losing money [1]. - It encourages users to understand how these instruments work and the associated risks before investing [1]. - The content may include advertisements and promotional materials, with the website potentially receiving compensation from third parties [1].

Group 1 - The author has been active in the markets for several years, focusing primarily on long/short equities [1] - The author holds a Bachelor of Science Degree in Finance and Accounting, with a minor in History, and has experience managing investment portfolios [1] - The author has completed internships at a large bank and in managing a university endowment [1] Group 2 - The article emphasizes the importance of conducting due diligence before making any investment decisions [3][4] - It is noted that past performance does not guarantee future results, and no specific investment recommendations are provided [4] - The article clarifies that the views expressed may not reflect those of Seeking Alpha as a whole, and analysts may not be licensed or certified [4]

Core Insights - The article highlights the investment strategies and performance of Chris Lau, an experienced investor and economist, focusing on undervalued stocks and dividend-growth income stocks [1][2]. Group 1: Investment Strategies - The investment group DIY Value Investing shares top stock picks that are undervalued and have upcoming catalysts that the market does not expect [2]. - The group also provides recommendations for dividend-income stocks that have a long history of dividend growth, including a printable calendar and quantitative scores [2]. - Additionally, there are speculative picks aimed at high-risk allocations with potential for significant returns, described as "moonshot" opportunities [2]. Group 2: Performance Metrics - The average return for public articles in 2023 is reported at 8.4%, an increase from 6.9% in 2022 and a notable rise from 29.9% in 2021 [2].

Core Insights - Lumen Technologies, Inc. reported a narrower adjusted loss of 3 cents per share for Q2 2025, compared to an expected loss of 24 cents, and a loss of 13 cents in the same quarter last year [1][8] - Total revenues for the quarter were $3.092 billion, down 5% year over year, missing the consensus estimate by 1.1%, impacted by $46 million in one-time reimbursements related to the Rural Digital Opportunity Fund [2][8] Financial Performance - Business revenues decreased by 3.4% year over year to $2.49 billion, Large Enterprises revenues fell 2% to $732 million, Mid-Market Enterprise revenues dropped 11% to $500 million, while Public Sector revenues increased by 8% to $486 million [6] - Revenues from Mass Markets declined by 12.8% year over year to $602 million, with the addition of 34,000 Quantum fiber subscribers, bringing the total to 1.2 million [9][10] - Total operating expenses rose by 18% year over year to $3.695 billion, resulting in an operating loss of $603 million compared to an operating income of $135 million in the previous year [11] Strategic Developments - Lumen secured $9 billion in PCF deals, an increase of $500 million since Q1, driven by rising AI connectivity demand from major tech companies [3] - The company anticipates $350 million in run-rate cost benefits, up from a previous target of $250 million, and expects to achieve $1 billion in run-rate cost benefits by the end of 2027 [4] - Lumen is optimistic about selling its Mass Markets' fiber-to-the-home business to AT&T for $5.75 billion, with the transaction expected to close in the first half of 2026 [4] Cash Flow and Liquidity - Lumen generated $570 million in net cash from operations, compared to $511 million in the prior year, while free cash outflow was $209 million, up from $156 million [12] - As of June 30, 2025, the company had $1.6 billion in cash and cash equivalents and $17.565 billion in long-term debt, following a significant refinancing that reduced annual interest expenses by $50 million [13] Future Outlook - For 2025, adjusted EBITDA is projected to be between $3.2 billion and $3.4 billion, with expectations to report near the high end of this range [14] - Capital expenditures are anticipated to be between $4.1 billion and $4.3 billion, while free cash flow is now expected to be between $1.2 billion and $1.4 billion, up from previous guidance [15][16]

Core Insights - Lumen reported revenue of $3.09 billion for the quarter ended June 2025, a decrease of 5.4% year-over-year, with an EPS of -$0.03, an improvement from -$0.13 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $3.13 billion by 1.06%, while the EPS exceeded the consensus estimate of -$0.24 by 87.5% [1] Financial Performance - Total Business Segment Revenue was $2.49 billion, slightly above the average estimate of $2.48 billion, but down 3.4% year-over-year [4] - Total Mass Markets Revenue was reported at $602 million, below the estimated $649.47 million, reflecting a decline of 12.9% year-over-year [4] - Wholesale Business Segment Revenue was $690 million, slightly above the estimate of $685.96 million, down 4.6% year-over-year [4] - Large Enterprise Revenue totaled $732 million, exceeding the average estimate of $713.65 million, but down 12.5% year-over-year [4] - International and Other Revenue was $82 million, slightly below the estimate of $85.85 million [4] - Public Sector Revenue was $486 million, surpassing the estimate of $475.71 million, with an increase of 8.5% year-over-year [4] - Fiber Broadband-Mass Markets Segment Revenue was $217 million, slightly above the estimate of $216.54 million, showing a growth of 19.9% year-over-year [4] - Other Broadband-Mass Markets Segment Revenue was $245 million, exceeding the estimate of $241.35 million, but down 17.8% year-over-year [4] - Voice and Other-Mass Markets Segment Revenue was $140 million, significantly below the estimate of $191.08 million, reflecting a decline of 34% year-over-year [4] - Mid-Market Enterprise Revenue was $500 million, below the average estimate of $514 million, but up 4.6% year-over-year [4] Stock Performance - Lumen's shares have returned +0.2% over the past month, compared to the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - Lumen reported a quarterly loss of $0.03 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.24, representing an earnings surprise of +87.50% [1] - The company posted revenues of $3.09 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.06%, and down from $3.27 billion year-over-year [2] - Over the last four quarters, Lumen has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Outlook - Lumen shares have declined approximately 16% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.36 on revenues of $3.07 billion, and for the current fiscal year, it is -$1.02 on revenues of $12.49 billion [7] Industry Context - The Diversified Communication Services industry, to which Lumen belongs, is currently ranked in the top 10% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Lumen's stock performance [5]

Financial Data and Key Metrics Changes - Lumen reported total revenue of $3,092,000,000, a decline of 5.4% year over year, while business segment revenue decreased by 3.4% to $2,490,000,000 [26][21] - Adjusted EBITDA was $877,000,000 with a margin of 28.4%, down from approximately $1,000,000,000 in the same quarter last year [33][21] - Free cash flow was negative $209,000,000, with expectations for improvement in future quarters [34][36] Business Line Data and Key Metrics Changes - Total IP sales increased nearly 38%, with IP revenue up in the mid-single digits [21] - North American enterprise grow revenue increased by 8.5% year over year, while nurture revenue decreased by 18% [30][27] - Mass markets segment revenue declined by 12.8%, but fiber broadband revenue increased by 19.9% year over year [32][26] Market Data and Key Metrics Changes - Public sector revenue grew by 8.2% year over year, driven by a 9.4% increase in grow revenue and a 49% increase in harvest revenue [27] - Wholesale revenue declined approximately 5% year over year, with harvest revenue contracting by 6.2% [28] - International and other revenue decreased by 10.9%, primarily due to VPN declines [29] Company Strategy and Development Direction - The company is focused on transforming its network to support the AI economy, emphasizing the construction of new infrastructure and digital platforms [20][7] - Lumen aims to leverage its physical network and digital platform to create a scalable commercial ecosystem for customers [20][19] - The company is committed to maintaining discipline in deal-making, ensuring that new contracts are value-accretive [10][4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to EBITDA growth and highlighted the importance of modernization and simplification efforts [37][38] - The company anticipates continued lumpiness in cash flow related to PCF contracts and the sale of its consumer fiber business [36][34] - Management noted that the recent reconciliation bill will significantly reduce tax liabilities, providing additional financial flexibility [25][36] Other Important Information - The company successfully refinanced $2,000,000,000 in debt, extending maturities and reducing annual interest expenses by approximately $100,000,000 [24][23] - Lumen's free cash flow guidance for 2025 has been raised to between $1,200,000,000 and $1,400,000,000, primarily due to expected tax refunds and lower CapEx spending [36][34] Q&A Session Summary Question: Performance of North American enterprise segment - Management highlighted that the grow bucket is performing well at 8.5%, which is crucial for future revenue inflection, while nurture revenue is expected to decline [42][43] Question: Expectations for 2026 EBITDA - Management indicated that there are no changes to the expectations for 2026 EBITDA, which is still anticipated to inflect next year [56][57] Question: Incremental costs and their impact - Management noted that there are about $100,000,000 in costs related to forced disconnects and cloud workload transitions, which will impact EBITDA in the second half [64][65] Question: Drivers of PCF sales - The recent $500,000,000 in new PCF contracts is primarily driven by over pull work, which is lower risk and higher margin [62][63] Question: Complexity of building new routes - Management explained that the complexity of building new routes is a significant factor affecting CapEx guidance, but it does not impact revenue timing [80][79]

Financial Performance & Outlook - Lumen reported total revenue of $3092 million, a decrease of 5.4% year-over-year and 2.8% quarter-over-quarter[30] - Adjusted EBITDA was $877 million, down 13.3% year-over-year, with an adjusted EBITDA margin of 28.4%, a decrease of 250 bps[35] - The company is guiding towards the high end of its adjusted EBITDA range due to strength in modernization and simplification programs[8] - Lumen revised its 2025 free cash flow outlook upwards to $1.2 to $1.4 billion, primarily driven by a $400 million tax refund, lower capital expenditures, better adjusted EBITDA performance, and lower interest expense[40] Debt Management - Lumen has reached nearly $9 billion in Private Connectivity Fabric (PCF) deals signed to date[8] - The company completed $2 billion in debt refinancing, extending maturities and reducing cash interest[8] - Pro forma Lumen SP debt paydown is projected to result in total debt of $13.5 billion and a gross leverage of 3.9x[28] Strategic Initiatives - Lumen announced the sale of its Consumer FTTH (fiber-to-the-home) business to AT&T for $5.75 billion to reduce leverage and focus on enterprise services[8] - The company is focused on building the backbone for AI, balancing capacity and utilization for optimal return on investment[10] - Lumen is experiencing strong NaaS (Network as a Service) adoption, with a 35% quarter-over-quarter increase in LCF (Lumen Cloud Fabric) customers purchasing and using one or more ports[14] Mass Markets - Total Mass Markets revenue was $602 million, a decrease of 12.8% year-over-year[30] - Fiber Broadband revenue within Mass Markets was $217 million, an increase of 19.9% year-over-year, contributing 36% to total broadband revenue[32]

[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) Outlines forward-looking statements, subject to safe harbor, and factors that could cause actual results to differ from projections - Forward-looking statements are based on judgment and assumptions, are inherently speculative, and are subject to a number of risks and uncertainties, many of which are beyond the company's control[12](index=12&type=chunk) - Factors that could cause actual results to differ materially include intense competition, new/emerging technologies, operational imperatives, asset monetization, cybersecurity, regulatory changes, cash flow generation, and shifts in customer demand, including for AI applications[14](index=14&type=chunk) - The company may change its intentions, strategies, or plans, including capital allocation, at any time and without notice[16](index=16&type=chunk) [Part I - Financial Information](index=8&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) Presents Lumen's unaudited consolidated financial statements, covering operations, balance sheets, cash flows, and accounting notes [Consolidated Statements of Operations (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 (Millions $) | Three Months Ended June 30, 2024 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Operating Revenue | 3,092 | 3,268 | 6,274 | 6,558 | | Total Operating Expenses | 3,695 | 3,133 | 6,770 | 6,378 | | Operating (Loss) Income | (603) | 135 | (496) | 180 | | Total Other Expense, Net | (546) | (176) | (898) | (119) | | (Loss) Income Before Income Taxes | (1,149) | (41) | (1,394) | 61 | | Income Tax (Benefit) Expense | (234) | 8 | (278) | 53 | | Net (Loss) Income | (915) | (49) | (1,116) | 8 | | Basic (Loss) Earnings Per Common Share | (0.92) | (0.05) | (1.12) | 0.01 | | Diluted (Loss) Earnings Per Common Share | (0.92) | (0.05) | (1.12) | 0.01 | [Consolidated Statements of Comprehensive (Loss) Income (Unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income%20(Unaudited)) Consolidated Statements of Comprehensive (Loss) Income | Metric | Three Months Ended June 30, 2025 (Millions $) | Three Months Ended June 30, 2024 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | NET (LOSS) INCOME | (915) | (49) | (1,116) | 8 | | Other Comprehensive Income | 21 | 13 | 44 | 24 | | COMPREHENSIVE (LOSS) INCOME | (894) | (36) | (1,072) | 32 | [Consolidated Balance Sheets (Unaudited)](index=10&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Consolidated Balance Sheets | Metric | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :---------------------------------- | :------------------------- | :--------------------------- | | **ASSETS** | | | | Cash and cash equivalents | 1,568 | 1,889 | | Accounts receivable, less allowance | 1,266 | 1,231 | | Assets held for sale | 3,692 | 24 | | Total current assets | 7,737 | 4,394 | | Property, plant and equipment, net | 18,665 | 20,421 | | Goodwill | — | 1,964 | | Other intangible assets, net | 4,525 | 4,806 | | Total assets | **32,976** | **33,496** | | **LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY** | | | | Current maturities of long-term debt | 331 | 412 | | Accounts payable | 831 | 749 | | Liabilities held for sale | 110 | — | | Total current liabilities | 3,632 | 3,639 | | Long-term debt | 17,565 | 17,494 | | Total stockholders' (deficit) equity | (595) | 464 | | Total liabilities and stockholders' (deficit) equity | **32,976** | **33,496** | [Consolidated Statements of Cash Flows (Unaudited)](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Consolidated Statements of Cash Flows | Metric | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net (loss) income | (1,116) | 8 | | Net cash provided by operating activities | 1,665 | 1,613 | | Net cash used in investing activities | (1,642) | (1,194) | | Net cash used in financing activities | (344) | (1,160) | | Net decrease in cash, cash equivalents and restricted cash | (321) | (741) | | Cash, cash equivalents and restricted cash at end of period | 1,579 | 1,507 | [Consolidated Statements of Stockholders' (Deficit) Equity (Unaudited)](index=12&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20(Deficit)%20Equity%20(Unaudited)) Consolidated Statements of Stockholders' (Deficit) Equity | Metric | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | | Balance at beginning of period (Common Stock) | 19,149 | 1,008 | | Net (loss) income | (1,116) | 8 | | Other comprehensive income | 44 | 24 | | Total Stockholders' (Deficit) Equity at end of period | (595) | 466 | [Notes to Consolidated Financial Statements (Unaudited)](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1— Background](index=13&type=section&id=Note%201%E2%80%94%20Background) Lumen Technologies is a digital networking services company focused on enterprise businesses in a multi-cloud, AI-first market - Lumen is a leading digital networking services company, empowering enterprise businesses to fuel growth in a multi-cloud, AI-first marketplace[34](index=34&type=chunk) - The company adopted ASU 2023-07, "Segment Reporting," for the year ended December 31, 2024, to improve reportable segment disclosures without changing how operating segments are identified or aggregated[40](index=40&type=chunk) - Lumen is evaluating ASU 2024-03, "Disaggregation of Income Statement Expenses," effective fiscal 2027, and does not expect ASU 2024-04, "Induced Conversions of Convertible Debt Instruments," to impact its consolidated financial statements as it has no outstanding convertible debt[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 2—Planned Divestiture of the Mass Markets Fiber-to-the-Home Business](index=15&type=section&id=Note%202%E2%80%94Planned%20Divestiture%20of%20the%20Mass%20Markets%20Fiber-to-the-Home%20Business) Lumen agreed to sell its Mass Markets fiber-to-the-home business in 11 states to AT&T for $5.75 billion in cash, expected to close in H1 2026 - Lumen entered into a definitive agreement to sell its Mass Markets fiber-to-the-home business in 11 states to AT&T for a pre-tax total of **$5.75 billion in cash**[44](index=44&type=chunk) - The divestiture is anticipated to close in the first half of 2026 and does not meet the criteria to be classified as a discontinued operation[46](index=46&type=chunk) Assets and Liabilities Held for Sale | Category | June 30, 2025 (Millions $) | | :---------------------------------- | :------------------------- | | **Assets held for sale** | | | Accounts receivable, less allowance | 14 | | Other current assets, net | 15 | | Property, plant and equipment, net | 2,275 | | Goodwill | 1,336 | | Other assets, net | 28 | | **Total assets held for sale** | **3,668** | | **Liabilities held for sale** | | | Accounts payable | 75 | | Other current liabilities | 3 | | Current portion of deferred revenue | 31 | | Other non-current liabilities | 1 | | **Total liabilities held for sale** | **110** | [Note 3—Goodwill, Customer Relationships and Other Intangible Assets](index=16&type=section&id=Note%203%E2%80%94Goodwill,%20Customer%20Relationships%20and%20Other%20Intangible%20Assets) Goodwill and other intangible assets decreased due to a $628 million impairment charge and reclassification of $1.3 billion as held for sale Goodwill and Other Intangible Assets | Asset Category | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :---------------------------------- | :------------------------- | :--------------------------- | | Goodwill | — | 1,964 | | Other intangible assets, net | 4,525 | 4,806 | - A non-cash, non-tax-deductible goodwill impairment charge of **$628 million** was recorded for the Mass Markets reporting unit for the three and six months ended June 30, 2025, following a post-classification impairment test triggered by the planned divestiture[55](index=55&type=chunk) Goodwill by Segment | Segment | As of December 31, 2024 (Millions $) | Impairment (Millions $) | Reclassified as held for sale (Millions $) | As of June 30, 2025 (Millions $) | | :---------------------------------- | :----------------------------------- | :---------------------- | :--------------------------------------- | :----------------------------- | | Business | — | — | — | — | | Mass Markets | 1,964 | (628) | (1,336) | — | | Total | **1,964** | **(628)** | **(1,336)** | **—** | [Note 4—Revenue Recognition](index=18&type=section&id=Note%204%E2%80%94Revenue%20Recognition) Details Lumen's revenue recognition policies, categorizing revenue for Business (Grow, Nurture, Harvest, Other) and Mass Markets (Fiber Broadband, Other Broadband, Voice and Other) segments - Business segment revenue is categorized into Grow (existing and emerging products with significant investment), Nurture (more mature offerings), Harvest (legacy services managed for cash flow), and Other (equipment sales, managed/professional services)[61](index=61&type=chunk) - Mass Markets segment revenue is categorized into Fiber Broadband (high-speed fiber services), Other Broadband (lower-speed copper services), and Voice and Other (local/long-distance voice, federal/state support programs)[61](index=61&type=chunk) Operating Revenue by Segment and Category | Category | Three Months Ended June 30, 2025 (Millions $) | Three Months Ended June 30, 2024 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | **Business Segment Revenue** | | | | | | Grow | 1,127 | 1,063 | 2,263 | 2,122 | | Nurture | 634 | 750 | 1,300 | 1,526 | | Harvest | 554 | 568 | 1,088 | 1,150 | | Other | 175 | 197 | 363 | 371 | | **Mass Markets Segment Revenue** | | | | | | Fiber Broadband | 217 | 181 | 426 | 351 | | Other Broadband | 245 | 298 | 502 | 613 | | Voice and Other | 140 | 211 | 332 | 425 | | **Total Operating Revenue** | **3,092** | **3,268** | **6,274** | **6,558** | [Note 5—Long-Term Debt and Credit Facilities](index=23&type=section&id=Note%205%E2%80%94Long-Term%20Debt%20and%20Credit%20Facilities) Lumen's consolidated long-term debt totaled $17.9 billion at June 30, 2025, with significant refinancing activities in 2025, including Level 3 Financing's $2.0 billion First Lien Notes issuance and Term Loan B refinancing Long-Term Debt | Debt Category | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :---------------------------------- | :------------------------- | :--------------------------- | | Senior Secured Debt | 11,397 | 12,291 | | Unsecured Senior Notes and Other Debt | 6,717 | 6,027 | | Unamortized discounts, net | (408) | (395) | | Unamortized debt issuance costs | (216) | (217) | | Total long-term debt | **17,896** | **17,906** | | Less current maturities | (331) | (412) | | Long-term debt, excluding current maturities | **17,565** | **17,494** | - On June 30, 2025, Level 3 Financing issued **$2.0 billion** of 6.875% First Lien Notes due 2033, using proceeds to redeem **$1.76 billion** of existing first lien notes, resulting in a **$236 million loss** on early retirement of debt[78](index=78&type=chunk)[79](index=79&type=chunk) - On March 27, 2025, Level 3 Financing refinanced its Term Loan B-1 and B-2 facilities, establishing a new **$2.4 billion** Term Loan B-3 facility maturing in 2032, which resulted in a **$35 million loss** on early retirement of debt[81](index=81&type=chunk)[82](index=82&type=chunk) [Note 6—Property, Plant and Equipment](index=30&type=section&id=Note%206%E2%80%94Property,%20Plant%20and%20Equipment) Net property, plant and equipment decreased to $18.7 billion at June 30, 2025, primarily due to assets classified as held for sale related to the Mass Markets divestiture Property, Plant and Equipment | Category | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :---------------------------------- | :------------------------- | :--------------------------- | | Gross property, plant and equipment | 41,823 | 43,542 | | Accumulated depreciation | (23,158) | (23,121) | | Net property, plant and equipment | **18,665** | **20,421** | - Depreciation expense decreased by **$26 million** for the three months and **$41 million** for the six months ended June 30, 2025, primarily due to the discontinuation of depreciation on Mass Markets fiber-to-the-home business assets classified as held for sale[112](index=112&type=chunk)[192](index=192&type=chunk) [Note 7—Severance](index=30&type=section&id=Note%207%E2%80%94Severance) Accrued severance liabilities remained stable at $11 million, reflecting ongoing workforce reductions due to integration, competitive pressures, cost reduction, and automation Severance Accrual | Metric | Severance (Millions $) | | :---------------------------------- | :--------------------- | | Balance at December 31, 2024 | 12 | | Accrued to expense | 18 | | Payments, net | (19) | | Balance at June 30, 2025 | **11** | - Workforce reductions are primarily driven by post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation, and reduced workloads[113](index=113&type=chunk) [Note 8—Employee Benefits](index=31&type=section&id=Note%208%E2%80%94Employee%20Benefits) Net periodic pension expense increased to $75 million for the six months ended June 30, 2025, while post-retirement benefit expense decreased to $30 million Net Periodic Pension and Post-Retirement Benefit Expense | Component | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | | **Combined Pension Plan** | | | | Service cost | 11 | 12 | | Interest cost | 120 | 125 | | Expected return on plan assets | (127) | (136) | | Recognition of prior service credit | (1) | (3) | | Recognition of actuarial loss | 72 | 54 | | **Net periodic pension expense** | **75** | **52** | | **Post-Retirement Benefit Plans** | | | | Service cost | 2 | 2 | | Interest cost | 44 | 47 | | Recognition of prior service credit | (3) | (4) | | Recognition of actuarial gain | (13) | (9) | | Special termination benefits charge | — | 2 | | **Net periodic post-retirement benefit expense** | **30** | **38** | - Lumen does not expect to be required to make any additional contributions to the Combined Pension Plan in 2025[120](index=120&type=chunk) [Note 9—(Loss) Earnings Per Common Share](index=33&type=section&id=Note%209%E2%80%94(Loss)%20Earnings%20Per%20Common%20Share) Basic and diluted loss per common share for the six months ended June 30, 2025, was $(1.12), reflecting the net loss incurred (Loss) Earnings Per Common Share Data | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income (Millions $) | (1,116) | 8 | | Basic (loss) earnings per common share | (1.12) | 0.01 | | Diluted (loss) earnings per common share | (1.12) | 0.01 | | Weighted-average common shares outstanding (Basic, thousands) | 992,906 | 986,047 | | Weighted-average common shares outstanding (Diluted, thousands) | 992,906 | 987,224 | - For the six months ended June 30, 2025, **9 million** potentially issuable shares were excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive due to the net loss position[122](index=122&type=chunk) [Note 10—Fair Value of Financial Instruments](index=33&type=section&id=Note%2010%E2%80%94Fair%20Value%20of%20Financial%20Instruments) The fair value of long-term debt (excluding finance lease and other obligations) was $17.53 billion at June 30, 2025, compared to a carrying amount of $17.66 billion Fair Value of Financial Instruments | Instrument | Input Level | June 30, 2025 Carrying Amount (Millions $) | June 30, 2025 Fair Value (Millions $) | December 31, 2024 Carrying Amount (Millions $) | December 31, 2024 Fair Value (Millions $) | | :---------------------------------- | :---------- | :--------------------------------------- | :------------------------------------ | :--------------------------------------- | :------------------------------------ | | Long-term debt, excluding finance lease and other obligations | 2 | 17,655 | 17,530 | 17,652 | 17,127 | | Indemnifications related to the sale of the Latin American business | 3 | 87 | 84 | 87 | 84 | - Fair value measurements are categorized into a three-level hierarchy: Level 1 (observable inputs like quoted market prices), Level 2 (inputs other than quoted prices that are directly or indirectly observable), and Level 3 (unobservable inputs)[127](index=127&type=chunk) [Note 11—Segment Information](index=35&type=section&id=Note%2011%E2%80%94Segment%20Information) Lumen manages its business through two reportable segments: Business and Mass Markets, with adjusted EBITDA used to assess performance - Lumen's two reportable segments are Business (serving large enterprise, mid-market enterprise, public sector, wholesale, and international customers) and Mass Markets (serving residential and small business customers)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Adjusted EBITDA is the key non-GAAP measure used by management to evaluate profitability, operating performance, and make resource allocation decisions for both segments[132](index=132&type=chunk)[206](index=206&type=chunk) Adjusted EBITDA by Segment | Segment | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | | Business segment adjusted EBITDA | 2,318 | 2,332 | | Mass Markets segment adjusted EBITDA | 698 | 759 | | Other unallocated amounts | (1,461) | (1,409) | | **Total adjusted EBITDA** | **1,555** | **1,682** | [Note 12—Commitments, Contingencies and Other Items](index=37&type=section&id=Note%2012%E2%80%94Commitments,%20Contingencies%20and%20Other%20Items) Lumen is involved in various legal proceedings and contingent liabilities, accruing $76 million for litigation and non-income tax contingencies as of June 30, 2025 - As of June 30, 2025, Lumen had accrued **$76 million** for litigation and non-income tax contingencies, but cannot estimate the reasonably possible loss or range of loss in excess of this amount due to inherent uncertainties[139](index=139&type=chunk) - Significant legal proceedings include a shareholder class action (Houser), multiple lawsuits related to lead-sheathed telecommunications cables, state tax disputes (Missouri), and a Fair Credit Reporting Act (FCRA) class action (Bultemeyer)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - The company is also subject to investigations from the U.S. Department of Justice, FCC, and Team Telecom regarding the use of Huawei equipment in its networks[152](index=152&type=chunk)[157](index=157&type=chunk) [Note 13—Other Financial Information](index=42&type=section&id=Note%2013%E2%80%94Other%20Financial%20Information) Details other current assets, net, totaling $1.21 billion at June 30, 2025, and clarifies components of "Other income (expense), net" Other Current Assets, Net | Component | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :---------------------------------- | :------------------------- | :--------------------------- | | Prepaid expenses | 420 | 372 | | Income tax receivable | 410 | 483 | | Materials, supplies and inventory | 126 | 146 | | Contract assets | 16 | 16 | | Contract acquisition costs | 104 | 102 | | Contract fulfillment costs | 120 | 109 | | Other | 15 | 22 | | **Total other current assets, net** | **1,211** | **1,250** | - Other income (expense), net for the three and six months ended June 30, 2024, included a **$205 million gain** on sale of investment[164](index=164&type=chunk) [Note 14—Accumulated Other Comprehensive Loss](index=43&type=section&id=Note%2014%E2%80%94Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss decreased to $(679) million at June 30, 2025, driven by reclassifications related to pension and post-retirement plans and foreign currency translation adjustments Accumulated Other Comprehensive Loss | Component | Pension Plans (Millions $) | Post-Retirement Benefit Plans (Millions $) | Foreign Currency Translation Adjustment and Other (Millions $) | Total (Millions $) | | :---------------------------------- | :----------------------- | :--------------------------------------- | :----------------------------------------------------------- | :----------------- | | Balance at December 31, 2024 | (1,003) | 320 | (40) | (723) | | Net current-period other comprehensive income (loss) | 54 | (13) | 3 | 44 | | Balance at June 30, 2025 | **(949)** | **307** | **(37)** | **(679)** | Reclassifications from Accumulated Other Comprehensive Loss | Component | Six Months Ended June 30, 2025 Decrease (Increase) in Net Income (Millions $) | Affected Line Item in Consolidated Statement of Operations | | :---------------------------------- | :----------------------------------------------------------- | :--------------------------------------------------------- | | Amortization of pension & post-retirement plans: Net actuarial loss | 59 | Other income, net | | Amortization of pension & post-retirement plans: Prior service credit | (4) | Other income, net | | Total before tax | 55 | | | Income tax benefit | (14) | Income tax (benefit) expense | | Net of tax | **41** | | [Note 15—Labor Union Contracts](index=44&type=section&id=Note%2015%E2%80%94Labor%20Union%20Contracts) Approximately 20% of Lumen's employees are represented by the CWA or IBEW, with 88% of these covered by collective bargaining agreements expiring within the next 12 months - Approximately **20%** of Lumen's employees are represented by the Communications Workers of America (CWA) or the International Brotherhood of Electrical Workers (IBEW)[168](index=168&type=chunk) - Approximately **88%** of the represented employees are subject to collective bargaining agreements scheduled to expire over the 12-month period ending June 30, 2026[168](index=168&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on Lumen's financial condition and results, highlighting a net loss driven by goodwill impairment and debt retirement losses, the planned divestiture, liquidity, capital expenditures, and market risk exposures [Overview](index=45&type=section&id=Overview) Lumen Technologies is a digital networking services company focused on enterprise and Mass Markets customers, leveraging its interconnected network for multi-cloud and AI-first solutions, and is divesting its Mass Markets fiber-to-the-home business to AT&T for $5.75 billion - Lumen is a leading digital networking services company, empowering enterprise businesses in a multi-cloud, AI-first marketplace and serving domestic Mass Markets customers[171](index=171&type=chunk) - The company entered into a definitive agreement to sell its Mass Markets fiber-to-the-home business in 11 states to AT&T for a pre-tax total of **$5.75 billion in cash**, with the transaction expected to close in the first half of 2026[172](index=172&type=chunk) - Key trends impacting operations include increased demand for robust, scalable network services driven by AI applications, the need to invest in new technologies and automated processes, and the expansion and monetization of its fiber network[182](index=182&type=chunk)[184](index=184&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Consolidated operating revenue decreased by 5% to $3.09 billion for the three months and 4% to $6.27 billion for the six months ended June 30, 2025, with a net loss of $915 million and $1.12 billion, respectively, primarily due to a $628 million goodwill impairment charge and a $236 million loss on early retirement of debt Consolidated Results of Operations | Metric | Three Months Ended June 30, 2025 (Millions $) | Three Months Ended June 30, 2024 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Operating revenue | 3,092 | 3,268 | 6,274 | 6,558 | | Operating (loss) income | (603) | 135 | (496) | 180 | | Net (loss) income | (915) | (49) | (1,116) | 8 | | Basic (loss) earnings per common share | (0.92) | (0.05) | (1.12) | 0.01 | - A non-cash, non-tax-deductible goodwill impairment charge of **$628 million** was recorded in the second quarter of 2025, significantly impacting operating loss and net loss[196](index=196&type=chunk) - A net loss of **$236 million** on early retirement of debt was recognized for the three months ended June 30, 2025, due to debt refinancing transactions[201](index=201&type=chunk) [Segment Results](index=53&type=section&id=Segment%20Results) Business segment revenue decreased by 3% for both periods, driven by declines in Nurture and Harvest, while Mass Markets segment revenue decreased by 13% (three months) and 9% (six months), primarily due to customer loss and RDOF funding relinquishment, despite Fiber Broadband growth Business Segment Revenue | Product Category | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | % Change | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | | **Business Segment Revenue** | | | | | Grow | 2,263 | 2,122 | 7 % | | Nurture | 1,300 | 1,526 | (15)% | | Harvest | 1,088 | 1,150 | (5)% | | Other | 363 | 371 | (2)% | | **Total Business Segment Revenue** | **5,014** | **5,169** | **(3)%** | Mass Markets Segment Revenue | Product Category | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | % Change | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | | **Mass Markets Segment Revenue** | | | | | Fiber Broadband | 426 | 351 | 21 % | | Other Broadband | 502 | 613 | (18)% | | Voice and Other | 332 | 425 | (22)% | | **Total Mass Markets Revenue** | **1,260** | **1,389** | **(9)%** | - Mass Markets Fiber Broadband revenue increased by **20-21%** due to growth in fiber customers from the Quantum Fiber buildout, while Voice and Other revenue decreased significantly due to customer loss and the relinquishment of FCC's RDOF funding[216](index=216&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) Lumen's liquidity is primarily from operating activities, with $1.6 billion in cash and equivalents and $723 million in available borrowing capacity as of June 30, 2025, and projects $4.1-$4.3 billion in capital expenditures for 2025 - As of June 30, 2025, Lumen held **$1.6 billion** in cash and cash equivalents and had approximately **$723 million** of borrowing capacity available under its revolving credit facilities[218](index=218&type=chunk) - The company projects capital expenditures of approximately **$4.1 billion to $4.3 billion** for 2025, focused on network operating efficiencies, new services, and expanding its fiber network, including Private Connectivity Fabric and Quantum Fiber buildout plans[220](index=220&type=chunk)[226](index=226&type=chunk) - The pending **$5.75 billion** divestiture of the Mass Markets fiber-to-the-home business is expected to reduce superpriority debt by approximately **$4.8 billion**, annual interest expense by **$300 million**, and Mass Markets fiber-related capital expenditures by **$1 billion annually**[221](index=221&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) is expected to significantly reduce Lumen's 2025 federal income tax liability, leading to a **$400 million** federal estimated income tax refund claim[223](index=223&type=chunk)[241](index=241&type=chunk) - Lumen relinquished the remainder of its FCC's Rural Digital Opportunity Fund (RDOF) awards in Q2 2025, resulting in a **$46 million** revenue reduction and **$49 million** in fees, with an expected **$95 million** remittance in the latter half of 2025[248](index=248&type=chunk) [Market Risk](index=60&type=section&id=Market%20Risk) Lumen is exposed to market risk from changes in interest rates on its variable rate long-term debt and fluctuations in foreign currencies - Lumen is exposed to market risk from changes in interest rates on its variable rate long-term debt obligations and fluctuations in certain foreign currencies[263](index=263&type=chunk) - As of June 30, 2025, approximately **$6.0 billion** aggregate principal amount of debt bore unhedged floating interest rates based on the Secured Overnight Financing Rate (SOFR)[265](index=265&type=chunk) - A hypothetical increase of **100 basis points** in SOFR related to the unhedged floating rate debt would decrease annual pre-tax earnings by approximately **$60 million**[265](index=265&type=chunk) [Other Information](index=60&type=section&id=Other%20Information) This section directs readers to the company's website for investor information, including SEC filings and webcasts of earnings calls and investor meetings - Lumen's website (www.lumen.com and ir.lumen.com) serves as a primary source for important investor information, including SEC filings and webcasts of earnings calls and investor meetings[268](index=268&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to the "Liquidity and Capital Resources—Market Risk" section in Item 2 for quantitative and qualitative disclosures about market risk - Quantitative and qualitative disclosures about market risk are incorporated by reference from the "Liquidity and Capital Resources—Market Risk" section in Item 2 of Part I[270](index=270&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that Lumen's disclosure controls and procedures were effective as of June 30, 2025, with the only material change being the implementation of controls for the Mass Markets fiber-to-the-home business divestiture - Lumen's CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely information disclosure[271](index=271&type=chunk) - The only material change in internal control over financial reporting during the second quarter of 2025 was the implementation of controls over accounting for the divestiture of the Mass Markets fiber-to-the-home business[272](index=272&type=chunk) [Part II - Other Information](index=62&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) This item incorporates by reference the "Principal Proceedings" and "Other Proceedings, Disputes and Contingencies" sections from Note 12 of the financial statements, emphasizing that outcomes may differ materially from expectations - Information on legal proceedings is incorporated by reference from Note 12—Commitments, Contingencies and Other Items in Item 1 of Part I[275](index=275&type=chunk) - The ultimate outcome of legal matters may differ materially from anticipated results, and proceedings currently viewed as not significant may ultimately materially impact the company[275](index=275&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) This section supplements the risk factors from the Annual Report on Form 10-K, highlighting specific risks related to the pending divestiture of the Mass Markets fiber-to-the-home business and changes in U.S. and foreign government administrative policy - Risks include the potential inability to complete the pending divestiture of the Mass Markets fiber-to-the-home business, which could lead to negative financial market reactions, challenges in achieving debt reduction goals, and operational restrictions[277](index=277&type=chunk) - Even if the divestiture is completed, risks include incurring greater tax or other costs, realizing fewer benefits than anticipated, experiencing operational difficulties segregating assets, and being exposed to ongoing obligations and liabilities[278](index=278&type=chunk) - Changes in U.S. and foreign government administrative policy, including the imposition of or increases in tariffs and changes to existing trade agreements, could have a material adverse effect on the business[279](index=279&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item reports on 359,602 shares of common stock withheld from employees during Q2 2025 to satisfy tax withholding obligations upon vesting of stock-based awards, at an average price ranging from $3.92 to $4.92 per share Shares Withheld for Taxes | Period | Total Number of Shares Withheld for Taxes | Average Price Paid Per Share ($) | | :---------------------------------- | :---------------------------------------- | :------------------------------- | | April 2025 | 271,183 | 4.92 | | May 2025 | 91 | 4.26 | | June 2025 | 88,328 | 3.92 | | **Total** | **359,602** | | [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) This section states that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - During the quarter ended June 30, 2025, none of the company's directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[283](index=283&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This item lists all exhibits filed or furnished as part of the report, including the Purchase Agreement for the Mass Markets fiber-to-the-home business, Composite Articles of Incorporation, Bylaws, Indenture for the 6.875% First Lien Notes due 2033, Forms of Notes, and certifications from the CEO and CFO - Key exhibits include the Purchase Agreement for the Mass Markets fiber-to-the-home business divestiture (Exhibit 2.1), the Indenture for Level 3 Financing's 6.875% First Lien Notes due 2033 (Exhibit 4.1), and CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2)[285](index=285&type=chunk) [Signature](index=65&type=section&id=Signature) The report was duly signed on behalf of Lumen Technologies, Inc. by Andrea Genschaw, Chief Accounting Officer and Controller, on July 31, 2025 - The report was signed on behalf of Lumen Technologies, Inc. by Andrea Genschaw, Chief Accounting Officer and Controller, on July 31, 2025[288](index=288&type=chunk)

NEWS RELEASE Lumen Technologies reports second quarter 2025 results DENVER, July 31, 2025 — Lumen Technologies, Inc. (NYSE: LUMN) reported results for the second quarter ended June 30, 2025. "Our second quarter results underscore the momentum of our transformation strategy and the discipline of our execution," said Kate Johnson, President and CEO of Lumen Technologies. "We are delivering on our financial milestones and building a stronger, more modern company. With the sale of our consumer fiber business, s ...