Financial Data and Key Metrics Changes - Total reported revenue declined 3.3% to $3,182 million, with business segment revenue down 2.6% to $2,524 million and mass market segment revenue down 5.9% to $658 million [25] - Adjusted EBITDA was $929 million with a 29.2% margin, compared to $977 million in the year-ago quarter [33] - Free cash flow was $354 million, with capital expenditures at $791 million [34] Business Line Data and Key Metrics Changes - North American enterprise channels saw a revenue decline of 1.7%, while North American enterprise grow revenue increased 9.9% year over year, driven by large enterprise and public sector growth [25][30] - Wholesale revenue declined approximately 3.6% year over year, with the Harvest portion contracting by 5.8% [27] - Fiber broadband revenue grew 22.9% year over year, representing 45% of mass markets broadband revenue [32] Market Data and Key Metrics Changes - Public sector revenue grew 14.7% year over year, although it can be lumpy quarter to quarter [25] - International and other revenue declined 11.3%, primarily driven by VPN declines [28] - The company added 101,000 fiber-enabled homes, bringing the total to approximately 4,300,000 as of March 31 [32] Company Strategy and Development Direction - The company focuses on three priorities: driving operational excellence, building the backbone for the AI economy, and cloudifying telecom [5][22] - The construction of $8.5 billion in private connectivity fabric projects is underway, with 57 ILA sites under construction [8][9] - The Lumen Digital platform aims to transform the customer experience and drive operational efficiency through automation and AI [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in margin expansion and total EBITDA returning to full-year growth in 2026 [24][35] - The company is optimistic about the demand for its services, particularly in the context of AI and digital transformation [56][57] - Management noted that while there may be uncertainty in the market, the investments in fiber and digital services are critical for long-term competitiveness [57] Other Important Information - The company refinanced $2.4 billion in term loans, reducing annual interest expense by approximately $55 million [23] - Management addressed rumors regarding the sale of the consumer fiber business, emphasizing a focus on enterprise connectivity [35] Q&A Session Summary Question: Context on grow revenue increase and sustainability - Management indicated that grow revenue was driven by dark fiber deals and expects trends to continue, although specifics on new versus existing customers were not provided [39][41] Question: Impact of legacy TDM revenue and disconnects - Management acknowledged some activity in disconnects but expressed confidence that it would not negatively impact EBITDA [40][42] Question: Differences in cloud economics versus traditional telecom - Management explained that the Lumen Digital platform enables cloud economics by allowing multiple services on one port, reducing marginal costs [46][48] Question: Public sector revenue trends and potential risks - Management noted strong performance in the public sector and ongoing engagement in large-scale opportunities, despite potential budget pressures [60][70] Question: Pricing strategy for new digital services - Management emphasized that the focus is on total value of ownership rather than discounting prices, highlighting the inherent value of their services [62][64] Question: CapEx spend cadence and public sector risks - Management refrained from providing specific quarterly guidance on CapEx but expressed confidence in annual targets, while remaining optimistic about public sector opportunities [68][70]

Financial Data and Key Metrics Changes - Total reported revenue declined 3.3% to $3,182 million, with business segment revenue down 2.6% to $2,524 million and mass market segment revenue down 5.9% to $658 million [27] - Adjusted EBITDA was $929 million with a 29.2% margin, compared to $977 million in the year-ago quarter [35] - Free cash flow was $354 million, with capital expenditures at $791 million [36] Business Line Data and Key Metrics Changes - North American enterprise channels saw a revenue decline of 1.7%, while North American enterprise grow revenue increased 9.9% year over year, driven by large enterprise and public sector growth [27][31] - Wholesale revenue declined approximately 3.6% year over year, with the Harvest portion contracting by 5.8% [29] - Fiber broadband revenue grew 22.9% year over year, representing 45% of mass markets broadband revenue [34] Market Data and Key Metrics Changes - Public sector revenue grew 14.7% year over year, although it can be lumpy quarter to quarter [28] - International and other revenue declined 11.3%, primarily due to VPN declines [30] - The North American business overall declined 2.2%, with large enterprise revenue down 3.7% and mid-market revenue down approximately 11.1% [27] Company Strategy and Development Direction - The company is focused on three priorities: driving operational excellence, building the backbone for the AI economy, and cloudifying telecom [4] - Significant progress has been made in modernizing and simplifying operations, with a goal of generating at least $250 million in savings by the end of 2025 and $1 billion by the end of 2027 [6][21] - The company is enhancing its digital platform to provide network as a service offerings, aiming to transform the customer experience and operational efficiency [13][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in margin expansion and total EBITDA returning to full-year growth in 2026, driven by increased sales and cost structure optimization [26][37] - The company is optimistic about the demand for its private connectivity fabric projects, despite some uncertainty in the market [9][60] - Management noted that the modernization efforts are essential regardless of external conditions, positioning the company for improved efficiency and customer experience [24] Other Important Information - The company refinanced $2.4 billion in term loans, reducing annual interest expense by approximately $55 million and extending loan maturity [25] - The company is proud of its consumer fiber platform but is focusing on enterprise connectivity and services, indicating a strategic review of its consumer business [37] Q&A Session Summary Question: Context on grow revenue increase and sustainability - Management indicated that grow revenue was driven by dark fiber deals and expects trends to continue, although specifics on new versus existing customers were not provided [41][42] Question: Impact of legacy TDM revenue and churn - Management acknowledged some activity in disconnects but expressed confidence that it would be neutral to positive for EBITDA [44] Question: Differences in cloud economics versus traditional telecom - Management explained that the Lumen digital platform enables cloud economics by allowing multiple services on one port, reducing marginal costs [49][50] Question: Pipeline conversion for PCF projects - Management noted active discussions with customers and an increase in demand for private connectivity fabric, although specific timelines were not provided [57][58] Question: Public sector revenue trends and potential risks - Management confirmed strong performance in the public sector and ongoing engagement in large-scale opportunities, despite potential impacts from government efficiency cuts [72][80]

[Part I - Financial Information](index=7&type=section&id=Part%20I%20-%20Financial%20Information) [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) Lumen Technologies reported a net loss of $201 million in Q1 2025, a significant downturn from prior-year net income, driven by revenue decline and debt retirement losses [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) Lumen reported a net loss of $201 million in Q1 2025, driven by a 3.3% revenue drop and a significant swing in other expenses, despite improved operating income Consolidated Statements of Operations (Unaudited) | Financial Metric | Three Months Ended March 31, 2025 (Millions USD) | Three Months Ended March 31, 2024 (Millions USD) | | :--- | :--- | :--- | | **Operating Revenue** | $3,182 million | $3,290 million | | **Operating Income** | $107 million | $45 million | | **Net (Loss) Income** | $(201) million | $57 million | | **Diluted (Loss) Earnings Per Share** | $(0.20) | $0.06 | - Total other expense was **$352 million** in Q1 2025, a stark contrast to total other income of **$57 million** in Q1 2024. This was primarily due to a **$35 million** net loss on early retirement of debt in 2025, compared to a **$275 million** net gain in 2024[20](index=20&type=chunk) [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets%20%28Unaudited%29) As of March 31, 2025, Lumen's total assets were $33.54 billion, with long-term debt at $17.33 billion, leading to a decrease in total stockholders' equity Key Balance Sheet Items | Balance Sheet Item | March 31, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :--- | :--- | :--- | | **Total Current Assets** | $4,277 million | $4,394 million | | **Total Assets** | $33,538 million | $33,496 million | | **Long-Term Debt** | $17,334 million | $17,494 million | | **Total Liabilities** | $33,249 million | $33,032 million | | **Total Stockholders' Equity** | $289 million | $464 million | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) Net cash from operations was $1.095 billion in Q1 2025, with increased cash used in investing activities and significantly decreased cash used in financing activities Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2025 (Millions USD) | Three Months Ended March 31, 2024 (Millions USD) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $1,095 million | $1,102 million | | **Net Cash Used in Investing Activities** | $(769) million | $(698) million | | **Net Cash Used in Financing Activities** | $(314) million | $(1,060) million | | **Capital Expenditures** | $(791) million | $(713) million | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Notes detail accounting policies, revenue breakdowns, debt structure, refinancing, segment performance, and ongoing legal contingencies including lead-sheathed cable litigation - As of March 31, 2025, the company expects to recognize approximately **$6.1 billion** of revenue in the future related to existing, unsatisfied performance obligations[57](index=57&type=chunk) - The company had accrued **$77 million** for litigation and non-income tax contingencies as of March 31, 2025, but cannot estimate the reasonably possible loss in excess of this amount[123](index=123&type=chunk) - Approximately **21%** of employees are represented by unions, with **90%** of these employees covered by collective bargaining agreements set to expire within the next 12 months ending March 31, 2026[152](index=152&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 3% YoY revenue decline across segments, projecting $4.1-$4.3 billion in 2025 capital expenditures and detailing liquidity [Overview](index=40&type=section&id=Overview) Lumen focuses on networking, acknowledging macroeconomic challenges, and pursuing strategic goals like infrastructure delivery, network monetization, and financial strengthening - The company's strategic goals include delivering best-in-class infrastructure, monetizing network assets through Private Connectivity Fabric (PCF) solutions, expanding the AI backbone, and executing the Quantum Fiber buildout plan[167](index=167&type=chunk) - Key trends impacting operations include increased demand for robust, scalable network services due to AI and cloud adoption, and declining demand for mature service offerings, which necessitates continuous right-sizing of the cost structure[166](index=166&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Consolidated operating revenue decreased 3% YoY to $3.182 billion, with expenses falling 5%, increasing operating income but resulting in a pre-tax loss due to other expenses Operating Revenue by Segment (YoY Change) | Segment | Q1 2025 Revenue (Millions USD) | Q1 2024 Revenue (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | **Business Segment** | $2,524 million | $2,591 million | (3)% | | **Mass Markets Segment** | $658 million | $699 million | (6)% | | **Total Revenue** | **$3,182 million** | **$3,290 million** | **(3)%** | Operating Expenses (YoY Change) | Expense Category | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | Cost of services and products | $1,687 million | $1,652 million | 2% | | Selling, general and administrative | $675 million | $823 million | (18)% | | Depreciation and amortization | $713 million | $748 million | (5)% | | **Total Operating Expenses** | **$3,075 million** | **$3,245 million** | **(5)%** | - The decrease in SG&A expenses was primarily due to a **$140 million** decline in legal and other professional fees, mainly driven by a large debt transaction in Q1 2024 that did not have a comparable event in Q1 2025[172](index=172&type=chunk) - Interest expense increased by **$56 million** YoY due to a higher average interest rate (**7.67%** vs **6.98%**), despite a decrease in average outstanding long-term debt[178](index=178&type=chunk) [Segment Results](index=48&type=section&id=Segment%20Results) Business segment revenue declined 3% YoY, while Mass Markets saw a 6% decline, with Fiber Broadband growth insufficient to offset legacy service declines Business Segment Revenue by Product Category (Q1 2025 vs Q1 2024) | Product Category | Q1 2025 Revenue (Millions USD) | Q1 2024 Revenue (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | Grow | $1,136 million | $1,059 million | 7% | | Nurture | $666 million | $776 million | (14)% | | Harvest | $534 million | $582 million | (8)% | | Other | $188 million | $174 million | 8% | - Business segment 'Grow' revenue increased by **$77 million**, driven by dark fiber and conduit (+$51 million) and IP services (+$19 million)[186](index=186&type=chunk) Mass Markets Segment Revenue by Product Category (Q1 2025 vs Q1 2024) | Product Category | Q1 2025 Revenue (Millions USD) | Q1 2024 Revenue (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | Fiber Broadband | $209 million | $170 million | 23% | | Other Broadband | $257 million | $315 million | (18)% | | Voice and Other | $192 million | $214 million | (10)% | - Mass Markets segment adjusted EBITDA margin improved to **58%** in Q1 2025 from **55%** in Q1 2024, despite a revenue decline, due to a **12%** decrease in segment expenses[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) Lumen held $1.9 billion in cash, projecting $4.1-$4.3 billion in 2025 capital expenditures, with recent debt refinancing and ongoing management of obligations including pension liabilities - The company projects capital expenditures for 2025 to be between **$4.1 billion** and **$4.3 billion**[194](index=194&type=chunk) - In March 2025, subsidiary Level 3 Financing refinanced its term loan facilities, extending the maturity to 2032 and reducing pricing. The transaction involved **$2.4 billion** of outstanding borrowings[69](index=69&type=chunk)[199](index=199&type=chunk) - The company does not expect to be required to make any contributions to its Combined Pension Plan in 2025[213](index=213&type=chunk) - The company is exposed to potential costs related to lead-sheathed copper cables in its network, which have resulted in regulatory inquiries and lawsuits. As of March 31, 2025, no costs have been accrued as they are not yet considered probable and reasonably estimable[229](index=229&type=chunk) [Market Risk](index=57&type=section&id=Market%20Risk) Primary market risks stem from interest rate changes on $6.0 billion unhedged floating-rate debt, where a 100 basis point SOFR increase would decrease annual pre-tax earnings by $60 million - A hypothetical **100 basis point** (1%) increase in SOFR would decrease annual pre-tax earnings by approximately **$60 million** due to the company's **$6.0 billion** of unhedged floating-rate debt[234](index=234&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates by reference the 'Market Risk' discussion within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - This section incorporates by reference the Market Risk discussion found in Item 2 of Part I of the report[239](index=239&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls during Q1 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[240](index=240&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2025[241](index=241&type=chunk) [Part II - Other Information](index=59&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference detailed legal matters from Note 10, including shareholder lawsuits and lead-sheathed cable litigation - Information regarding legal proceedings is incorporated by reference from Note 10—Commitments, Contingencies and Other Items[244](index=244&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) This section supplements Annual Report risk factors, highlighting potential adverse effects from changes in U.S. and foreign government policies and trade agreements - The company highlights risks related to changes in U.S. and foreign government administrative policy, including the imposition of tariffs and changes to trade agreements, which could have a material adverse effect on the business[246](index=246&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company withheld 2,148,593 common shares from employees for tax obligations related to stock-based award vesting Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Withheld for Taxes (Shares) | | :--- | :--- | | January 2025 | 48,080 | | February 2025 | 99,236 | | March 2025 | 2,001,277 | | **Total** | **2,148,593** | [Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including the Level 3 Credit Agreement amendment, CEO/CFO certifications, and Inline XBRL financial statements - Key exhibits filed include an amendment to the Level 3 Credit Agreement, CEO/CFO certifications, and financial statements in Inline XBRL format[249](index=249&type=chunk)

[Overview and Key Highlights](index=1&type=section&id=Overview%20and%20Key%20Highlights) Lumen Technologies reported better-than-expected Q1 2025 results, driven by operational excellence and strategic initiatives, despite a net loss of $201 million - CEO Kate Johnson attributed better-than-expected financial results to operational excellence and emphasized innovation on the fiber network for value creation[5](index=5&type=chunk) - Strategic initiatives included a partnership with Google for direct fiber access to Google Cloud, continued NaaS port adoption, and a term loan refinancing to strengthen the balance sheet[6](index=6&type=chunk) Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (Loss) Income | $(201) million | $57 million | | Diluted (Loss) Earnings per Share | $(0.20) | $0.06 | | Adjusted EBITDA (Excl. Special Items) | $929 million | $977 million | | Free Cash Flow (Excl. Special Items) | $354 million | $518 million | [Financial Performance](index=2&type=section&id=Financial%20Performance) Lumen's Q1 2025 total revenue declined 3% year-over-year to $3.182 billion, resulting in a net loss of $201 million and a 5% decrease in Adjusted EBITDA [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total revenue for Q1 2025 decreased 3% year-over-year to $3.182 billion, with declines across most business segments and product categories, except for Public Sector and 'Grow' products Total Revenue Trend | Period | Total Revenue ($ in millions) | YoY Change | | :--- | :--- | :--- | | Q1 2025 | $3,182 | -3% | | Q1 2024 | $3,290 | N/A | Revenue by Sales Channel (YoY Change) | Sales Channel | Q1 2025 Revenue ($M) | YoY Change | | :--- | :--- | :--- | | Large Enterprise | $737 | -4% | | Mid-Market Enterprise | $513 | -11% | | Public Sector | $483 | +15% | | Wholesale | $705 | -4% | Business Revenue by Product Category (YoY Change) | Product Category | Q1 2025 Revenue ($M) | YoY Change | | :--- | :--- | :--- | | Grow | $1,136 | +7% | | Nurture | $666 | -14% | | Harvest | $534 | -8% | [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Q1 2025 profitability significantly declined, reporting a net loss of $201 million compared to a net income of $57 million in Q1 2024, with Adjusted EBITDA falling 5% YoY Q1 2025 Profitability Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (Loss) Income | $(201) million | $57 million | | Net (Loss) Income Margin | (6.3)% | 1.7% | | Adjusted EBITDA (Excl. Special Items) | $929 million | $977 million | | Adjusted EBITDA Margin (Excl. Special Items) | 29.2% | 29.7% | [Cash Flow and Liquidity](index=3&type=section&id=Cash%20Flow%20and%20Liquidity) Free Cash Flow, excluding special items, decreased to $354 million in Q1 2025, while the company maintained $1.9 billion in cash and successfully refinanced a $2.4 billion term loan - Free Cash Flow, excluding Special Items, was **$354 million** in Q1 2025, a decrease from **$518 million** in Q1 2024[11](index=11&type=chunk) - As of March 31, 2025, Lumen held **$1.9 billion** in cash and cash equivalents, having successfully refinanced its **$2.4 billion** term loan at lower rates with extended maturity[12](index=12&type=chunk) [Operating Metrics](index=11&type=section&id=Operating%20Metrics) Mass Markets fiber broadband subscribers grew to 1.116 million in Q1 2025, but total broadband subscribers decreased to 2.508 million due to declines in copper-based subscribers Mass Markets Broadband Subscribers (in thousands) | Subscriber Type | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Fiber broadband | 1,116 | 1,077 | 952 | | Other broadband | 1,392 | 1,469 | 1,758 | | **Total broadband** | **2,508** | **2,546** | **2,710** | Mass Markets Broadband Enabled Units (in millions) | Unit Type | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Fiber broadband | 4.3 | 4.2 | 3.8 | | Other broadband | 17.7 | 17.8 | 18.0 | | **Total enabled units** | **22.0** | **22.0** | **21.8** | [2025 Financial Outlook](index=4&type=section&id=2025%20Financial%20Outlook) Lumen Technologies reiterated its full-year 2025 outlook, projecting Adjusted EBITDA between $3.2 billion and $3.4 billion, Free Cash Flow between $700 million and $900 million, and capital expenditures of $4.1 billion to $4.3 billion Full-Year 2025 Financial Outlook | Metric | Outlook ($ in billions) | | :--- | :--- | | Adjusted EBITDA | $3.2 to $3.4 | | Free Cash Flow | $0.7 to $0.9 | | Net Cash Interest | $1.2 to $1.3 | | Capital Expenditures | $4.1 to $4.3 | | Cash Income Taxes | $0.1 to $0.2 | [Appendix: Non-GAAP Reconciliations and Financial Statements](index=7&type=section&id=Appendix%3A%20Non-GAAP%20Reconciliations%20and%20Financial%20Statements) This appendix provides definitions for non-GAAP financial measures, their relevance, and comprehensive reconciliation tables, alongside the company's unaudited Consolidated Statements of Operations, Balance Sheets, and Cash Flows [Description of Non-GAAP Metrics](index=12&type=section&id=Description%20of%20Non-GAAP%20Metrics) This section defines key non-GAAP metrics like 'Special Items,' 'Adjusted EBITDA,' and 'Free Cash Flow,' explaining their calculation and management's use in evaluating business trends and debt servicing ability - Special Items are defined as significant costs related to Modernization and Simplification, Transaction and Separation, and Other items, which management believes warrant separate investor consideration[34](index=34&type=chunk)[35](index=35&type=chunk) - Adjusted EBITDA is defined as net income before interest, taxes, D&A, stock-based compensation, and impairments, serving as a key management measure for profitability and operating performance[36](index=36&type=chunk)[37](index=37&type=chunk) - Free Cash Flow, defined as net cash from operating activities less capital expenditures, is a key indicator of the company's ability to generate cash for debt servicing[41](index=41&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited Consolidated Statements of Operations, Balance Sheets, and Cash Flows for the three months ended March 31, 2025, detailing the company's financial position and performance - The report includes the unaudited Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024[23](index=23&type=chunk) - The report includes the unaudited Consolidated Balance Sheets as of March 31, 2025, and December 31, 2024[25](index=25&type=chunk) - The report includes the unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024[27](index=27&type=chunk) [Reconciliation Tables](index=14&type=section&id=Reconciliation%20Tables) This section provides detailed reconciliation tables for non-GAAP measures, including 'Special Items,' Adjusted EBITDA, and Free Cash Flow, ensuring transparency between GAAP figures and management's emphasized metrics - A detailed table outlines specific **Special Items** impacting Adjusted EBITDA, Net Income, and Cash Flows for Q1 2025 and Q1 2024, including costs for transactions, modernization, and severance[44](index=44&type=chunk)[45](index=45&type=chunk) - The report provides a reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Unlevered Cash Flow, both with and without the effects of cash Special Items[46](index=46&type=chunk)[47](index=47&type=chunk) - A reconciliation from Net (Loss) Income to Adjusted EBITDA details adjustments for taxes, interest, D&A, and other items to derive final Adjusted EBITDA and Adjusted EBITDA excluding Special Items figures[48](index=48&type=chunk)[49](index=49&type=chunk)

Financial Performance - Q1 2025 - Total revenue was $3182 million, a decrease of 33% year-over-year[27] - Adjusted EBITDA was $929 million, a decrease of 49% year-over-year, with an adjusted EBITDA margin of 292%, down 50 basis points[34] - Free cash flow was $354 million[36] Revenue Breakdown - N A Enterprise revenue totaled $1733 million, a decrease of 17% year-over-year[27] - Within N A Enterprise, "Grow" products contributed $834 million, an increase of 99% year-over-year, representing 48% of N A Enterprise revenue[27] - Mass Markets revenue was $658 million, a decrease of 59% year-over-year[27] - Fiber Broadband revenue within Mass Markets was $209 million, an increase of 229% year-over-year, representing 32% of total Mass Markets revenue[29] Mass Markets & Fiber - Fiber-enabled locations reached 43 million, with 112 million subscribers[32] - The company added 39K net fiber subscribers in Q1 2025[32] - Fiber Broadband ARPU (Average Revenue Per User) was approximately $64[33] Strategic Initiatives & Future Outlook - The company is focused on building the backbone for the AI economy, driving operational excellence, and simplifying its network and systems[8] - The company is driving Lumen Digital platform adoption and launching new multi-cloud capabilities to drive revenue growth[9] - The company is transforming from traditional telecom to 'Cloudified' Telecom[17] - The company reiterated its 2025 financial outlook, including adjusted EBITDA of $32 to $34 billion and free cash flow of $700 to $900 million[37]

Core Insights - Lumen Technologies reported a net loss of $201 million for Q1 2025, a significant decline from a net income of $57 million in Q1 2024, reflecting ongoing challenges in the business environment [5][11][23] - Total revenue for Q1 2025 was $3.182 billion, down 3.3% from $3.290 billion in Q1 2024, indicating a continued revenue decline across various segments [11][23] - The company emphasized its focus on operational excellence and innovation, particularly through its Lumen Digital platform and partnerships, such as the one with Google for direct fiber access to Google Cloud [3][5] Financial Performance - Large Enterprise revenue decreased by 4% year-over-year to $737 million, while Mid-Market Enterprise revenue fell by 11% to $513 million [4][9] - Public Sector revenue increased by 15% to $483 million, showcasing growth in this segment [4][9] - Adjusted EBITDA for Q1 2025 was $929 million, down from $977 million in Q1 2024, with an adjusted EBITDA margin of 29.2% [5][6][9] Cash Flow and Liquidity - Net cash provided by operating activities was $1.095 billion, slightly down from $1.102 billion in Q1 2024 [12][26] - Free Cash Flow, excluding special items, was $354 million, a decrease from $518 million in Q1 2024 [12][44] - As of March 31, 2025, Lumen had cash and cash equivalents of $1.9 billion, reflecting a stable liquidity position [13][24] Strategic Initiatives - The company is focused on building a stronger balance sheet, highlighted by recent term loan refinancing [5] - Lumen is investing in its network capacity and utilization to support growth, particularly in AI and cloud services [3][5] - The adoption of Network as a Service (NaaS) ports and services is growing, indicating a shift towards a consumption-based model [5] 2025 Financial Outlook - Lumen reiterated its full-year 2025 financial outlook, projecting adjusted EBITDA between $3.2 billion and $3.4 billion and free cash flow between $700 million and $900 million [14][15]

Core Viewpoint - Lumen Technologies, Inc. is expected to report a loss of 25 cents per share for Q1 2025, a significant increase from a loss of 4 cents in the same quarter last year, with total revenues projected at $3.1 billion, reflecting a 5.8% year-over-year decline [1] Financial Performance - Lumen has beaten the Zacks Consensus Estimate for earnings in the last two quarters, with an average earnings surprise of 42.4% [2] - The company has an Earnings ESP of 0.00% and a Zacks Rank of 2 (Buy) [5] Revenue Trends - Lumen's total revenues declined by 5.3% year-over-year in the last reported quarter, primarily due to divestitures and the sale of the CDN business [6] - The company is experiencing ongoing weakness in its legacy business, which is expected to continue affecting revenue growth in the near term [6] Growth Initiatives - Lumen is shifting focus towards newer growth products such as fiber and cloud-based offerings, driven by increasing demand from hyperscalers and enterprise markets [7] - The company secured $8.5 billion in Private Connectivity Fabric (PCF) deals in 2024 and announced a partnership with Google Cloud to address enterprise customer demands related to AI workloads [7] Service Adoption - There has been a notable increase in the uptake of Lumen's services, particularly in the large enterprise and mid-market segments, with a nearly 50% increase in 100 and 400-gig wave sales in 2024 [8] - Lumen added 43,000 Quantum fiber subscribers in the last reported quarter, bringing the total to one million [9] Market Position - Lumen's stock has declined by 49.3% over the past six months, underperforming its industry and the S&P 500 [12] - The company is trading at a trailing 12-month price-to-sales ratio of 0.25, significantly below the industry average of 1.40 [18] Investment Considerations - Despite challenges such as heavy debt and competition in the AI space, Lumen's alignment with AI and cloud computing growth presents promising opportunities [20] - The company's focus on cost discipline and expansion into Network-as-a-Service (NaaS) markets are seen as positive factors for future growth [20][21]

Core Viewpoint - Lumen (LUMN) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - Changes in a company's future earnings potential, as reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [3]. - Institutional investors utilize earnings estimates to determine the fair value of a company's shares, impacting stock price through their large transactions [3]. Business Improvement Indicators - The rising earnings estimates and the Zacks Rank upgrade for Lumen suggest an improvement in the company's underlying business, which could lead to higher stock prices as investors respond positively [4]. Importance of Earnings Estimate Revisions - Empirical research supports the correlation between earnings estimate revisions and stock movements, making tracking these revisions crucial for investment decisions [5]. - The Zacks Rank system effectively utilizes earnings estimate revisions to classify stocks, providing a reliable framework for investors [6]. Specific Earnings Estimates for Lumen - Lumen is projected to earn -$0.87 per share for the fiscal year ending December 2025, reflecting a year-over-year change of -314.3% [7]. - Over the past three months, the Zacks Consensus Estimate for Lumen has increased by 7.8%, indicating a positive trend in earnings expectations [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings across its universe of over 4000 stocks, with only the top 20% receiving favorable ratings [8][9]. - Lumen's upgrade to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [9].

Lumen Technologies, Inc. (LUMN) and Cogent Communications Holdings, Inc. (CCOI) are both primarily enterprise-focused fiber network providers that deliver high-capacity, long-haul fiber networks powering everything from cloud services and streaming to AI data transfer and enterprise connectivity.Higher demand for bandwidth-intensive applications stemming from AI workloads and cloud infrastructure is providing ample business scope for these two players as they try to make the most of the next wave of digital ...

Lumen Defender Plus, powered by Black Lotus Labs intelligence, stops threats before they reach business networks – delivering measurable results for companies like Apex DataCom DENVER, April 22, 2025 /PRNewswire/ -- The need for smarter, faster, and more automated defenses has never been greater. In 2024, 86% of enterprises reported a year-over-year increase in cyber threats. Lumen Technologies (NYSE: LUMN) today announced it is putting the strength of its global threat intelligence that safeguards its own ...