Core Insights - Lumen Technologies (NYSE: LUMN) exceeded adjusted earnings expectations and delivered cash flow ahead of forecasts in Q3 [1] - However, revenue fell short of estimates due to a decline in legacy telecom segments [1] Financial Performance - Adjusted earnings beat expectations, indicating strong operational performance [1] - Cash flow was reported to be ahead of forecasts, suggesting effective cash management [1] - Revenue decline reflects ongoing challenges in the legacy telecom business, impacting overall financial results [1]

Core Insights - Lumen Technologies, Inc. reported third-quarter earnings that exceeded analyst expectations on both revenue and earnings per share, leading to a rise in stock price [1][2]. Financial Performance - The company reported quarterly losses of 20 cents per share, beating the analyst estimate of losses of 27 cents [2]. - Quarterly revenue was $3.08 billion, surpassing the analyst consensus estimate of $3.03 billion [2]. - Financial results included exceeding expectations for revenue, adjusted EBITDA, and free cash flow [5]. Operational Execution - The company successfully implemented Phase I of its ERP system [5]. - Progress was made on the sale of consumer FTTH to AT&T, targeted to close in early 2026 [5]. - A $2.4 billion debt refinancing and term loan repricing were completed, resulting in an annual interest expense saving of $135 million year to date [5]. Growth Initiatives - In October, Lumen secured $1 billion in new Private Connectivity Fabric deals, bringing the total deal value to over $10 billion [5]. - The company is scaling its NaaS platform and launching IoD offnet innovation [5]. - CEO Kate Johnson emphasized the company's disciplined execution and bold ambition in advancing its transformation agenda [4].

Financial Data and Key Metrics Changes - The company reported total revenue of $3.087 billion, a decline of 4.2% year over year, while business segment revenue decreased by 3.2% to $2.456 billion [21] - Adjusted EBITDA was $787 million with a margin of 25.5%, down from approximately $900 million in the previous year [24] - Free cash flow for the quarter was over $1.7 billion, reflecting strong financial performance [24] Business Line Data and Key Metrics Changes - North America enterprise grow revenue increased by 10.5% year over year, now representing 50% of North America enterprise revenue, up from 35.5% three years ago [4][22] - Mass market segment revenue declined by 7.7% to $631 million, while fiber broadband revenue increased by 18.4% year over year [23] - The number of active customers in the Network-as-a-Service (NAS) grew by 32% since the last quarter, with services sold increasing by 36% [10] Market Data and Key Metrics Changes - The company signed over $1 billion in Private Connectivity Fabric (PCF) deals, bringing the total deal value to over $10 billion [4] - The company completed more than 3,200 miles of overpulls, achieving approximately 130% of its end-year 2025 target [9] - The company added approximately 122,000 fiber-enabled homes, bringing the total to approximately 4.5 million [23] Company Strategy and Development Direction - The company is focused on transforming its business model to support the AI economy, emphasizing the need for a fundamental reset in networking to support Cloud 2.0 [5][6] - The strategy includes building a connected ecosystem and enhancing digital capabilities, with expectations of generating $900 million to $1.1 billion in incremental revenue by 2028 [17][28] - The company is committed to a disciplined approach in signing deals that are value accretive to shareholders [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA stability over the next few quarters, with an inflection to growth expected in 2026 [26] - The company anticipates that the early 2026 closing of the AT&T transaction will significantly improve its debt profile and reduce annual interest expenses [20] - Management highlighted the urgency for structural change in network architecture due to the advent of AI, with expectations of data center footprints growing tenfold by 2030 [5][6] Other Important Information - The company is on track to achieve $350 million in run-rate cost takeout through its ERP system implementation [3] - The company has reduced annual interest expenses by approximately $235 million year to date through proactive balance sheet management [19] - The company expects free cash flow to be lumpy quarter to quarter as it moves through large PCF builds [24] Q&A Session Summary Question: Update on PCF deals and revenue growth - Management confirmed that the new $1 billion in PCF bookings has margins equivalent to previous deals and emphasized a disciplined approach to business [32] Question: Insights on grow revenue and sustainability - Management indicated that grow revenue is expected to continue growing, driven by dark fiber and IP, and is becoming a larger portion of the North America enterprise revenue base [32][36] Question: Revenue impact from recent announcements - Management stated that the recent announcements are part of the connected ecosystem strategy, which is expected to improve results over time [40][44] Question: Clarification on the digital revenue outlook - Management expressed confidence in achieving $500 million to $600 million in digital revenue by 2028, with multiple pathways to reach this goal [44][50] Question: Investments needed for digital platform growth - Management acknowledged significant investments are required for building the digital platform, which are already included in their plans [51] Question: Disconnects of legacy services - Management noted that disconnects have returned to normal levels and highlighted a one-time revenue item from the previous year as a significant factor [52]

Financial Highlights - Reached over $10 billion in PCF deals signed to date[8] - Debt refinancing and term loan repricing of $24 billion extends maturities and reduces cash interest[8] - Total revenue was $3087 billion, a decrease of 42% year-over-year[36] - Adjusted EBITDA was $787 million, a decrease of 125% year-over-year, with an adjusted EBITDA margin of 255%[41] - Free cash flow was $1661 billion[44] Strategic Initiatives and Growth - Over 1500 customers adopted Lumen NaaS since launch[8] - NaaS customers increased by 32% quarter-over-quarter, fabric ports deployed by customers increased by 30%, and services sold across all fabric ports increased by 36%[22] - Fiber broadband revenue in Mass Markets was $225 million, an increase of 184% year-over-year, contributing 36% to total broadband revenue[38] Network and Infrastructure - Total intercity fiber miles increased from 12 million in 2022 to a planned 17 million in 2025, with a vision of 47 million by 2028[13] - Hyperscaler utilization is projected to increase from 30% in 2022 to 45% in 2025 and 57% in 2028[13] Debt and Leverage - Total debt as of September 30, 2025, was $180 billion[34] - Pro forma total debt after planned paydown and Lumen SP debt paydown is projected to be $131 billion, with gross leverage less than 38x[34]

Financial Performance - For the three months ended September 30, 2025, consolidated operating revenue decreased by $134 million (4%) to $3,087 million compared to $3,221 million for the same period in 2024[200]. - Operating expenses for the three months ended September 30, 2025, increased by $108 million (3%) to $3,203 million compared to $3,095 million for the same period in 2024[201]. - The net loss for the three months ended September 30, 2025, was $621 million, compared to a net loss of $148 million for the same period in 2024, resulting in a basic loss per share of $0.62[199]. - The Business segment revenue for the three months ended September 30, 2025, was $2,456 million, a decrease of $81 million (3%) from $2,537 million in the same period in 2024[200]. - The Mass Markets segment revenue for the three months ended September 30, 2025, was $631 million, down $53 million (8%) from $684 million in the same period in 2024[200]. - Total operating revenue decreased to $3,087 million for the three months ended September 30, 2025, down from $3,221 million in 2024, with the Business segment revenue decreasing by $81 million[220]. - Business segment adjusted EBITDA was $1,108 million for the three months ended September 30, 2025, representing a 1% increase compared to the same period in 2024[221]. - Total segment adjusted EBITDA was $347 million for the three months ended September 30, 2025, representing 55% of segment revenue, compared to 52% for the same period in 2024[227]. Expenses and Costs - The company reported a total other expense of $697 million for the three months ended September 30, 2025, compared to $298 million for the same period in 2024[199]. - Cost of services and products increased by $8 million and $14 million for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to a $41 million increase in employee-related expenses[203]. - Selling, general and administrative expenses increased by $133 million for the three months ended September 30, 2025, mainly due to a $120 million increase in professional fees and legal expenses[204]. - Total other expense, net increased to $697 million for the three months ended September 30, 2025, compared to $298 million in 2024, primarily due to a net loss on early retirement of debt[213]. - Depreciation expense decreased by $31 million for the three months ended September 30, 2025, mainly due to the discontinuation of depreciation for certain assets[207]. Cash Flow and Liquidity - The company held cash and cash equivalents of $2.4 billion as of September 30, 2025, with approximately $722 million of borrowing capacity available under its Revolving Credit Facilities[230]. - The company anticipates that its cash and cash equivalents will provide sufficient liquidity to meet cash requirements for at least the next 12 months[234]. - Net cash provided by operating activities increased by $531 million for the nine months ended September 30, 2025, compared to the same period in 2024[267]. - Net cash used in investing activities increased by $670 million for the nine months ended September 30, 2025, primarily due to increased capital expenditures[269]. - Net cash used in financing activities decreased by $246 million for the nine months ended September 30, 2025, due to higher net proceeds from long-term debt issuance[270]. Debt and Financing - The company had $13.9 billion of outstanding consolidated secured indebtedness and $4.1 billion of outstanding consolidated unsecured indebtedness as of September 30, 2025[244]. - Future debt transactions are planned to refinance a substantial portion of maturing debt, subject to market conditions[249]. - The company has engaged in various debt refinancing transactions to improve its financial flexibility and reduce consolidated indebtedness[252]. - On May 21, 2025, the company entered into an agreement to sell its Mass Markets fiber-to-the-home business for $5.75 billion in cash, expected to reduce interest expense by approximately $300 million annually[233]. - Interest expense decreased by $32 million for the three months ended September 30, 2025, attributed to a decrease in the average interest rate from 7.85% to 6.80%[215]. Market Risks and Strategies - The company highlighted significant market risks related to liquidity and capital resources[282]. - The discussion included quantitative and qualitative disclosures about market risk factors affecting performance[282]. - The company emphasized the importance of monitoring market conditions to mitigate potential risks[282]. - Future strategies will focus on enhancing capital management to address market volatility[282]. - The company plans to implement new risk assessment models to better predict market fluctuations[282]. - There was a mention of ongoing evaluations of market trends to inform investment decisions[282]. - The company aims to strengthen its financial position by optimizing resource allocation in response to market risks[282]. - The management reiterated the commitment to transparency in disclosing market risk factors[282]. - The company is exploring partnerships to enhance its market risk management capabilities[282]. - Future earnings guidance will incorporate potential impacts of identified market risks[282]. Employee and Operational Insights - The company had approximately 24,000 employees as of September 30, 2025[186]. - The company is experiencing operational challenges due to inflation and supply shortages, but these have not materially impacted financial performance to date[189]. - The company aims to expand its network capacity through its AI backbone initiative and execute on its Quantum Fiber buildout plan[199]. Tax and Benefits - The effective income tax rate was 23.6% for the three months ended September 30, 2025, compared to 14.0% in 2024, influenced by a $42 million impact from goodwill impairment[219]. - The company anticipates a significant reduction in its 2025 federal income tax liability due to the OBBBA, filing a refund claim for $400 million[255]. - The company expects to pay approximately $186 million of post-retirement benefits for the full year 2025[259]. Goodwill and Impairment - Goodwill impairment charges of $628 million were recorded in the second quarter of 2025 due to the estimated fair value of the Mass Markets reporting unit being less than its carrying value[211]. - The unfunded status of the defined benefit pension plans was $645 million as of December 31, 2024[257].

Financial Performance - Total revenue for Q3 2025 was $3.087 billion, a decrease of 4% from $3.221 billion in Q3 2024[11] - Adjusted EBITDA for Q3 2025 was $787 million, down from $899 million in Q3 2024, reflecting a margin of 25.5%[7][8] - The company reported a net loss of $(621) million for Q3 2025, compared to a net loss of $(148) million in Q3 2024[7] - Operating revenue for Q3 2025 was $3,087 million, a decrease of 4% compared to $3,221 million in Q3 2024[26] - Total operating expenses increased by 3% to $3,203 million in Q3 2025 from $3,095 million in Q3 2024[26] - Net loss for Q3 2025 was $621 million, compared to a net loss of $148 million in Q3 2024[26] - Basic loss per share for Q3 2025 was $0.62, significantly higher than $0.15 in Q3 2024[26] - The company reported a net loss excluding special items of $197 million for Q3 2025, compared to a loss of $133 million in Q3 2024, representing a 48% increase[26] - Net loss for the nine months ended September 30, 2025, was $1,737 million, compared to a net loss of $140 million in the same period of 2024[30] - The net loss for Q3 2025 was $621 million, compared to a net loss of $148 million in Q3 2024, showing a significant increase in losses[51] - The net loss for the twelve months ending December 31, 2025, is projected to range from $(1,455) million to $(650) million[53] Cash Flow and Liquidity - Free cash flow for Q3 2025 was $1.661 billion, compared to $1.198 billion in Q3 2024, marking a significant increase[12] - Cash provided by operating activities increased to $4,176 million in 2025 from $3,645 million in 2024, reflecting a growth of approximately 14.6%[30] - Net cash provided by operating activities for Q3 2025 was $2,511 million, up from $2,032 million in Q3 2024, representing a 23.5% increase[49] - Free Cash Flow for Q3 2025 was $1,470 million, compared to $1,182 million in Q3 2024, reflecting a 24.4% growth[49] - The company expects Free Cash Flow for the twelve months ending December 31, 2025, to range between $1,200 million and $1,400 million[54] - Total cash, cash equivalents, and restricted cash at the end of the period was $2,412 million in 2025, down from $2,653 million in 2024[30] - Cash and cash equivalents increased to $2,401 million as of September 30, 2025, up from $1,889 million at the end of 2024[28] Capital Expenditures and Investments - Capital expenditures for Q3 2025 were $1.041 billion, up from $850 million in Q3 2024[8] - Capital expenditures for the twelve months ending December 31, 2025, are expected to be between $(4,100) million and $(4,300) million[54] - Net cash used in investing activities was $2,669 million in 2025, compared to $1,999 million in 2024, indicating an increase of approximately 33.6%[30] - Net proceeds from the issuance of long-term debt reached $6,920 million in 2025, a significant increase from $1,325 million in 2024[30] Subscriber Metrics - Total broadband subscribers decreased to 2,417 thousand in Q3 2025 from 2,601 thousand in Q3 2024, representing a decline of about 7.1%[32] - Fiber broadband subscribers increased to 1,190 thousand in Q3 2025, up from 1,035 thousand in Q3 2024, marking an increase of approximately 14.9%[32] Special Items and Adjustments - Special items impacting Adjusted EBITDA totaled $216 million in Q3 2025, compared to $56 million in Q3 2024, reflecting a substantial increase[47] - Goodwill impairment recorded in 2025 was $628 million, with no such impairment reported in 2024[30] Future Outlook - The company expects full-year 2025 adjusted EBITDA to be between $3.2 billion and $3.4 billion[14] - Adjusted EBITDA outlook for the twelve months ending December 31, 2025, is projected to be between $3,200 million and $3,400 million[53] - The company is targeting the completion of the consumer FTTH sale to AT&T in early 2026[6] - The company is undergoing a transformation strategy, including the anticipated sale of its consumer fiber business[20] - The company aims to enhance growth products while managing the decline of legacy products, driven by increased demand for high-speed data transmission services[20]

Core Insights - Lumen Technologies exceeded third-quarter revenue estimates and reported a smaller-than-expected loss, attributed to increased demand for its network infrastructure to handle significant data flows and complex applications [1] Financial Performance - The company reported third-quarter revenue that surpassed analyst expectations, indicating strong performance in its core business [1] - The loss reported was less than what analysts had anticipated, showcasing improved operational efficiency [1] Market Demand - There is a growing demand for network infrastructure, driven by the need to support massive data flows, which is a positive indicator for the company's future growth prospects [1]

Group 1 - Palantir Technologies Inc. is expected to double in value over the next three years [1] - Palantir and Lumen Technologies have entered a multi-year partnership worth approximately $200 million to enhance enterprise AI deployment [2] - The partnership will combine Palantir's Foundry and AI platform with Lumen's connectivity solutions, facilitating the integration of advanced AI capabilities with high-performance network infrastructure [2] Group 2 - Palantir specializes in software platforms for the intelligence community, focusing on counterterrorism efforts in the US, UK, and globally [3] - Lumen Technologies provides integrated networking products and services to both business and mass customers in the US and internationally [3] - There are suggestions that other AI stocks may present greater upside potential and lower downside risk compared to Palantir [3]

Core Insights - The article highlights the partnership between Lumen Technologies and Commvault aimed at enhancing data protection for enterprises in the face of increasing cyberattacks [1] Company Overview - Lumen Technologies integrates its secure global network infrastructure with Commvault's advanced cyber resilience platform [1] - This collaboration is designed to help enterprises safeguard critical information, reduce risks, and accelerate recovery in complex digital environments [1]

Core Insights - QTS Data Centers and Lumen Technologies have announced an expanded strategic partnership aimed at supporting a next-generation network designed for AI, cloud, and hyperscaler growth [1] Company Developments - The partnership will see Lumen connecting its AI-ready infrastructure to 16 new QTS data center campuses located across the U.S., including states such as Arizona, Georgia, Ohio, and Texas [1]