Lumen Stock Rises on Better-Than-Expected Q4 Earnings

Core Insights - Lumen Technologies, Inc. reported adjusted earnings of 9 cents per share for Q4 2024, exceeding the Zacks Consensus Estimate of a loss of 8 cents and up from 8 cents in the prior-year quarter [1] - Total revenues for Q4 2024 were $3.329 billion, a decline of 5.4% year over year, primarily due to divestitures and the sale of the CDN business, but still beating the Zacks Consensus Estimate by 3.4% [2] - For the full year 2024, total revenues were $13.1 billion, down 10% from 2023 [3] Revenue and Segment Performance - Business revenues fell 5.1% to $2.659 billion, Large Enterprises revenues dropped 5.5% to $845 million, and Mid-Market Enterprise revenues declined 9.8% to $452 million [7] - Public Sector revenues increased by 11% to $554 million, while North America's Enterprise Channels revenues decreased by 2.2% to $1.851 billion [7] - Revenues from Mass Markets were down 6.3% year over year to $670 million [9] Strategic Developments - Lumen secured $8.5 billion in PCF deals in 2024, driven by AI-fueled connectivity demand, partnering with major tech companies like Microsoft, Amazon, Google Cloud, and Meta Platforms [4] - The company is focused on "cloudifying" telecom and promoting its network-as-a-service solutions [4] Financial Health - Lumen repaid $1.6 billion of debt in 2024 and plans to eliminate $1 billion in operating expenses by 2027, expecting a run-rate cost benefit of over $250 million in the current year [5] - Total operating expenses decreased by 40% year over year to $3,175 million, with operating income at $154 million compared to a loss of $1.776 billion in the prior-year quarter [11] Cash Flow and Liquidity - In Q4, Lumen generated $688 million of net cash from operations, down from $784 million in the prior-year quarter, with free cash outflow of $174 million compared to free cash flow of $50 million in the prior-year quarter [12] - As of December 31, 2024, the company had $1.889 billion in cash and cash equivalents and $17.494 billion in long-term debt [13] Future Outlook - For 2025, Lumen expects adjusted EBITDA between $3.2 billion and $3.4 billion, with capital expenditures projected between $4.1 billion and $4.3 billion [14] - The company anticipates EBITDA to rebound significantly in 2026, exceeding $3.5 billion, with growth expected thereafter [14] Market Performance - Following better-than-expected results, LUMN stock rose by 10.7% in pre-market trading, with shares gaining 305.2% over the past year compared to the Technology Services industry's growth of 67% [6]