Summary of Lumen's 2026 Investor Day Conference Call Company Overview - **Company**: Lumen Technologies - **Focus**: Transitioning to become the trusted network for AI and Cloud 2.0 services Key Industry Insights - **AI and Networking**: The importance of a robust network infrastructure to support AI workloads is emphasized. Lumen's network is designed to handle massive workloads across multiple clouds efficiently and securely [3][4][6] - **Cloud 2.0**: A shift from traditional cloud services to intelligent, application-centric environments is highlighted. This transition requires significant investment in data center expansion and networking capabilities [19][21] Core Strategic Points - **Cultural Transformation**: Lumen has undergone a cultural reboot, empowering employees and focusing on a growth mindset rather than merely surviving [5][6] - **Financial Restructuring**: The company has secured $13 billion in Private Connectivity Fabric deals and divested its consumer fiber business, leading to improved financial stability and market confidence [8][9] - **Stock Performance**: Lumen's equity has seen a 400% return over the past two years, with stock prices rising from slightly above $1 to over $7 [9][10] Growth Strategy - **Network Expansion**: Lumen is expanding its physical network to support high-capacity, low-latency services essential for AI and cloud applications [7][22] - **Digital Platform Development**: The introduction of a programmable network and services like Network as a Service (NaaS) aims to enhance customer control and flexibility [49][55] - **Investment in Infrastructure**: Plans to invest $500 million by 2026 to build a programmable network for AI workloads, focusing on high-capacity circuits and data center connectivity [47][48] Market Dynamics - **Shifts in Spending**: Enterprises currently allocate 36% of their network spend on connecting premises to the cloud, with a projected shift to 84% focusing on cloud core interconnections over the next three years [21][44] - **East-West Traffic Growth**: The east-west market, which involves data movement between data centers and clouds, is expected to grow significantly, with a projected CAGR of 13% [44] Technological Innovations - **Lumen Connect**: A new digital platform that allows customers to manage their network services on-demand, enhancing the customer experience [58][60] - **Fabric Port**: A product that enables multiple services on a single port, streamlining service delivery and reducing operational complexity [63][64] - **Multi-Cloud Gateway**: A solution designed to simplify connections to multiple cloud providers, facilitating better data transfer and reducing complexity [66] Conclusion - Lumen is positioning itself as a leader in the AI and cloud networking space through strategic investments, cultural transformation, and innovative service offerings. The company aims to provide high-bandwidth, low-latency solutions that meet the evolving needs of enterprises in a complex digital landscape [10][22][67]

1 © 2025 Lumen Technologies. All Rights Reserved. Jim Breen SVP Investor Relations 2 Forward Looking Statement Except for historical and factual information, the matters set forth in this presentation and other of our oral or written statements identified by words such as "estimates," "expects," "anticipates," "believes," "plans," "intends," "will," and similar expressions with respect to the future are forward-looking statements as defined by the federal securities laws, and are subject to the "safe harbor ...

Financial Data and Key Metrics Changes - Total reported revenue declined 8.7% to $3.041 billion, with business segment revenue down 8.8% to $2.425 billion, impacted by one-time dark fiber and elevated public sector harvest revenue growth in the previous year [24][26] - Adjusted EBITDA was $767 million, with a margin of 25.2%, and free cash flow was negative $765 million, affected by a delay in a $400 million tax refund expected in the first half of 2026 [24][27] - The company reduced annual interest expense by nearly $500 million, with total debt now under $13 billion and net leverage reduced to below 4x [4][21][22] Business Line Data and Key Metrics Changes - North American enterprise revenue grew to 52% of total revenue, surpassing nurture and harvest revenues, indicating an improving business revenue mix [6][19] - The company reported strong performance in PCF sales, with total signed deals reaching nearly $13 billion, contributing $41 million in revenue for the fourth quarter and $116 million for the full year [25][72] - The NaaS business saw a 31% increase in fiber ports deployed, reflecting growing enterprise adoption of Lumen's programmable network [13] Market Data and Key Metrics Changes - North American business revenue, including wholesale, declined 8.6%, while international revenue fell 16.3%, primarily due to declines in Managed Services, VPN, and Voice [26] - The company expects organic business revenue declines to improve by roughly 75 basis points in 2026 compared to 2025, as it focuses on growth products [28] Company Strategy and Development Direction - The company aims to become the trusted network for AI, focusing on serving public and private enterprises and reducing capital intensity by over $1 billion through the divestiture of its fiber to the home business [5][9] - Lumen's three-pillar strategy includes building the AI backbone, cloudifying telecom, and expanding its connected ecosystem, with significant investments in network upgrades and partnerships [10][12][15] - The company is transitioning to a new reporting structure that separates strategic growth from legacy revenues, enhancing transparency and aligning with its enterprise-first strategy [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to business revenue growth by 2028, supported by a strong pipeline of PCF deals and improvements in the revenue mix [19][33] - The company remains cautiously optimistic about the market's ability to absorb changes in critical infrastructure, emphasizing the need for change management for customers [49] - Management highlighted the importance of structural changes in network architectures to align with customer needs in a multi-cloud, AI-first world [9][12] Other Important Information - The company has achieved over $400 million in run rate cost reductions, targeting $700 million by the end of 2026 as part of its modernization and simplification program [7][19] - Lumen has signed 16 Connected Ecosystem partnerships, yielding over 180 potential sales opportunities, enhancing its commercial reach [15] Q&A Session Summary Question: Can you share how the recent PCF deals may differ from previous ones regarding margins and returns? - The recent $2.5 billion deals have a similar economic profile to previous deals, as they utilize existing network conduit [38][39] Question: Can you provide insights on the guidance for 2028 business revenue growth? - Management is being conservative in their estimates due to the long-term nature of infrastructure changes, but they acknowledge the potential for upside as digital adoption accelerates [45][49] Question: How should we think about the pacing of EBITDA and cost items in 2026? - The company will provide more visibility on the impact of PCF sales on revenue and EBITDA at the upcoming Investor Day, with a focus on cost savings and modernization efforts [54][56] Question: What measures are being taken to avoid construction delays? - The company leverages its scale across the supply chain and workforce to ensure timely delivery, with favorable contracts and performance bonuses for faster execution [92][96]

Financial Data and Key Metrics Changes - Total reported revenue declined 8.7% to $3.041 billion, with business segment revenue down 8.8% to $2.425 billion [24] - Adjusted EBITDA was $767 million, with a margin of 25.2%, and free cash flow was negative $765 million [24][27] - Annual interest expense has been reduced by nearly $500 million in the last 12 months [21][22] Business Line Data and Key Metrics Changes - North American enterprise revenue grew to 52%, surpassing nurture and harvest revenues [6] - Total business grow revenue was roughly flat year-over-year and quarter-over-quarter, impacted by one-time revenue items [25] - The number of active customers grew by 29% quarter-over-quarter, and the number of NaaS fiber ports deployed increased by 31% [13] Market Data and Key Metrics Changes - North American business revenue declined 8.6%, with wholesale revenue down approximately 7.8% year-over-year [26] - International and other revenue declined 16.3%, primarily due to managed services, VPN, and voice declines [26] Company Strategy and Development Direction - The company aims to become the trusted network for AI, focusing on serving public and private enterprises [4] - A three-pillar strategy is being implemented to build the backbone for AI, cloudify telecom, and expand the connected ecosystem [9] - The company is transitioning from legacy revenue streams to strategic growth products, with a focus on digital services [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to business revenue growth by 2028 and total revenue growth by 2029 [18] - The company is cautiously optimistic about the market's ability to absorb changes in critical infrastructure due to the AI and Cloud 2.0 catalysts [50] - The future outlook remains positive, with expectations for improved margins and free cash flow as digital revenue increases [33] Other Important Information - The company closed the transaction with AT&T for $5.75 billion, using proceeds to pay down super priority bonds [20] - The company has achieved over $400 million in run rate cost reductions, targeting $700 million by the end of 2026 [19][29] Q&A Session Summary Question: Can you share how the recent PCF deals may differ from previous ones regarding margins and returns? - The structure of the recent $2.5 billion deals is similar to previous ones, as they utilize existing network conduit, maintaining a similar economic profile [39] Question: Can you provide insights on the guidance for 2028 business revenue growth? - Management is being cautiously optimistic about the market's ability to absorb changes, with a focus on gradual adoption and potential upside in revenue [50][51] Question: How should we think about the pacing of EBITDA growth in 2026? - The range for Adjusted EBITDA in 2026 is estimated to be $3.1 billion to $3.3 billion, indicating growth compared to 2025 [28][31]

Financial Data and Key Metrics Changes - Total reported revenue declined 8.7% to $3.041 billion, with business segment revenue down 8.8% to $2.425 billion [22][24] - Adjusted EBITDA was $767 million, with a margin of 25.2%, compared to approximately $1.052 billion in the year-ago quarter [24][25] - Free cash flow was negative $765 million, impacted by a delay in a $400 million tax refund expected in the first half of 2026 [25][26] Business Line Data and Key Metrics Changes - North American enterprise revenue grew slightly, driven by strength in IP, while overall North American business revenue declined 8.6% [24] - The business revenue mix improved, with 52% of North American enterprise revenue now coming from growth products, up from the mid-40% range in 2024 [17][22] - The company recognized revenue of approximately $41 million in Q4 and $116 million for the full year from nearly $13 billion in PCF deals [23][24] Market Data and Key Metrics Changes - Wholesale revenue declined approximately 7.8% year-over-year, in line with expectations, while international and other revenue declined 16.3% [24] - The company reported a strong performance in NaaS business, with active customers growing by 29% quarter-over-quarter and NaaS fiber ports deployed increasing by 31% [11][24] Company Strategy and Development Direction - The company aims to become the trusted network for AI, focusing on serving public and private enterprises [3][4] - A three-pillar strategy is being implemented to build the backbone for AI, cloudify telecom, and expand the connected ecosystem [7][10] - The company is transitioning from legacy revenue streams to strategic growth products, with a focus on digital services and programmable networks [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to business revenue growth by 2028 and total revenue growth by 2029 [16][26] - The company anticipates a significant reduction in capital intensity and an improvement in margins and free cash flow due to ongoing cost optimization efforts [30] - Management highlighted the urgent need for structural change in network architectures to align with customer needs in a multi-cloud, AI-first world [7][10] Other Important Information - The company closed the transaction with AT&T for $5.75 billion, using proceeds to pay down super priority bonds, reducing annual cash interest expense by an additional $300 million [18][19] - The company achieved over $400 million in run rate cost reductions in 2025, targeting $700 million by the end of 2026 [17][26] Q&A Session Summary Question: Can you share how the recent PCF deals may differ from previous ones regarding margins and returns? - The structure of the recent $2.5 billion deals is similar to previous ones, utilizing existing network conduit, thus maintaining a similar economic profile [34][35] Question: What is the timing of CapEx investments and cash receipts relative to the recent deals? - The company expects a significant reduction in capital intensity, with a projected CapEx intensity profile roughly half of the previous year [36][37] Question: Can you provide insights on the guidance for 2028 business revenue growth? - Management remains cautiously optimistic about growth, acknowledging the need for structural change in the industry while projecting conservative estimates [41][45] Question: How should we think about the EBITDA guide for 2026? - The range of $3.1 billion-$3.3 billion for 2026 is expected to reflect growth compared to 2025, though not every quarter will show growth [93]

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]

Summary of Lumen Technologies 2025 Analyst Day Company Overview - **Company**: Lumen Technologies (NYSE: LUMN) - **Event**: 2025 Analyst Day held on September 23, 2025 Core Industry Insights - **Theme**: The trusted network for AI, focusing on building a robust physical network and cloudifying telecom to meet enterprise demands in the AI era [5][12][64] - **Transformation**: Lumen is undergoing a fundamental transformation from a legacy telecom company to a modern technology infrastructure provider, emphasizing innovation and customer value [13][14][18] Key Financial Insights - **Financial Goals**: Restoration of free cash flow health, EBITDA growth guidance for 2026, and a target to restore business segment revenue growth by 2028 [15][79] - **Debt Management**: Successfully completed the largest out-of-court debt restructuring in history, reducing debt from over $18 billion to $13 billion and cutting interest expenses significantly [78][79] Strategic Focus Areas - **Physical Network Expansion**: Lumen is dramatically expanding its physical network, leveraging partnerships with hyperscalers to meet the demands of the AI economy [52][84] - **Digital Transformation**: The company is cloudifying its telecom services to enhance flexibility and scalability, allowing for multiple services over a single infrastructure [56][90] - **Ecosystem Development**: Building a connected ecosystem that accelerates time to value for technology partners and customers, enhancing overall service delivery [61][62] Innovation and Technology - **Product Development**: Introduction of new technology products aimed at simplifying networking and enhancing customer experiences [5][28][60] - **Project Berkeley**: A significant initiative aimed at providing a management console for total lifecycle management of networking needs, enhancing service delivery [57] Market Opportunities - **Total Addressable Market**: Targeting a rapidly growing market for connectivity, estimated at $15 billion, driven by increasing cloud spend and data proliferation [29][90] - **Customer Demand**: Addressing the complexity faced by CIOs in delivering insights quickly amidst a sea of data and applications [26][27] Cultural and Leadership Insights - **Company Culture**: Emphasis on a culture of trust, transparency, and a growth mindset, which is seen as critical for successful transformation [45][86] - **Leadership Team**: A strong leadership team with an underdog mindset, focused on innovation and disruption in the telecom industry [21][22] Conclusion - **Future Outlook**: Lumen is positioned for growth with a clear strategy focused on innovation, financial stability, and a commitment to transforming the telecom landscape to support the AI economy [64][79]

Lumen's Transformation and Strategy - Lumen aims to simplify technical complexity by removing friction, collapsing layers, unlocking speed, embedding security, and reducing costs[9] - Lumen's long-term vision is to be a digital network services company delivering ubiquitous connectivity to enterprises[24] - Lumen's growth strategy involves building the backbone for the AI economy, cloudifying the telecom industry with Lumen Connectivity Fabric, and building the Lumen Connected Ecosystem[26] - Lumen is on track to return to Business Segment Revenue growth in 2028 and aEBITDA stabilizing with inflection in 2026[66] Market Opportunity and AI Focus - The total addressable market (TAM) is projected to increase approximately 2x by 2030, reaching $1.12 trillion[11] - Cloudify Telecom TAM has an approximate 5% compound annual growth rate (CAGR), forming part of a larger $80 billion enterprise connectivity opportunity[13] - Approximately 85% of customers expect AI to drive bandwidth and cloud demand[13] - Global network traffic from AI-enriched data is expected to increase from 65 Exabytes in 2023 to 1,226 Exabytes by 2030+, representing a 19x increase[85] Network Infrastructure and Deployment - Lumen plans to expand its intercity fiber miles to 34 million+ [30] - Lumen has secured approximately $9 billion in Private Connectivity Fabric (PCF) deals with hyperscalers[17, 18] - By the end of 2027, Lumen aims to complete 27,000 fiber miles across 73 routes for its PCF deployment[119] Debt Management - Pro forma for Lumen SP debt paydown, the company projects a total debt of $13.2 billion by the end of 2025, with a gross leverage of 3.7x and interest expense of $0.7 billion[63] Cloud 2.0 and Digital Platform - Data center footprint is expected to grow 10x from 2025 to 2030[144, 146] - Lumen is building programmable fabrics with Lumen Connectivity Fabric and Lumen Connect, enabling on-demand, API-driven provisioning across data centers, clouds, and enterprises[173] - Lumen is enabling access to over 11 million offnet locations through Project Berkeley[198] Customer Insights - Approximately 69% of US leaders do not believe their legacy network infrastructure can handle the demands of AI[252, 263]

Financial Data and Key Metrics Changes - Revenue grew 18% year-over-year to $33.8 million in Q4 2024, slightly ahead of guidance [35] - Adjusted EBITDA margin improved to 14%, more than doubling from the previous year [39] - Net revenue retention (NRR) increased to 116% compared to 109% last year, benefiting from a price increase [38] - Average revenue per user (ARPU) rose to $268, an 18% increase year-over-year [39] Business Line Data and Key Metrics Changes - B2 Cloud Storage revenue reached $17.1 million, representing a 22% year-over-year growth, driven by customer expansion and new acquisitions [35] - Computer Backup revenue was $16.7 million, reflecting a 13% year-over-year growth primarily due to a price increase [35] - B2 annual recurring revenue (ARR) increased by $5 million sequentially, marking the largest organic sequential increase since the IPO [37] Market Data and Key Metrics Changes - The company has seen a nearly tenfold increase in data stored by AI customers, with three out of the top ten customers now being AI companies [30] - The average deal size from channel leads nearly doubled year-over-year, indicating strong growth in partnerships [18] Company Strategy and Development Direction - The company aims to become a "Rule of 40" company, focusing on both growth and profitability [11] - A go-to-market transformation is underway, emphasizing B2 growth and aiming for adjusted free cash flow positivity by Q4 2025 [12][45] - The company is expanding its partnerships and sales strategies, including co-build, co-market, and co-sell initiatives [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the acceleration in B2 growth, expecting it to exceed 30% by the end of 2025 [46] - The company anticipates adjusted EBITDA margins to exceed 20% by Q4 2025, with a focus on operational efficiency [47] - Management highlighted the importance of flexibility and data mobility in the evolving AI landscape, positioning Backblaze as a key player [28] Other Important Information - The company completed a secondary offering for $37 million in net proceeds to strengthen its balance sheet [33] - Cash flow from operations improved significantly, showing a $20 million improvement year-over-year [44] Q&A Session Summary Question: Key metrics for partners in 2025 - Management monitors pipeline and sales productivity for channel partners, while alliance metrics focus on co-build, co-market, and co-sell initiatives [51][52] Question: Long-term growth outlook for B2 and Computer Backup - B2 is expected to grow over 30% year-over-year by the end of 2025, while Computer Backup may see flattish growth due to consumer decline [55][56] Question: Progress of gross margins - Management expects adjusted gross margins to remain stable at 78% [59] Question: AI use cases and their impact on growth - AI customers utilize Backblaze for data collection, processing, model training, and inference, indicating a direct correlation between their growth and Backblaze's growth [66][70] Question: Competitive landscape update - The competitive landscape remains similar, with major players like Amazon, Google, and Microsoft still present, but new partnerships have emerged [118][120]