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]