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]

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]