LUMN

It has been about a month since the last earnings report for Lumen (LUMN). Shares have added about 12% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Lumen due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Lumen Technologies, Inc. before we dive into how investors and analysts have reacted as of late. Lumen reported a second-quarter 2026 adjusted loss (excluding special items) of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 15 cents. The company reported adjusted loss per share of 3 cents in the prior-year quarter.Quarterly total revenues were $2.805 billion, down 9.3% year over year, but topped the Zacks Consensus Estimate by 2%. Strategic revenues remained a key bright spot, reaching 53% of total business revenues in the quarter, up from 51% in the first quarter. The metric was $1.289 billion, up 14.1% year over year, while legacy revenues declined 15.1% to $1.155 billion. The shift reflects continued traction in newer digital offerings. Within strategic, digital revenues came in at $39 million.Strong adoption of NaaS, growing demand for AI-driven networking solutions and the completed Alkira acquisition (July) remained key highlights.Alkira is a “cloud-native, carrier-agnostic” networking platform, which will extend Lumen’s programmable networking footprint into faster-growing east-west connectivity, including cloud-to-cloud and data center interconnect. Management positioned Alkira as a control-plane software for cloud connectivity. Post the integration, Alkira will unify Lumen's on-net and off-net services, cloud on-ramps and Multi-Cloud Gateway into a single unified platform, compressing its digital platform roadmap meaningfully. With about $13 billion in PCF deals, Lumen recognized revenues of $91 million associated with these deals. Management noted that about $36 million of that figure reflected a California delivery milestone payment that was expected in the back half of the year. As AI demand surges, large companies across industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Total NaaS customer adoption was up 22% sequentially in the second quarter. Active ports rose 34% sequentially, while services sold across ports increased 29% from the prior quarter. Lumen now has 3,000 NaaS customers. Business revenues fell 2% year over year to $2.444 billion, with North America business down 2% to $2.37 billion.Revenues from Large Enterprises were up 4% to $794 million. Mid-Market Enterprise revenues declined 8% to $435 million. Public Sector revenues were up 1% to $490 million. Revenues of North America’s Enterprise Channels were marginally down to $1.719 billion. The metric for Wholesale decreased 5% to $653 million. Revenues from Mass Markets were down 40% year over year to $361 million, reflecting the impact of divestitures.Management noted continued strength in higher-bandwidth networking products. Within North American enterprise channels, strategic 100 and 400-gig wave services posted nearly 11% year-over-year growth, while strategic wave sales increased almost 35%, supported by strong demand from AI infrastructure and cloud customers. Total operating expenses were down 22% year over year to $2.893 billion. Operating loss was $88 million in contrast with a loss of $603 million in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $802 million from $877 million, reflecting expected revenue trends and the completion of the sale of fiber-to-the-home assets. Adjusted EBITDA margin excluding special items improved modestly to 28.6% from 28.4% a year earlier. In the second quarter, Lumen generated $971 million of net cash from operations compared with $570 million in the prior-year quarter.Free cash flow (excluding cash special items) was $327 million, compared with an outflow of $209 million in the prior-year quarter. Capital expenditures excluding special items were $780 million.As of June 30, 2026, the company had $1.876 billion in cash and cash equivalents with $13.15 billion of long-term debt compared with the respective figures of $1.625 billion and $12.925 billion as of March 31, 2026. Lumen reiterated its full-year 2026 outlook, projecting adjusted EBITDA excluding special items between $3.1 billion and $3.3 billion. Capital expenditures (excluding special items)  are estimated to be between $3.2 billion and $3.4 billion.  Free cash flow is anticipated to be between $1.9 billion and $2.1 billion, compared with free cash flow (excluding cash special items) of $1.041 billion reported in 2025. Since the earnings release, investors have witnessed a upward trend in estimates review. At this time, Lumen has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a score of A on the value side, putting it in the top quintile for value investors. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Lumen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Lumen belongs to the Zacks Diversified Communication Services industry. Another stock from the same industry, Liberty Global Ltd (LBTYA), has gained 1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Liberty Global Ltd reported revenues of $1.17 billion in the last reported quarter, representing a year-over-year change of -7.7%. EPS of -$1.07 for the same period compares with -$8.09 a year ago. Liberty Global Ltd is expected to post break-even earnings per share for the current quarter, representing a year-over-year change of 0%. Over the last 30 days, the Zacks Consensus Estimate has changed 0%. Liberty Global Ltd has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lumen Technologies, Inc. (LUMN) : Free Stock Analysis Report Liberty Global Ltd (LBTYA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Cogent Communications Holdings, Inc. CCOI shares gained 14% in the past week, even after falling 20.2% in the past month and 49.3% in the past three months. The rebound follows a narrower quarterly loss and improving earnings estimates.The setup remains mixed. Service revenues are still declining, the acquired Sprint wireline base continues to run off and leverage remains elevated, leaving investors to weigh improving operating trends against refinancing and execution risks. Second-quarter 2026 loss excluding non-recurring items narrowed to 80 cents per share from $1.21 a year earlier. The result was better than the Zacks Consensus Estimate for a loss of $1.12 per share.Service revenues fell 4.3% year over year to $235.6 million and missed the consensus estimate of $240.9 million. The revenue decline, driven mainly by weaker off-net business and the Sprint wireline runoff, keeps the earnings improvement from signaling a broad operating recovery. Cogent Communications Holdings, Inc. price-consensus-eps-surprise-chart | Cogent Communications Holdings, Inc. Quote Net-centric revenue increased 10.4% year over year to $107.4 million as IP network traffic rose 16%. IPv4 leasing revenue climbed 18.1% to $18.1 million, while wavelength revenue jumped 63.8% to $14.8 million and wavelength connections increased 66.4% to 2,445.Competitive investment remains active. Lumen Technologies, Inc. LUMN is expanding enterprise networking and AI-related connectivity while growing adoption of its digital networking services. Verizon Communications Inc. VZ continues to market global wide-area networking and infrastructure services for AI workloads, underscoring the competitive backdrop for high-capacity connectivity. On-net revenue including wavelengths rose 6.2% year over year to $150.2 million, while off-net revenue declined 17.3% to $84.5 million. The mix shift matters because Cogent's on-net services are more profitable than off-net services.Non-GAAP gross margin reached 47%, up from 44.4% a year earlier. Adjusted EBITDA margin was 30.2%, compared with 29.8% in the prior-year quarter, as cost reductions and the move toward higher-margin on-net products helped offset lower consolidated revenues. Corporate revenue declined 9.6% year over year to $98.6 million. Sprint-related revenue had fallen to 15% of total revenues from 42% at closing, while off-net connections dropped 12.2% to 23,033, showing that legacy runoff is still weighing on the consolidated growth rate.Net leverage adjusted for amounts due from T-Mobile stood at 6.23 times, down from 6.79 times in the prior quarter. Cogent also faces a $750 million unsecured-note maturity in June 2027 and expects to complete refinancing in the third quarter of 2026, with management indicating that new funding will likely cost more. The 14% weekly gain coincides with better loss performance, improving margins and favorable estimate revisions, but revenue contraction, Sprint runoff and leverage remain unresolved. Those crosscurrents keep the investment case balanced despite the recent rebound.CCOI currently carries a Zacks Rank #2 (Buy), along with a Growth Score of A, Momentum Score of A, VGM Score of B and Value Score of D. The current fiscal-year EPS estimate has improved 36.4% over the past four weeks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.A Zacks Rank #2 paired with A or B Style Scores is generally favorable for the one- to three-month horizon. Still, the Value Score of D and the company's refinancing and revenue risks support a measured view rather than an uncomplicated turnaround call. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cogent Communications Holdings, Inc. (CCOI) : Free Stock Analysis Report Verizon Communications Inc. (VZ) : Free Stock Analysis Report Lumen Technologies, Inc. (LUMN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Lumen’s second quarter was marked by a sharper-than-expected decline in sales and a negative market reaction, despite delivering revenue and non-GAAP earnings above Wall Street expectations. Management attributed the results to continued progress in shifting the business mix toward strategic and digital services, highlighted by robust growth in Network-as-a-Service (NaaS) adoption and the initial integration of Alkira. CEO Kate Johnson noted, “Our NaaS growth rates exceeded even our own internal ambitions for the first half,” emphasizing that strategic revenue now comprises a majority of total business revenue. However, ongoing declines in legacy services and increased costs related to modernization initiatives tempered the quarter’s performance. Is now the time to buy LUMN? Find out in our full research report (it’s free). Revenue: $2.81 billion vs analyst estimates of $2.74 billion (9.3% year-on-year decline, 2.4% beat) Adjusted EPS: -$0.07 vs analyst estimates of -$0.14 (50.5% beat) Adjusted EBITDA: $802 million vs analyst estimates of $769.3 million (28.6% margin, 4.3% beat) EBITDA guidance for the full year is $3.2 billion at the midpoint, below analyst estimates of $3.33 billion Operating Margin: -3.1%, up from -19.5% in the same quarter last year Market Capitalization: $6.85 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Michael Rollins (Citigroup) asked how quickly customers are transitioning from legacy to strategic services and about the potential impact Alkira could have on accelerating this shift. CEO Kate Johnson and CFO Chris Stansbury explained that strategic adoption is outpacing legacy declines, with significant share gains in high-capacity networking and an expanding customer base for NaaS and Alkira. Frank Louthan (Raymond James) questioned the incremental revenue potential from Alkira customers and whether Lumen is gaining market share in high-capacity waves. Johnson cited rapid customer adoption and upsizing of renewals, while Stansbury noted it was too early to quantify recurring revenue but highlighted the ability to upsell additional services with minimal incremental cost. Gregory Williams (TD Cowen) inquired about the ramp in digital revenue and the impact of the State of California deal pull-forward on public sector results. Stansbury responded that digital adoption is scaling from a small base, with Alkira expected to accelerate growth, and clarified that public sector results were boosted by the accelerated state contract delivery. Michael Funk (Bank of America) asked about the size and progression of the enterprise deal funnel and Lumen’s approach to pricing new conduit (PCF) deals. Stansbury emphasized a disciplined approach, focusing on monetizing underutilized assets and only pursuing new builds with attractive returns, rather than chasing headline growth. Batya Levi (UBS) sought details on CapEx for public sector fiber (PCF) projects and the incremental costs of integrating Alkira. Stansbury stated that PCF capital requirements are funded upfront by customers and that Alkira’s revenue and costs remain immaterial at this stage, but integration efforts are progressing as planned. In the coming quarters, the StockStory team will monitor (1) the pace of Alkira platform adoption and its impact on digital revenue growth, (2) the ongoing shift in revenue mix from legacy to strategic services, and (3) the company’s ability to achieve targeted cost savings from modernization and simplification initiatives. We will also track additional portfolio pruning and new product releases as key indicators of execution. Lumen currently trades at $6.65, in line with $6.71 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Lumen Technologies (LUMN) is back in focus after its latest quarterly report, which showed a smaller net loss alongside lower sales and highlighted a deeper shift toward digital platforms and services. See our latest analysis for Lumen Technologies. Despite the smaller net loss and growing focus on digital platforms, the share price has come under pressure, with the 90 day share price return down 32.13% and the year to date share price return down 17.04%, even as the 1 year total shareholder return is 61.52% and the 3 year total shareholder return is about three times. If this kind of turnaround story has your attention, it can also be useful to see what else is moving in related areas by checking out 57 AI infrastructure stocks Lumen Technologies has cut its losses, yet the share price has pulled back sharply again. For investors, the trade off is clear: lean into the current weakness or wait for a price that lines up more cleanly with today’s valuation markers. The most followed narrative on Lumen Technologies sets a fair value of $7.82 against a last close of $6.38, which implies meaningful upside if those assumptions play out. Read the complete narrative. Want to see what sits behind that confidence in Lumen Technologies? The narrative leans heavily on shrinking top line pressure, rising margins, and a future earnings multiple that is not out of step with larger telecom peers. The details show how revenue mix, contract structure, and share count expectations all feed into today’s fair value. Result: Fair Value of $7.82 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, there are still clear pressure points for Lumen Technologies, including ongoing declines in legacy services and a heavy debt load that could limit flexibility if conditions tighten. Find out about the key risks to this Lumen Technologies narrative. The analyst narrative points to Lumen Technologies trading about 18.4% below an estimated fair value of $7.82 based on future earnings and P/E assumptions. A contrasting look using the SWS DCF model reaches a different result, with Lumen trading above an estimated future cash flow value of $4.26, which implies an overvalued signal instead of a discount. Both approaches rely on long range forecasts and each highlights a different risk. When you weigh Lumen Technologies, consider whether you are more comfortable anchoring on earnings and multiples, or on cash flow and discount rates. Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lumen Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Given the mixed signals around Lumen Technologies, it makes sense to move quickly and test the story against your own expectations. To weigh both the concerns and the potential upside in one place, take a close look at the 1 key reward and 3 important warning signs. If Lumen Technologies has sharpened your focus, now is the time to broaden your watchlist. Fresh ideas across sectors can help you spot opportunities before they feel obvious. Target potential upside in beaten down opportunities by scanning the 19 elite penny stocks with strong financials, which is built around stronger balance sheets and fundamentals. Zero in on quality at a discount with the 49 high quality undervalued stocks and see which companies pair solid cash generation with lower implied pricing. Prioritise resilience and sleep better at night by reviewing the 85 resilient stocks with low risk scores, focused on businesses with relatively lower risk scores. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LUMN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Earnings estimates for AT&T, Inc. T for fiscal 2026 and fiscal 2027 have moved up 1.29% to $2.35 and 1.18% to $2.57, respectively, over the past 60 days. The positive estimate revision depicts bullish sentiments about the stock’s growth potential. Image Source: Zacks Investment Research AT&T is aggressively expanding its fiber footprint. It added more than 1 million fiber locations in the second quarter. Total fiber locations reached are now 38.6 million. The company expects to exceed 40 million locations by the end of 2026 and reach more than 60 million by 2030. The acquisition of Lumen's mass-market fiber business has accelerated AT&T’s fiber expansion strategy.Wireless remains a major contributor to overall growth. AT&T added 432,000 postpaid phone customers in the second quarter, with churn of just 0.86%. The company added 279,000 fixed wireless connections in the second quarter. The company has been taking several steps to become the customer's single connectivity provider by bundling home internet and wireless. In the second quarter, 42.5% of advanced home internet customers also had an AT&T postpaid wireless account. When customers get dependent on multiple services from a single vendor, it becomes difficult for them to change service providers. This higher switching friction lowers churn rate and boosts customer retention. This significantly boosts the company’s cross-selling opportunities as well. The rising usage of Agentic AI is driving network traffic growth. To support the significant surge of data traffic, the companies need a network that can support near-real-time communication, high bandwidth and significantly greater uplink capacity. A major part of AI processing is expected to move closer to the end user, or the edge, to reduce latency. With a dense metro fiber network combined with nationwide wireless spectrum, AT&T can benefit from this AI infrastructure expansion initiative. AT&T's growth strategy is heavily reliant on continued investment in fiber and wireless infrastructure. The company is expanding fiber aggressively while also investing in its wireless network and spectrum. Such a high capex requirement may impact free cash flow growth in the near term.AT&T is competing for both wireless and broadband customers. Rivals like Verizon and T-Mobile are also expanding network infrastructure and taking several approaches to drive customer addition. Verizon has also taken a convergence strategy to improve churn rate. Stiff competition in a saturated telecom market is impacting margins.Amid this high investment requirement, AT&T’s leveraged balance sheet remains a major concern. Net debt-to-adjusted EBITDA was 2.68X at the end of second-quarter 2026, with total debt of $144 billion and cash and equivalents of $17.6 billion. Management expects leverage to rise to about 3.2X after the planned EchoStar spectrum acquisition, before returning to the 2.5X range within about three years. The company also plans $23 to $24 billion of annual capital investment and $10 billion of 2026 buybacks, leaving less flexibility if operating execution weakens. AT&T has lost 14% in the past year compared with the Wireless National industry’s decline of 78.9%. The stock has also underperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period. Image Source: Zacks Investment Research The company has underperformed its peers like Verizon Communications Inc. VZ but outperformed T-Mobile, US, Inc. TMUS. Verizon has gained 9.3%, while T-Mobile has lost 29.2% year to date. From a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 9.86 forward earnings, lower than 33.07 for the industry. Image Source: Zacks Investment Research Rapid fiber expansion, healthy traction in the postpaid wireless business are major growth drivers. Effort to reduce churn through bundled product offering is a positive factor. Upward estimate revision underscores growing investors’ confidence on stock’s growth potential. However, fierce competition is weighing on margin. High capex requirement amid elevated debt obligation remains major concern. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T) : Free Stock Analysis Report Verizon Communications Inc. (VZ) : Free Stock Analysis Report T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 5:00 p.m. ET CEO - Kate Johnson CFO - Chris Stansbury Senior Vice President of Investor Relations - James Breen Operator: Greetings, and welcome to Lumen Technologies Second Quarter 2026 Earnings Call. As a reminder, this conference is being recorded Tuesday, August 4, 2026. Your speakers for today are Kate Johnson, CEO; and Chris Stansbury, CFO. I would now like to turn the conference over to Jim Breen, Senior Vice President of Investor Relations. Please go ahead. James Breen: Good afternoon, everyone, and thank you for joining Lumen Technologies' Second Quarter 2026 Earnings Call. Before we begin, I'd like to remind everyone that today's presentation will include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect our current expectations, assumptions and projections about future events and financial performance. Actual results may differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties. A detailed discussion of these factors can be found in our most recent filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q for this quarter and any subsequent filings. We undertake no obligation to update or revise any forward-looking statements made today, whether as a result of new information, future events or otherwise. Today's presentation may also include non-GAAP financial measures. Reconciliations are provided under posted materials. And with that, I'll hand it to Kate. Kathleen Johnson: Thanks, Jim. I'll start by sharing how excited we are to welcome John Hinshaw to the Lumen Board of Directors. John has led complex technology organizations through major moments of change, and his perspective will be a great asset as we continue Lumen's transformation. And to that end, we're pleased to report that Lumen delivered another solid quarter with financial results in line with expectations. Before Chris covers the numbers, I'll give some color on our strategy and transformation progress. Great companies don't win by fitting neatly into existing categories. They win by solving hard problems in new ways, sometimes creating new company categories along the way. And that is exactly what we're doing at Lumen. We're using 3 assets together in a way no other traditional telecom company is, our physical infrastructure, our programmable network and the connected ecosystem we're building on top. We are redefining enterprise networking for AI. And the market's noticing. Most recently, Gartner named Lumen, the company to beat in enterprise networking, one of several strong endorsements of our strategy and progress. And since closing the Alkira transaction, our market position has only strengthened. Alkira is now a Lumen Connect solution, and it gives us a critical capability customers really need, a simpler, faster way to connect and secure multi-cloud and AI environment. Let me double click on the problem we're solving. Over the past decade, people, data and applications have dispersed geographically. The software industry responded with wave after wave of innovation to help the physical network keep up, launching new capabilities in cloud connectivity, SD-WAN, SASE, firewalls and [indiscernible] interconnection. Basically, they made distributed work possible. But because telecom ceded that innovation to big tech, it happened around the network, not in the network. And that created a whole new set of problems. Customers ended up having to stitch together too many tools, policies and handoffs. It created sprawl, which is expensive and difficult to manage, secure and adapt to the speed of today's business. Lumen is stepping up. We're bringing innovation back where it belongs, inside the network. Together with Alkira, we can simplify our architecture, improve control and create more value for customers. By giving customers one cloud-based control point to connect and secure distributed environments, we can help them connect to any building, data center or public cloud while reducing sprawl. Our network fabric is simple, secure and built for scale and agility. And look, we're not talking about a vision here. These are capabilities that are already delivering breakthrough business outcomes for many customers. Two real-life examples, on Alkira, Koch Industries' simplified network hub setup across multiple clouds, compressing implementation time from 8 months to a single day. And at Michaels, Alkira helped connect more than 1,400 retail locations to Google Cloud in just a few weeks with no CapEx and reduced OpEx. In Alkira's real economic value report, you can find many more examples of business value delivered with our platform. It's a new chapter for Lumen, our customers and our investors. In the past, too much of Telecom's value conversation came down to price, and we're changing all of that. Our digital capabilities help customers reduce costs, move faster and create new revenue opportunities. Lumen can now deliver value to customers through business outcomes, not just through discounts. And our sales team, as you can imagine, are excited to bring these new capabilities to existing Lumen customers. As such, we're rapidly scaling our Alkira go-to-market muscle. Just since we closed, we've already trained nearly 4,000 Lumen employees on the Alkira value proposition. We've established a scalable sales motion and aligned incentives, and we're doing outbound marketing and demand gen to scale the sales pipeline. And the feedback so far from customers is very positive. We feel confident that Alkira will accelerate our strategic revenue growth curve. I will also share our plan for technical integration of the Lumen Connect and Alkira platforms. And our goal is really simple. We want to give customers a quick, secure, effortless digital experience to discover, buy, provision and manage all of their services across their network. That includes traffic moving into and out of the enterprise, which we call North-South as well as traffic moving across clouds and data centers, which we call East-West and do it all on one platform. Our plan is to deliver most of that integration in the next 18 months. But even earlier than that, we plan to bring the digital experience to existing Lumen customers, starting with DIA. We are in the process of making Lumen DIA ports digitally discoverable and service ready through our platform and that's going to allow us to remotely provision, manage and support these circuits, upsell additional capability on existing ports without a truck roll and create a path toward more consumption-based offers. This is a huge strategic unlock. I cannot stress this enough. Our DIA installed base carries traditional telecom economics today, but the platform gives us a path to layer on high-margin digital services like Lumen Defender, DDoS, multi-cloud gateway and more. Those incremental services are expected to approach 80% adjusted EBITDA margin, helping drive Lumen's margin expansion. That's why the product portfolio simplification matters so much. We're moving capital and talent towards the existing and future products that define next-gen Lumen. They're digital, platform-based services that solve real customer problems and expand our margins over time. And this strategy includes pruning the portfolio with discipline. Our recent decision to phase out our enterprise voice and communications products was part of the strategy. We're setting our sights and allocating our capital on higher growth markets where Lumen has a differentiated position to win. Now speaking of winning, we had another great quarter of NaaS adoption. And today, the total number of NaaS customers exceed 3,000. And in Q2, new customer adoption grew 22% quarter-over-quarter and more than 20% of these first-time NaaS adopters were brand new to Lumen, and active ports grew 34% quarter-over-quarter and active services grew 29% quarter-over-quarter. I have to say, our NaaS growth rates, they exceeded even our own internal ambitions for the first half. And what's more, we achieved these results in the North-South connectivity market, a segment that's growing less than 1% per year. We are clearly taking market share, and we believe this is for 2 reasons. Enterprise customers want digital consumption-based network services, and they also see real differentiation in Lumen. Now let me close where our strategy compounds in the connected ecosystem. We just paired Black Lotus Labs network-level threat intelligence with Palo Alto Networks' leading security platform to create a managed offering that's better together. Customers get early visibility, a fast response and far less tool sprawl against security threats that are growing more and more complex every single day. We're scaling this partner model in the connected ecosystem by making sure that Lumen brings unique network intelligence and our incredible fiber capabilities together with our tech partners who bring their best products and technologies. Together, we help customers move, control and secure data in an AI-first world. Chris, over to you. Christopher Stansbury: Thanks, Kate. I'll build on Kate's remarks by showing how our strategy is showing up in our financial model through disciplined simplification, improving revenue mix, focused capital allocation and a clear path to higher growth strategic revenue. Now before I get into the second quarter results, I want to talk about some of the decisions we're making with respect to product simplification. Product simplification is not just a cost action. It's a strategic capital allocation decision, and it's letting us focus resources on the digital, platform-based high-growth, high-margin services Kate described. It's imperative that as an organization, we aggressively manage our product portfolio to maximize margins and cash flow. These are purposeful decisions that are a means to an end in driving cash flow to fund our growth. Legacy remains a cash-generating part of the business, but it's becoming a smaller part of our revenue mix as strategic and digital services grow. We're maximizing the value of our existing legacy asset base while redeploying capital towards our digital initiatives. So to be abundantly clear, extending the life of legacy products has not been and will not be a pillar of our future success. These decisions create the flexibility to invest in capabilities like Alkira that can accelerate our digital revenue curve and support a higher growth, higher return revenue mix over time. Over the next several quarters, we'll continue to provide color on our shift from legacy to the digital products and how Alkira can help accelerate that process. The second quarter gave us tangible evidence that the transformation Kate described is progressing, strategically, operationally and financially. In the second quarter, we delivered solid financial results with revenue, adjusted EBITDA and free cash flow, all in line with our expectations. In early July, we closed the acquisition of Alkira. Alkira was not embedded in our Investor Day targets. So while the near-term revenue contribution is immaterial, we view it as upside to the digital growth trajectory we outlined earlier this year. And we reduced our SEC filers from 3 to 1, simplifying our reporting structure. And just as we're simplifying the customer experience and product portfolio, we're also simplifying how we operate internally, giving investors one unified view of Lumen's financial performance. Total revenue was in line with our expectations and slightly ahead of consensus. Total business revenue declined 1.8% year-over-year to $2.44 billion as our revenue mix continued to improve, and North America total business was down 1.6% year-over-year. North American enterprise revenue, which excludes wholesale was down only 0.2% year-over-year. Importantly, the positive revenue mix shift continues as strategic revenue grew 14% year-over-year and over 23% going back 2 years. Second quarter PCF revenue was approximately $91 million associated with the $13 billion in PCF deals announced today. Approximately $36 million was another State of California delivery milestone, which was accelerated into the second quarter from the back half of the year and is now largely complete. PCF remains an example of disciplined infrastructure monetization of underutilized assets while preserving capital for the higher return digital and platform-based opportunities that Kate discussed. We'll continue to monetize these underutilized assets, but we are not going to invest capital with subpar returns when we have the ability to drive significant returns through our digital portfolio. Within strategic, digital revenue in the second quarter was $39 million. The key near-term drivers are customer growth and service adoption both of which continue to build. Digital revenue remains in line with our expectations as the category scales. The clearest proof point behind our transformation is a mix shift in the business, and that shift is happening faster than we expected. Strategic revenue was 53% of total business revenue in the second quarter, up from 51% in the first quarter and compared to 45% in the prior year quarter. The increasing share of strategic revenue allows for more paths to capitalize on products aligned with customer demand in the future of Lumen. We also note that legacy has declined less than expected, implying the expanding share of strategic revenue is all the more impressive and driven by underlying dollar growth. Contributing to the improving mix, strategic waves revenue, 100 and 400 gig grew nearly 11% over a year-over-year in the second quarter in our North American enterprise channels, and we expect that momentum to continue as strategic waves sales were up nearly 35% year-over-year in the quarter, which is a nice precursor to future revenue. In short, the enterprise business is moving closer to sustainable revenue growth as the mix shifts towards strategic and digital services. And as a reminder, Alkira was not contemplated in our Investor Day digital revenue targets. While its revenue contribution is immaterial today, we believe Alkira can unlock increased adoption over time, making any contribution upside to those targets. We're in the process of quantifying Alkira's impact on accelerating our growth, and we plan to share that view with investors when we provide our 2027 guidance. Adjusted EBITDA, excluding special items, was $802 million in the second quarter compared to approximately $877 million in the prior year quarter. The year-over-year decline was predominantly due to the Fiber-to-the-Home sale in the first quarter as well as expected revenue declines. As strategic and digital services become a larger part of the mix, we expect that shift to support improvements in the margin profile of the business over time. Special Items impacting adjusted EBITDA totaled $204 million this quarter, primarily driven by our modernization and simplification initiatives as well as transaction and separation costs. Capital expenditures, excluding Special Items, were approximately $780 million in line with our expectations and full year guidance. That included approximately $300 million of CapEx associated with PCF deals. PCF cash received was approximately $476 million in the quarter. Free cash flow, excluding Special Items, was $327 million in the second quarter, and our cash flow performance gives us the flexibility to continue funding the transformation while remaining disciplined around where we deploy capital. So to wrap up, our focus remains on delivering consistent execution through our strategic initiatives, including the end-of-sale of enterprise voice and the acceleration of digital growth, inclusive of the incredible capabilities Alkira brings to Lumen. We're not managing decline. We're reshaping Lumen around where demand is moving, simplifying the legacy portfolio, reallocating capital towards higher-growth digital initiatives and building a revenue mix designed to create more durable shareholder value. With that financial context, the message is clear. The strategy is taking hold, and we're focused on translating it into sustainable growth and value creation. Kate, back to you. Kathleen Johnson: Thanks, Chris. I'll close with this. Lumen is becoming a different company. We're helping create a new category, enterprise networking for AI. Our platform is grounded in fiber scale, network intelligence, digital orchestration and measurable business outcomes and customers see the differentiation. They see a company that understands their networking challenges and can help them connect, secure and scale for AI, and they're voting with their business. You can see it in the numbers. Strategic revenue grew 14%. NaaS adoption dramatically outpaced the market, 100 and 400 gig waves in North America enterprise revenue grew 11% year-over-year, while sales of the same grew almost 35%. We're executing with discipline. Alkira expands our opportunity and our momentum is backed by customer demand, stronger capabilities and a clearer economic model. Lumen's pivot to growth isn't a slogan. It's just math. Operator, let's open up the line for questions. Operator: Your first question comes from the line of Michael Rollins with Citigroup. Michael Rollins: First, I was curious if you could talk a bit more about -- Kate, what you were just describing, this move to strategic revenue relative to legacy. So, are you seeing that this transition of your customers from legacy to strategic is happening more quickly? If you look at the higher strategic revenue growth and legacy now declining about 15%. And when you look at Alkira, can you share with us some additional ways that you can accelerate that performance to get to more of the strategic services? And if I could just follow up with one other numbers question. So I think earlier in the discussion, it was mentioned that results were in line with your expectations. And as you look at revenue change for 2Q in business, down about 1.8% year-over-year, but I think for the year, you're thinking about -- when you talked about -- correct me if I'm wrong, like maybe the upper 3 to 4. So what does that mean for business revenue declines in the back half of the year? Kathleen Johnson: Do you want to take the second part first, and I'll go to the first. Christopher Stansbury: Sure. So we're still committed to the guidance that we laid out. And obviously, we don't guide revenue or at least we haven't to date. Just keep in mind that the first half, we did have State of California impact both first and second quarter. And while our plans contemplated some of that hitting in the second half, that's now done. So that was accelerated. I would answer the question certainly from an EBITDA standpoint, if you look historically, adjusted EBITDA is about $100 million less in the third quarter than the second quarter just seasonally because of summer maintenance and energy costs and whatnot. And so if you look at it that way, and then look at what fourth quarter would need to be to hit guidance, I think that solidifies what we're saying for the year. Kathleen Johnson: Okay. And Mike, I'll try and hit the first one. So strategic 53% of the portfolio, legacy 47%. Strategic growing 14%, legacy down 15%. So, is it a one-for-one match? No. There's a lot of complexity in there. But I think the trends that we see that give us confidence are 2 that I really called out. There are several of them in there, though. The first is if you think about the number of NaaS customers that adopted the platform in Q2, we had another greater than 20% number of them be brand new to Lumen. These were customers that were not doing business with Lumen that decided to come to the NaaS platform, which is great because it's not a one-for-one cannibalization. What's more? I can't -- I don't remember the exact number, but I think it's somewhere around 60%, we can confirm that off-line, of the customers that were already Lumen customers were adding NaaS circuits. They weren't migrating, okay? So this is clearly a share take, and it's not a one-for-one translation of the legacy business into strategic. What's more, I think in legacy, we have the lower bandwidth wave circuits and those are declining. And in Strategic, we have 100 and 400 gig and you're seeing a real uptick there, which is indicative, I think, of the second phase of the AI adoption curve where more customers are starting to realize that they've got to upgrade their capacity. And you're also seeing a lot of the neoclouds go long in 100 and 400 gig. That growth, if you juxtapose one for one, I think over time, you're going to see a much faster acceleration on the 100 and 400 gig on the horizon. And it's where we're focused and where we're investing and why our investment in rapid routes has been just such a great return because we can turn up these circuits in days versus what used to take months. So we're very, very encouraged with what we see. Christopher Stansbury: Yes, the only thing that I would add to that is, remember, the vast majority of the legacy is voice and private line, and those are just not in [indiscernible] anymore. And to Kate's point, it's the high-speed waves, it's IP, it's dark fiber, it's NaaS. You also asked about Alkira and I think you, in particular, Mike, have done a phenomenal job of really digging in and understanding the strategy. I would encourage you and everybody else to look deeply into the value proposition of Alkira and some of the data that we shared and the materials that are online because when you look at the things that Kate talked about in her script, the complexity of allowing networking to work today, which as you scale that for AI is impossible. Cloud-native solutions, which is what Alkira brings, are massively disruptive. And so our belief is that allows us to accelerate our digital transformation, and we're working over the next couple of quarters to quantify that through medium guidance next year. Operator: Your next question comes from the line of Frank Louthan with Raymond James. Frank Louthan: Great. Can you give us an idea of sort of the MRR of an Alkira customer and maybe what that would be -- you would be getting with them over and above, if they were just a networking customer? And then on the waves growth, how do you think about it? Do you believe that you're taking share in the waves business? Or are you just -- is that just indicative of the market growth itself? Kathleen Johnson: I mean, rapid routes is clearly giving us an advantage from ability to turn up customer circuits that's being recognized. Again, I'll kind of hammer on this, the neoclouds have awakened to this notion of Lumen capabilities being able to quick, secure and effortless, it's working. And the best example is 100 and 400 gig waves with rapid route. So yes, we're taking share. It's growing quite rapidly. The sales number was phenomenal. The pipe looks really good. We have a lot more work to do to offset the decline on the lower end, but we're pretty excited and bullish on the future. Christopher Stansbury: Yes. And from an MRR perspective, it's the right question, Frank. It's a good question. I would say it's too early to say that because it really gets back to what we talked about in terms of scaling the model. Our focus to date has been on driving customer adoption. That continues. That's good news. It's now about getting customers to consume more services for every port because the reality is once you go back in with the second, third, fourth service, you get very close to having 0 marginal cost and little to no CapEx. So too early to tell that. Our goal would be to provide much more clarity around total business segment revenue next year when we give guidance that would incorporate all of that. But certainly, Alkira allows us to expand that. And Kate? Kathleen Johnson: Yes. I just want to add one thing. Look, it's been a month since we've closed. So I don't want to overdo our zeal here, but 2 things that I see that I'm really excited about. When we renew Alkira customer, we're upsizing the deals. And I think that's a very positive outcome of customers that are happy and we have several data points that show that. The second thing is -- Frank, which I think is really, really important is traditionally when we're selling connectivity, we're talking with procurement teams and they have a cost budget and they have a bandwidth budget and they -- not to exceed. With these net new services, multi-cloud gateway and the Alkira portfolio, we're now a couple of clicks up from procurement, talking about total network upgrades strategically to allow for them to achieve their AI ambitions and we're knocking on the door of the CIO and CTO and they're answering for the first time since I've been here. And I think that's the really exciting part. So we'll get a larger sort of share of wallet of those customers as we can bring the whole set of capabilities at least that's our aspiration. Operator: Your next question comes from the line of Gregory Williams with TD Cowen. Gregory Williams: First one on digital revenue. Chris, you mentioned it was in line with expectations, about $39 million. It's up only $2 million from $37 million last quarter. When does that digital adoption, you talked about this NaaS adoption equate to a higher ramp than $2 million quarter-over-quarter as we think about the cadence over the next few quarters. And second question is just on state of California. Can you quantify the impact of the pull forward? Just trying to see how much you beat on public sector and if it was California or not and to what degree? And is that both PCF revenue and public revenue? Christopher Stansbury: So on the latter, yes, it is. It's both. The public sector business, obviously, has been, I would say, fairly chunky given what's going on in the world. But we also know third quarter is the strongest quarter for that business. So we'll see. I mean we remain in deep conversations around some fairly strategic investments with the federal government, and so we'll see where that takes us. As it relates to digital revenue, remember, when we did Investor Day, we laid out not just the mix shift from legacy to strategic, but also within strategic, how much was digital. And so I would say that as a baseline, that's still a good way to look at it. Obviously, Alkira allows us to accelerate that, and that's what we've got to quantify over the next couple of months. So again, we're operating off of a small base. We're driving significant adoption. It's really a question as to how long it takes to get customers to add that second, third and fourth service. But it will... Operator: Your next question comes from the line of Michael Funk with Bank of America. Michael Funk: Two, if I could. So, can you comment on the size of the funnel and where deals are in the funnel for new enterprise deals? You mentioned earlier some of the pace of those deals as well as the payback for customers as well. And then second, just my comment about not chasing PCF deals based on price. Can you add some more clarity for where you see deals being priced on development yield or whatever type of yield you think is useful in the current environment versus where you'd be more comfortable pricing? Christopher Stansbury: No, I'd love to address that. Thanks for asking. If you look at the PCF deals that Lumen has signed to date, all of those deals were about monetizing conduit that was paid for a quarter of a century ago. Underutilized assets that allowed us to deliver faster network deployment for hyperscalers that ultimately, from a strategic perspective, created proximity with those hyperscalers that is now helping us bring differentiated services to enterprise. As we look at new builds, the economics are a very different story. And so there's -- I think there's been a number of announcements. There's great headline generating news in those, but the returns are terrible. And what I mean by that is that if you look at the cost to build new trenches, deploy new conduits, you're looking at returns that are at or below cost of capital levels. So from our standpoint, the growth of fiber is great news. Alkira, our NaaS solution, allows us to deliver services across everyone's fiber, not just Lumen's, and we're quite happy for others to build at or below their cost of capital so that we can provision higher margin, higher growth services on top of them. Now with that, we will continue to deploy network where it makes economic sense for our shareholders. But we are not going to chase things for headline value anymore. That's just not what we do. It hasn't been what we've done, and we're not going to start now. Operator: Your next question comes from the line of Batya Levi with UBS. Batya Levi: Great. A couple of follow-ups. First, on the comments you made on the PCF network. Can you talk about the CapEx required to deliver the service? I believe CapEx has been coming lighter than you had originally expected? Are you finding some improvements in the delivery? And looking out to potential new deals, do you still see some of your existing conduits and fiber assets as you can leverage to gain more deals? And a question on Alkira. Can you just remind us what status is the current business revenue EBITDA that you acquired from the company? And should we anticipate any incremental cost as you integrate that with your platform over the next 18 months? Christopher Stansbury: Yes. So we haven't given specific Alkira guidance. And the revenue and costs are immaterial in terms of our results at this point and obviously had no impact on the second quarter. It really is about where we can take it from here. And as Kate said, we're moving very rapidly to drive sales motions around that, and we'll quantify that in the back half of the year. As it relates to PCF, I would say the capital expenditures on PCF, which remember are paid for upfront by the -- by the customer, we're pretty much on schedule. I wouldn't say that we're finding significant efficiencies nor do I see any risk. So it's pretty much on schedule. And yes, there is definite opportunity to deploy more of those underutilized assets for the hyperscalers with great returns. And where there's opportunities to do that, we will continue to do so. Kathleen Johnson: And we have a pipeline on that. Christopher Stansbury: We do. Yes, we're in a number of conversations for some fairly material deals. But again, as you know, we don't announce those until they are signed because they are very long sales cycles. Operator: Your next question comes the line of Nick Del Deo with MoffettNathanson. Nicholas Del Deo: First, it seems like everyone across the industry is highlighting neocloud demand. Kate, you mentioned it earlier in the call. Can you do anything to help give us a better sense of just how much that category customers is contributing to your deal funnel or your bookings or to your revenue growth? Kathleen Johnson: We don't report that actually. Christopher Stansbury: Yes, we don't report it. There are neocloud deals as part of the $13 billion. They're relatively small. Kathleen Johnson: And I think they're buying waves, right? Christopher Stansbury: Yes, exactly. Kathleen Johnson: So not as much PCF business for the neoclouds, but a pretty significant uptick in pipe and conversion of wave capabilities for these customers. Christopher Stansbury: Exactly. That is a part of the waves growth. We're taking -- we're definitely, I would say, taking share of waves because of the capabilities of our 100 and 400 gig routes and just the density in those 58 million fiber miles that we're building that are a big factor for the neoclouds. And that's how they're choosing to buy their connectivity. Nicholas Del Deo: Okay. Okay. That's good color. Second question on enterprise voice. I mean you've articulated the idea of sunsetting those sorts of services for a while, so it's not necessarily a surprise to hear that. Can you talk a little bit about the path to get there, like for how long you're going to support existing customers taking the service and so on? And maybe the steps you're taking to ensure that it doesn't prompt any unwanted churn associated with other services that those customers might be buying? Kathleen Johnson: Yes. I think it's a great question. Our strategy is deeply rooted in the customer. We put the customer at the center of it. And I think it's really important to kind of segment customers in the base of a legacy revenue stream. We have a huge number of customers that have a very small monthly MRR, right, and do not have other services. And then we have a much smaller base of customers numerically, like a lower number that actually have a very large book of business with Lumen. And so we're rooting our strategy in the larger footprint of revenue for obvious reasons, and we're intersecting that with our strategy to exit copper. And I think that, that's really important. So we're balancing a couple of things. We're maximizing cash flow as we consider the customers' needs and giving the migration strategies that are swift and efficient and makes sense for them and address their AI aspirations. At the same time that we're dealing in some places with regulatory constraints. So it's a bit of a multivariable equation that starts with the customer. Second thing is maximize cash from it. And the third thing is to exit so that we can mine the copper. Christopher Stansbury: Yes. I would just add to that. The percentage that enterprise voice contributed to our sales is very low single digit. It's immaterial. So it's not about what's driving our future. It comes down to the revenue management. And to Kate's point, there's very few customers that we actually need to be concerned about when we look at the bulk of that business. Beyond that, though, there are decision points around when we end of life versus end of sale. We announced end of sale, right? End of life is a different story, but we're going to be aggressive about that and make the right financial decisions because, again, it's a distraction. It's -- we will meet the obligations of our big customers, will meet the regulatory obligations we have. But beyond that, this is not our future. And we're full on in terms of extracting every dollar we can to focus on digital growth. Kathleen Johnson: And I also feel really good about the partnerships that we're developing with some providers that can help our customers get the voice that they need in the context of the overall Lumen portfolio of business. So it's a connected ecosystem play that I think will enable better economics for the company. Christopher Stansbury: Absolutely. Operator: Your next question comes from Eric Luebchow with Wells Fargo. Eric Luebchow: Great. There's obviously been a ton of talk about how satellite could potentially impact telecom. And Kate, you brought this up. Just wondering if you could comment on how satellite broadband could maybe help you accelerate your copper decommissioning and what type of cost savings opportunity that could represent for Lumen longer term? And then secondly, maybe, Chris, if you could just touch on the trajectory of the cost savings opportunity, the $1 billion plus by 2027, where we are in that journey and what we should expect through the balance of the year? Kathleen Johnson: Part of our voice strategy is basically to provide whatever capability makes sense for that customer and to give them choice along the way. So whether it's fixed wireless or satellite we have the capability to drop an [indiscernible] in place of the infrastructure that they have today to give them immediate capabilities to replace, which I think is a great thing. And we're starting to get that motion in place to do it at scale. Separately, satellite is a significant part of our business as well because as we've talked about in the past, data needs to find fiber as fast as possible. So we do the backhaul for the satellite companies, and it's growing pretty significantly. Christopher Stansbury: Yes. And on the modernization simplification, when we guided the year, we said $700 million exiting this year, $1 billion exiting next year. And we are on track to deliver against both of those. It's frankly a piece -- a big piece of how we inflect EBITDA this year while revenue hasn't inflected yet. So the revenue declines slowing and is certainly a help, but the M&S savings are what push us there. And I'd say, more importantly, the learning that we've been able to extract around the legacy business because of that modernization and simplification program in terms of truly understanding the economic value of individual circuits and routes to market is what's allowing us to be more aggressive on how we ultimately wind down that portfolio. So a few years ago, we would not have had with the level of information that we have today, and it's just allowing us to move faster on becoming a digital company. So it's worked out really well for us. Operator: There are no further questions at this time. I will now turn the call back to Kate for closing remarks. Kathleen Johnson: So the transformation is going well, and we're really excited. And I just want to take a minute to thank all Lumenaries for their incredible work and contribution. Let's keep going, and thanks to everybody today for great engagement on the call and a great discussion. Have a great day. Operator: That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone. Before you buy stock in Lumen Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lumen Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Lumen (LUMN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

BCE Inc. BCE reported second-quarter 2026 adjusted earnings of C$0.65 per share (47 cents), up 3.2% year over year. The figure beat the Zacks Consensus Estimate by 2.2%. Total operating revenues rose 1.5% to C$6.18 billion ($4.461 billion), topping the consensus estimate of $4.401 billion. The improvement was primarily driven by 4.3% growth in service revenue, contribution from Ziply Fiber following its acquisition, strong Bell Media performance and growth in AI-powered enterprise services. However, product revenue declined 16.3%, mainly because last year's results included revenue from the completion of Bell's first AI Fabric data center and lower wireless device sales as more customers opted for bring-your-own-device (BYOD) plans. Adjusted EBITDA rose 1% to C$2.70 billion. The adjusted EBITDA margin was 43.8% compared with 43.9% a year earlier, as higher operating revenues were partly offset by Ziply Fiber expenses and increased content costs at Bell Media. BCE, Inc. price-consensus-eps-surprise-chart | BCE, Inc. Quote Bell CTS Canada operating revenues declined 4% to C$5.12 billion. The fall reflected lower service and product revenues, including the non-recurrence of G7 Summit and federal election-related revenues, ongoing legacy service erosion, a CRTC wholesale-rate adjustment and lower wireless connection fees. Adjusted EBITDA for the Canadian segment fell 3.1% to C$2.36 billion. However, margin improved 40 basis points to 46.1% as operating costs declined 4.7%, helped by lower device costs, the absence of prior-year data-center and G7-related costs, and cost-reduction initiatives. Postpaid mobile phone net activations were 41,594, down 6.6% year over year as gross activations declined in a less active market with lower promotional intensity. Blended ARPU fell 2.3% to C$56.30, though management said ARPU was relatively stable excluding the prior-year G7 impact. Bell CTS Canada recorded 45,271 residential FTTH Internet net additions versus 47,920 a year earlier. Ziply Fiber contributed 9,612 FTTH net additions, its highest quarterly residential result since BCE acquired the business. Canadian video net additions improved to 8,741 from a loss of 15,851. Bell Media revenues advanced 8.9% to C$918 million, driven by the FIFA World Cup, Crave growth, the Formula 1 Canadian Grand Prix and higher program sales. Advertising revenues increased 5.3%, subscriber revenues rose 6.7% and digital revenues grew 5.8%. Crave subscriptions increased 23% to 5.07 million, with direct-to-consumer streaming subscribers up 49%. Bell Media adjusted EBITDA rose 3.8% to C$244 million, while margin declined to 26.6% from 27.9% as operating costs increased 10.9% on sports, content and event-related spending. Cash flows from operating activities increased 11% to C$2.16 billion. Capital expenditures rose 41.5% to C$1.08 billion on Bell AI Fabric and Ziply Fiber investment, pushing free cash flow down 9.5% to C$1.04 billion. Bell AI Fabric had about 335 MW of contracted capacity, including the 300 MW Saskatchewan facility. The first Saskatchewan phase remains scheduled for the first half of 2027, while most of roughly C$1.3 billion of expected 2026 project capex is slated for the second half. BCE ended the quarter with C$4.6 billion of available liquidity and a 3.71 net debt leverage ratio. BCE reaffirmed 2026 guidance for revenue growth of 1% to 5% and adjusted EBITDA growth of 0% to 4%. Management continues to expect capital intensity of about 20%, supported by investment in the Saskatchewan AI data center. Adjusted EPS is still projected to decline 5% to 11% while free cash flow is expected at C$2.10 billion to C$2.30 billion. BCE maintained its C$1.75 annualized common dividend and remains on track for a 3.5 net debt leverage ratio by the end of 2027. BCE currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. TELUS Corporation TU reported second-quarter 2026 adjusted earnings per share of C$0.16, down 27% from C$0.22 a year ago. Adjusted net income fell 26% to C$254 million, while operating revenues and other income declined 3% to C$4,929 million, pressured by weaker TELUS Digital results, lower mobile equipment revenues and reduced other income. Lumen Technologies, Inc. LUMN reported a second-quarter 2026 adjusted loss (excluding special items) of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 15 cents. The company reported adjusted loss per share of 3 cents in the prior-year quarter. Quarterly total revenues were $2.805 billion, down 9.3% year over year, but topped the Zacks Consensus Estimate by 2%. Rogers Communications Inc RCI reported second-quarter 2026 adjusted earnings of 83 cents per share, topping the Zacks Consensus Estimate and up 1.2% year over year. Revenues of $4.06 billion surpassed the consensus mark by 2.45% and increased 7.6% year over year. In domestic currency (Canadian dollar), RCI’s total revenues increased 7.7% year over year to C$5.62 billion, primarily driven by growth in the Media businesses. Total service revenues increased 8% year over year to C$5.06 billion in the quarter. Shares for RCI are up 2.5% in the past year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BCE, Inc. (BCE) : Free Stock Analysis Report TELUS Corporation (TU) : Free Stock Analysis Report Rogers Communication, Inc. (RCI) : Free Stock Analysis Report Lumen Technologies, Inc. (LUMN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, Lumen (LUMN) reported revenue of $2.81 billion, down 9.3% over the same period last year. EPS came in at -$0.07, compared to -$0.03 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $2.75 billion, representing a surprise of +2.04%. The company delivered an EPS surprise of +53.33%, with the consensus EPS estimate being -$0.15. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Lumen performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Operating Revenues- Total Business Segment Revenue: $2.44 billion versus the two-analyst average estimate of $2.39 billion. The reported number represents a year-over-year change of -1.9%. Operating Revenues- Mass Markets Segment by Product Category- Voice and Other: $152 million compared to the $154.92 million average estimate based on two analysts. The reported number represents a change of +8.6% year over year. Operating Revenues- Mass Markets Segment by Product Category- Other Broadband: $192 million compared to the $201.03 million average estimate based on two analysts. The reported number represents a change of -21.6% year over year. Operating Revenues- Total Mass Markets Segment Revenue: $361 million versus $361.81 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a -40% change. View all Key Company Metrics for Lumen here>>> Shares of Lumen have returned -0.5% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lumen Technologies, Inc. (LUMN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Lumen Technologies, Inc. LUMN used its second-quarter 2026 earnings call to emphasize a faster shift toward strategic and digital services, supported by rising Network-as-a-Service adoption and the recently completed Alkira acquisition. Management maintained its full-year outlook while stressing disciplined portfolio simplification, selective capital deployment and the goal of moving enterprise networking economics beyond traditional connectivity pricing. Chief executive officer Kate Johnson said that Lumen is combining its fiber infrastructure, programmable network and digital ecosystem to address enterprise networking requirements across cloud and artificial intelligence environments. Johnson positioned Alkira as a central part of that strategy. The acquired platform gives customers a cloud-based control point for connecting and securing sites, data centers and multiple cloud environments. Lumen plans to complete most of the technical integration between Alkira and Lumen Connect within 18 months. Management expects the platform to support service discovery, provisioning and management through a more unified digital experience. President and chief financial officer Chris Stansbury said that strategic revenues grew 14% year over year and represented 53% of business revenues, up from 51% in the first quarter and 45% a year earlier. Legacy revenues declined 15%, but management said the improving mix reflected underlying growth in strategic services rather than a simple migration from older products. Business revenues were $2.44 billion, down 2% year over year. The company reported an adjusted loss of 7 cents per share, beating the Zacks Consensus Estimate of a 15-cent loss. Revenues of $2.80 billion also exceeded the consensus estimate of $2.75 billion. Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote Johnson said that the number of Network-as-a-Service customers exceeded 3,000. New customer adoption increased 22% sequentially, while active ports grew 34% and active services advanced 29%. More than 20% of first-time NaaS adopters were new to Lumen. In the analyst discussion, Johnson added that many existing customers were adding NaaS circuits rather than replacing current services. Management also highlighted demand for 100- and 400-gigabit connectivity. Revenues from those strategic wave services in North American enterprise channels grew nearly 11%, while sales rose almost 35%, providing a potential indicator of future revenue conversion. Johnson said that Lumen is making dedicated Internet access ports digitally discoverable and service-ready, creating opportunities to add security, cloud connectivity and other services without additional field visits. Management expects incremental digital services placed on existing ports to approach an 80% adjusted EBITDA margin. Stansbury said that the economics improve as customers add second, third and fourth services because marginal costs and capital requirements become limited. A Raymond James analyst asked about Alkira customer economics. Management declined to provide monthly recurring revenue details but said that recent renewals were being expanded and that customer discussions were increasingly reaching chief information and technology officers. A Bank of America analyst pressed management on private connectivity fabric investments. Stansbury said that Lumen would continue monetizing underused conduit where returns were attractive but would not pursue new construction offering returns near or below its cost of capital. Second-quarter private connectivity fabric revenues were approximately $91 million. Capital expenditures tied to those arrangements were about $300 million, while related cash receipts totaled approximately $476 million. Lumen reiterated its full-year outlook for adjusted EBITDA excluding special items of $3.1 billion to $3.3 billion and free cash flow excluding special items of $1.9 billion to $2.1 billion. Management’s tone remained focused on replacing legacy complexity with a smaller portfolio of digital, platform-based services. The company is phasing out enterprise voice sales while preserving service for important customers and meeting regulatory obligations. Stansbury said that Lumen remains on track for $700 million in modernization and simplification savings exiting 2026 and $1 billion exiting 2027. The company’s stated priorities remain digital growth, cash generation and disciplined investment. LUMN currently carries a Zacks Rank #3 (Hold), indicating a more neutral near-term earnings-revision outlook. Its Value Score of A and Growth Score of B point to favorable characteristics in those styles, while the Momentum Score of F signals weak price momentum. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The VGM Score of B reflects an attractive combined profile across value, growth and momentum despite the momentum weakness. The Zacks Rank can change as analysts revise earnings estimates following the newly reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lumen Technologies, Inc. (LUMN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Lumen Technologies, Inc.? Here are five stocks we like better. Lumen’s revenue mix continued shifting toward strategic services: Total business revenue fell 1.8% year over year to $2.44 billion, but strategic revenue rose 14% and reached 53% of total revenue, driven by growth in high-speed wavelength and digital networking services. Alkira and Network-as-a-Service are central to Lumen’s AI and cloud strategy. Lumen plans to integrate Alkira into its Lumen Connect platform over the next 18 months, while NaaS adoption expanded to more than 3,000 customers, with new-customer adoption up 22% sequentially. Profitability declined as Lumen invests in transformation and simplifies its portfolio. Adjusted EBITDA fell to $802 million, while the company reported $327 million in free cash flow and reiterated cost-savings targets of $700 million exiting 2026 and more than $1 billion exiting 2027. Former Dividend Aristocrat AT&T Posts Strong Earnings, Tries to Win Back Investors Lumen Technologies (NYSE:LUMN) reported second-quarter results that management said were in line with expectations, as the company continued to shift its business toward digital, strategic networking services and away from legacy offerings. Chief Executive Officer Kate Johnson said Lumen is positioning its fiber infrastructure, programmable network and connected ecosystem for enterprise networking needs tied to artificial intelligence. The company also announced that John Hinshaw joined its board of directors. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control AT&T's Earnings Glow-Up Can't Hide These Red Flags Johnson said the July acquisition of Alkira, now offered as a Lumen Connect solution, strengthens Lumen’s ability to connect and secure multi-cloud and AI environments. She said the company aims to integrate the Lumen Connect and Alkira platforms over the next 18 months, creating a digital platform for customers to discover, provision and manage network services. Total business revenue declined 1.8% year over year to $2.44 billion during the second quarter, while North American business revenue fell 1.6%. North American enterprise revenue, excluding wholesale, declined 0.2% from the prior-year period. → 3 Drone Stocks That Should Soar After the Summer Slump It's Not Too Late to Buy These 2 Red-Hot AI Infrastructure Stocks At the same time, strategic revenue increased 14% year over year and more than 23% over two years, according to President and Chief Financial Officer Chris Stansbury. Strategic revenue represented 53% of total business revenue, compared with 51% in the first quarter and 45% a year earlier. “The positive revenue mix shift continues,” Stansbury said, adding that legacy revenue had declined less than the company expected. He said the increasing contribution from strategic services was driven by underlying dollar growth rather than solely by legacy product declines. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Digital revenue totaled $39 million in the second quarter. Stansbury said customer adoption and service usage are the near-term drivers of digital revenue growth, though he said it will take time for customers to add second, third and fourth services to their accounts. Strategic 100-gigabit and 400-gigabit wavelength revenue in North American enterprise channels rose nearly 11% year over year. Sales of those services increased nearly 35%, which Stansbury described as an indicator of future revenue momentum. Johnson said Lumen believes it is gaining share in high-speed wavelength services, aided by its Rapid Routes capabilities, which she said can activate customer circuits in days rather than months. She also cited demand from “neo cloud” customers for 100G and 400G connectivity. Johnson said Alkira enables customers to use a single cloud-based control point to connect and secure distributed environments, including buildings, data centers and public clouds. She cited Koch Industries’ use of Alkira to reduce a multi-cloud network-hub setup from eight months to one day, and Michaels’ use of the platform to connect more than 1,400 retail locations to Google Cloud in a few weeks. Lumen has trained nearly 4,000 employees on the Alkira value proposition since the acquisition closed, Johnson said. The company is also developing sales incentives, outbound marketing and demand-generation efforts around the offering. Management said Alkira was not included in Lumen’s investor-day digital revenue targets. Its near-term revenue and cost contribution is immaterial, Stansbury said, but the company views it as potential upside to its digital growth plans. Lumen expects to discuss its view of Alkira’s impact when it provides 2027 guidance. The company reported more than 3,000 Network-as-a-Service, or NaaS, customers. New customer adoption increased 22% sequentially in the second quarter, while active ports increased 34% and active services rose 29%. More than 20% of first-time NaaS adopters were new to Lumen, Johnson said. She also said many existing Lumen customers are adding NaaS circuits rather than merely replacing legacy services, which management characterized as evidence of market-share gains. Adjusted EBITDA, excluding special items, was $802 million, down from about $877 million a year earlier. Stansbury said the year-over-year decline was driven primarily by the first-quarter sale of the company’s fiber-to-the-home business and expected revenue declines. Special items affecting adjusted EBITDA totaled $204 million in the quarter, primarily related to modernization and simplification initiatives, transaction costs and separation costs. Capital expenditures excluding special items were approximately $780 million, including about $300 million associated with public cloud fiber, or PCF, deals. Lumen received approximately $476 million in PCF-related cash during the quarter. Free cash flow excluding special items was $327 million. PCF revenue was approximately $91 million, including about $36 million from a State of California delivery milestone that was accelerated from the second half of the year and is now largely complete. Stansbury said Lumen plans to continue monetizing underutilized conduit and fiber assets where returns are attractive, but does not intend to pursue new construction projects with returns at or below its cost of capital. He said the company has a pipeline of potential PCF opportunities, though such deals have long sales cycles. The company is also phasing out enterprise voice and communications products as part of its portfolio simplification effort. Johnson said Lumen will focus on larger customer relationships, migration strategies and regulatory requirements as it exits those services. Stansbury said enterprise voice represented a very low-single-digit share of sales and is not central to Lumen’s future strategy. Lumen reiterated its cost-savings targets of $700 million exiting 2026 and more than $1 billion exiting 2027. Stansbury said the company remains on track to meet both goals and expects modernization and simplification savings to be a key contributor to its EBITDA outlook. Lumen Technologies is a multinational technology company specializing in integrated network, edge cloud, security and collaboration services for enterprise and public sector clients. The company's core offerings include high-capacity fiber and IP-based connectivity, managed edge computing solutions designed to accelerate applications and data processing closer to end users, and cybersecurity services ranging from DDoS protection to unified threat management. Through its unified portfolio, Lumen enables organizations to support digital transformation initiatives, modernize infrastructure and enhance operational resilience. Leveraging one of the largest fiber footprints in North America, as well as infrastructure in Latin America and parts of Europe, Lumen connects customers across more than 60 countries. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Lumen Technologies Q2 Earnings Call Highlights" was originally published by MarketBeat. 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This article first appeared on GuruFocus. Total Business Revenue: Declined 1.8% year-over-year to $2.44 billion. North America Total Business Revenue: Down 1.6% year-over-year. North American Enterprise Revenue: Down only 0.2% year-over-year, excluding wholesale. Strategic Revenue: Grew 14% year-over-year and over 23% over the past two years. Digital Revenue: $39 million in the second quarter. PCF Revenue: Approximately $91 million in the second quarter. Adjusted EBITDA: $802 million in the second quarter, compared to approximately $877 million in the prior year quarter. Capital Expenditures: Approximately $780 million, excluding special items, including about $300 million associated with PCF deals. Free Cash Flow: $327 million in the second quarter, excluding special items. Strategic Revenue Mix: 53% of total business revenue in Q2, up from 51% in Q1 and 45% in the prior year quarter. Strategic Wavelength Revenue: 100 and 400 gig grew nearly 11% year-over-year in North American enterprise channels. Strategic Wavelength Sales: Up nearly 35% year-over-year in the quarter. Warning! GuruFocus has detected 5 Warning Signs with LUMN. Is LUMN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Strategic revenue grew 14% year-over-year, now representing 53% of total business revenue, up from 45% in the prior year quarter. NaaS adoption accelerated, with total customers exceeding 3,000, new customer adoption up 22% quarter-over-quarter, and over 20% of new adopters being brand new to Lumen. The acquisition of Alkira strengthens Lumen's position in enterprise networking for AI, enabling faster multi-cloud connectivity and reducing implementation time from months to days. 100 and 400 gig wave revenue grew nearly 11% year-over-year in North American enterprise, with sales up almost 35%, indicating strong demand and market share gains. The company is on track to achieve $700 million in modernization and simplification savings this year and $1 billion next year, supporting EBITDA inflection. PCF deals continue to monetize underutilized assets, with $91 million in revenue in Q2 and $476 million in cash received, while preserving capital for higher-return digital investments. Total business revenue declined 1.8% year-over-year to $2.44 billion, with North America total business down 1.6%. Adjusted EBITDA fell to $802 million in Q2 from $877 million in the prior year quarter, impacted by the fiber-to-the-home sale and expected revenue declines. Digital revenue remains small at $39 million in Q2, with only a $2 million sequential increase, indicating a slow ramp despite strong adoption metrics. Legacy revenue continues to decline at 15% year-over-year, and the company is phasing out enterprise voice products, which may lead to customer churn and regulatory challenges. The company is not chasing new PCF deals with subpar returns, as new builds have returns at or below cost of capital, limiting growth opportunities in that area. Special items impacting adjusted EBITDA totaled $204 million in Q2, primarily from modernization and transaction costs, weighing on profitability. Q: Can you elaborate on the faster-than-expected shift from legacy to strategic revenue and how the Alkira acquisition will accelerate this transition? Also, what does the 2Q business revenue decline of 1.8% imply for the back half of the year?A: Kate Johnson (CEO) noted that strategic revenue now represents 53% of the portfolio, growing 14%, while legacy is down 15%. She highlighted that over 20% of new NaaS customers in Q2 were brand new to Lumen, and roughly 60% of existing customers are adding circuits rather than migrating, indicating clear market share gains. Chris Stansbury (CFO) reaffirmed full-year guidance, noting that the State of California PCF revenue was accelerated into Q2 and is now largely complete. He also reminded that Q3 EBITDA is typically about $100 million lower seasonally than Q2, which aligns with their annual targets. Q: What is the average monthly recurring revenue (MRR) per Alkira customer, and do you believe you are taking share in the 100/400 gig waves business?A: Chris Stansbury (CFO) stated it is too early to provide specific MRR figures, as the focus is currently on driving customer adoption before expanding services per port. Kate Johnson (CEO) confirmed Lumen is taking share in the waves business, driven by the rapid deployment capabilities of "Rapid Routes," which is particularly resonating with neocloud customers. She also noted that Alkira renewals are seeing upsized deals, and the new multi-cloud gateway services are opening conversations with CIOs and CTOs, a shift from traditional procurement-focused discussions. Q: Can you provide more clarity on the pricing and returns for new PCF (Pre-Customer Funded) network deals versus existing ones?A: Chris Stansbury (CFO) explained that existing PCF deals monetized underutilized conduit paid for decades ago, delivering strong returns and strategic proximity to hyperscalers. However, new builds require new trenches and conduit, resulting in returns at or below the cost of capital. Lumen will not chase such deals for headline value and prefers to let others build fiber at subpar returns while Lumen provisions higher-margin digital services on top of that infrastructure. Q: Digital revenue was only up $2 million quarter-over-quarter to $39 million. When will NaaS adoption translate into a higher revenue ramp?A: Chris Stansbury (CFO) reiterated that digital revenue is in line with expectations set at Investor Day. The current focus is on customer adoption, and the revenue inflection will come as customers add second, third, and fourth services per port, which have near-zero marginal costs. He expects to provide more clarity on the acceleration, including Alkira's contribution, when the company issues 2027 guidance. Q: Can you discuss the CapEx requirements for PCF deals and whether there are opportunities to leverage existing assets for new deals? Also, what is Alkira's current revenue/EBITDA contribution?A: Chris Stansbury (CFO) stated PCF CapEx is on schedule, with customer-funded upfront payments. There is a pipeline of potential deals leveraging underutilized assets, but they are not announced until signed due to long sales cycles. Regarding Alkira, revenue and costs are currently immaterial and had no impact on Q2 results. The company is rapidly scaling sales motions and will quantify Alkira's impact in the back half of the year. Q: How much are neocloud customers contributing to the deal funnel, bookings, and revenue growth?A: Kate Johnson (CEO) and Chris Stansbury (CFO) declined to provide specific figures. They noted neocloud deals are part of the $13 billion in PCF announcements but are relatively small. Neoclouds are primarily purchasing 100/400 gig waves rather than PCF infrastructure, contributing to significant growth in the waves business due to Lumen's network density and rapid deployment capabilities. Q: What is the timeline for sunsetting enterprise voice products, and how will you prevent churn of customers who also buy other Lumen services?A: Kate Johnson (CEO) explained the strategy is customer-centric, segmenting the base by revenue footprint. The company is prioritizing customers with large Lumen relationships while maximizing cash flow from smaller accounts. Chris Stansbury (CFO) added that enterprise voice is a low single-digit percentage of sales and immaterial to the future. The company announced end-of-sale, with end-of-life decisions to be aggressive, while meeting customer and regulatory obligations. Partnerships are being developed to provide voice alternatives within the broader Lumen portfolio. Q: How could satellite broadband help accelerate copper decommissioning, and what is the status of the $1 billion cost savings program?A: Kate Johnson (CEO) noted satellite is part of the voice strategy, offering customers alternatives like fixed wireless or satellite to replace legacy infrastructure. Lumen also provides backhaul for satellite companies, a growing business. Chris Stansbury (CFO) confirmed the company is on track to deliver $700 million in modernization and simplification savings exiting this year and $1 billion next year. These savings are critical to inflecting EBITDA while revenue declines slow, and the program has provided deeper insights into the economic value of legacy circuits, enabling faster portfolio wind-down. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Lumen is repositioning itself as an 'enterprise networking for AI' company by integrating physical infrastructure with a programmable network fabric. The acquisition of Alkira is central to the strategy, providing a cloud-based control point that simplifies multi-cloud and AI environment connectivity. Management attributes market share gains in the North-South connectivity market to enterprise demand for digital, consumption-based network services. Strategic revenue growth of 14% was driven by high-bandwidth 100 and 400 gig wave services, particularly among 'neocloud' customers. The company is intentionally phasing out legacy enterprise voice and communications products to reallocate capital toward higher-margin digital services. Operational performance was bolstered by the 'rapid routes' capability, which allows the company to provision circuits in days rather than months. The 'connected ecosystem' model leverages partnerships, such as with Palo Alto Networks, to combine Lumen's network intelligence with best-in-class security. Management expects to complete the technical integration of Lumen Connect and Alkira platforms within the next 18 months. The company plans to migrate existing Dedicated Internet Access (DIA) customers to the digital platform to enable remote provisioning and high-margin service upsells. Incremental digital services, such as Lumen Defender and DDoS protection, are expected to approach 80% adjusted EBITDA margins. Lumen is targeting $700 million in cost savings by the end of 2026 and $1 billion by 2027 through its modernization and simplification initiatives. Future guidance for 2027 will formally incorporate Alkira's impact on the digital revenue growth trajectory. The company recognized $91 million in Private Connectivity Fabric (PCF) revenue, including an accelerated milestone from the State of California. Management explicitly stated they will not chase new PCF builds with 'subpar returns' where infrastructure costs result in returns at or below the cost of capital. The transition from legacy to strategic revenue is not a one-for-one cannibalization, as over 20% of new Network-as-a-Service (NaaS) adopters are brand new to Lumen. Lumen reduced its SEC filers from three to one to simplify reporting and provide a unified view of financial performance. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that legacy revenue (voice and private line) is declining at 15% while strategic revenue grows at 14%, with the mix now 53% strategic. Alkira is expected to move Lumen 'up the stack' from procurement-level bandwidth discussions to strategic CIO-level AI architecture conversations. Lumen clarified that existing PCF deals monetize underutilized conduit assets paid for decades ago, yielding high returns. The company will avoid new trenching projects that offer returns at or below the cost of capital, preferring to let others build fiber while Lumen provisions services on top. The 'end of sale' for enterprise voice is a strategic move to exit copper infrastructure and mine it for value. Management is using partnerships to provide alternative voice solutions for customers, ensuring they maintain the broader relationship while exiting the legacy product.