Lumen Technologies — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $2.715 billion for the third quarter of 2026, a 12% decrease year-over-year compared to $3.087 billion in the same period in 2025.
• Strategic revenue grew 10% year-over-year to $1.28 billion, representing 55% of total business revenue, up from 53% in the second quarter.
• Reported net loss was $(265) million for the third quarter of 2026, compared to a net loss of $(621) million in the third quarter of 2025.
• Diluted loss per share was $(0.26) for the third quarter of 2026, compared to $(0.62) in the third quarter of 2025.
• Excluding Special Items, diluted loss per share was $(0.14) for the third quarter of 2026, compared to $(0.20) in the third quarter of 2025.
• Adjusted EBITDA was $521 million for the third quarter of 2026, compared to $571 million in the third quarter of 2025.
• Adjusted EBITDA excluding Special Items was $715 million for the third quarter of 2026, compared to $787 million in the third quarter of 2025.
• Adjusted EBITDA margin excluding Special Items was 26.3% for the third quarter of 2026, compared to 25.5% in the third quarter of 2025.
• Net cash provided by operating activities was $518 million for the third quarter of 2026, compared to $2.5 billion in the third quarter of 2025.
• Free Cash Flow was $(354) million for the third quarter of 2026, compared to $1.47 billion in the third quarter of 2025.
• Free Cash Flow excluding Special Items was $(76) million for the third quarter of 2026, compared to $1.7 billion in the third quarter of 2025.
• Capital expenditures were $872 million for the third quarter of 2026, compared to $1.041 billion in the third quarter of 2025.
• Capital expenditures excluding Special Items were $796 million for the third quarter of 2026, compared to $950 million in the third quarter of 2025.
• As of September 30, 2026, cash and cash equivalents were $978 million.
• Long-term debt was $13.164 billion as of September 30, 2026, down from $17.353 billion as of December 31, 2025.
• Deferred revenue was $8.238 billion as of September 30, 2026, up from $6.406 billion as of December 31, 2025.

Guidance and Future Outlook:

• The company reiterated its full-year 2026 financial outlook.
• Adjusted EBITDA excluding Special Items is expected to be between $3.1 billion and $3.3 billion for the full year 2026.
• Free Cash Flow excluding Special Items is expected to be between $1.9 billion and $2.1 billion for the full year 2026.
• Capital expenditures excluding Special Items are expected to be between $3.2 billion and $3.4 billion for the full year 2026.
• Net Cash Interest is expected to be between $650 million and $750 million for the full year 2026.
• Cash Income Taxes (Refunded) are expected to be between $(350) million and $(450) million for the full year 2026.
• The company remains on track to deliver adjusted EBITDA inflection in 2026.
• The company targets a return to business revenue growth in 2028.

Business Segments and Product Lines:

• Strategic sales rose 30% year-over-year.
• Strategic waves sales increased 22% sequentially.
• Lumen signed $700 million in additional PCF deals year-to-date, bringing cumulative signed agreements to over $13.5 billion.
• More than 4,000 customers are on the Network-as-a-Service (NaaS) platform, with active customers up 24% sequentially.
• Active ports on the NaaS platform increased by 38%.
• 20% of NaaS Internet on Demand ports are carrying multiple services at nearly 100% direct margin.
• Intelligent Internet was introduced across more than 10 million U.S. locations.
• Plans were announced to accelerate copper decommissioning in Florida, Iowa, Nevada, and Utah.
• The company announced plans to redefine networking for the AI and quantum eras.
• Business revenue by product category: Strategic revenue was $1.279 billion (up 10% YoY), while Legacy revenue was $1.067 billion (down 17% YoY).
• Large Enterprise revenue was $810 million (up 4% YoY).
• Mid-Market Enterprise revenue was $430 million (down 7% YoY).
• Public Sector revenue was $429 million (down 10% YoY).
• North America Business Revenue was $2.276 billion (down 4% YoY).
• Mass Markets Revenue was $369 million (down 42% YoY).

Market and Competitive Landscape:

• AI-driven demand for connectivity is fueling momentum in the Strategic revenue base.
• Customers are choosing the NaaS platform to simplify networks and increase connection value.
• The transformation is translating into a higher-quality revenue base with stronger margins and operating leverage.

Risks and Challenges:

• Risks include the ability to successfully implement corporate strategies, modernization, and simplification initiatives.
• Challenges involve managing the decline of legacy products and integrating, modernizing, and digitally transforming systems.
• Risks associated with AI technology, including performance, security vulnerabilities, and regulatory developments.
• Complex debt structure and ability to comply with debt obligations and covenants.
• Risks related to cyber-attacks, service outages, and system failures.
• Potential adverse impacts from complex regulations, judicial proceedings, and trade policy changes.
• Risks related to the use of net operating loss carryforwards and realizing benefits from federal tax legislation.
• Risks from adverse weather, geopolitical conflicts, and other social, political, and economic factors.

Management Commentary and Tone:

• Kate Johnson, CEO, stated the company is delivering on promises and building a stronger, more valuable Lumen, noting AI-driven demand is fueling momentum.
• Chris Stansbury, President and CFO, emphasized that the transformation is translating into financial results with a higher-quality revenue base and stronger margins.
• Management stated the company is being built on Strategic revenue growth rather than preserving the past.
• The tone reflects confidence in the path to adjusted EBITDA inflection and future business revenue growth.

Other Key Points:

• The company sold its Mass Markets Fiber-to-the-Home business to AT&T, generating a net gain on sale of business of $569 million year-to-date.
• Proceeds from the Mass Markets Fiber-to-the-Home divestiture included $729 million classified as cash flow from operations for the first quarter of 2026, primarily used to pay down debt.
• The company voluntarily relinquished its Rural Digital Opportunity Fund (RDOF) awards, resulting in a payment of $99 million in the first quarter of 2026.
• Revenue of $27 million related to the FCC's Connect America Fund (CAF) Phase II program was recognized in the third quarter of 2026 after the program lapsed on December 31, 2021.
• Modernization and Simplification costs are part of a multi-year initiative designed to deliver $1 billion in annualized cost savings on a run-rate basis exiting 2027.
• The company acquired Alkira, Inc., contributing to transaction and separation costs.
• A $420 million refund, including interest, from recent tax legislation is reflected in the outlook.