On August 6, 2024, Lumen Technologies Inc (LUMN, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Lumen Technologies, with 450,000 route miles of fiber, is one of the United States' largest telecommunications carriers serving global enterprises. The company has shifted its focus towards enterprise services following its merger with Level 3 in 2017 and the divestiture of much of its incumbent local exchange carrier (ILEC) business in 2022.
Performance Overview
Lumen Technologies Inc (LUMN, Financial) reported a net loss of $49 million for Q2 2024, a significant improvement from the net loss of $8.736 billion in Q2 2023, which included a non-cash goodwill impairment charge of $8.793 billion. The reported diluted loss per share was $(0.05), compared to $(8.88) in the same quarter last year. Excluding special items, the diluted loss per share was $(0.13), missing the analyst estimate of $(0.09).
Revenue and Segment Performance
Total revenue for Q2 2024 was $3.268 billion, down from $3.661 billion in Q2 2023, and above the analyst estimate of $3.245 billion. The decline in revenue was observed across various segments:
| Segment | Q2 2024 Revenue ($ millions) | Q2 2023 Revenue ($ millions) |
|---|---|---|
| Large Enterprise | 837 | 899 |
| Mid-Market Enterprise | 478 | 514 |
| Public Sector | 448 | 415 |
| Wholesale | 723 | 803 |
| Mass Markets | 691 | 753 |
Financial Metrics and Cash Flow
Lumen Technologies generated Adjusted EBITDA of $1.011 billion for Q2 2024, compared to $1.229 billion in Q2 2023. The Adjusted EBITDA margin, excluding special items, was 30.9%, down from 33.6% in the same period last year. The company reported net cash provided by operating activities of $511 million and a negative free cash flow of $(156) million, excluding cash paid for special items.
Commentary and Strategic Initiatives
"The rising demand of AI is requiring greater connectivity between data centers, and Lumen’s world-class fiber network and forward-thinking digital services are positioning us to help drive the AI growth wave,” said Kate Johnson, president and CEO of Lumen Technologies. “We feel confident in our future growth and business transformation as we look to enable the AI economy."
Analysis and Outlook
Lumen Technologies Inc (LUMN, Financial) continues to face challenges in stabilizing its revenue base and improving profitability. The decline in revenue across key segments highlights the competitive pressures and the need for strategic initiatives to drive growth. The company's partnership with Microsoft and focus on AI-driven connectivity solutions are positive steps towards capitalizing on emerging market opportunities.
Despite the reported net loss, the improvement from the previous year's significant impairment charge is notable. However, the missed earnings estimates and declining revenue underscore the need for continued operational improvements and strategic investments.
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Explore the complete 8-K earnings release (here) from Lumen Technologies Inc for further details.
