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Lumen Technologies, Inc. (LUMN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue of $3.087B declined 4% YoY but was roughly flat QoQ; GAAP diluted EPS was $(0.62) while EPS excluding special items was $(0.20). Revenue and EPS both beat Wall Street consensus, and Adjusted EBITDA (ex special items) of $787M exceeded the S&P Global consensus, driven by “grow” products and disciplined execution. *
  • Management reiterated FY 2025 guidance (Adjusted EBITDA $3.2–$3.4B; FCF $1.2–$1.4B), expecting EBITDA near the high end and FCF supported by lower CapEx, lower interest expense, and a $400M tax refund; net cash interest at the low end.
  • Strategic momentum: +$1B in new Private Connectivity Fabric (PCF) deals (total >$10B), expansion of Internet On-Demand to >10M off-net locations, and ecosystem partnerships (QTS, Commvault, Palantir) underpin Lumen’s AI-ready network and digital platform.
  • Balance sheet actions reduced annual interest expense by ~$135M year-to-date; expected AT&T FTTH transaction proceeds in early 2026 to further reduce debt and interest expense, removing a key overhang cited by management as a stock reaction catalyst.

What Went Well and What Went Wrong

What Went Well

  • Revenue, Adjusted EBITDA, and Free Cash Flow exceeded expectations, with “grow” revenue now 50% of North America enterprise revenue, up from ~35.5% three years ago. “We delivered strong financial results—revenue, EBITDA, and free cash flow all ahead of expectations.” — Kate Johnson, CEO.
  • Strategic wins: +$1B PCF bookings (total >$10B) and IoD off-net expansion to >10M locations; active NAS customers +32% QoQ, fabric ports +30%, services sold +36%, supporting Lumen’s P×Q digital flywheel.
  • Ecosystem partnerships (QTS, Commvault, Palantir) reinforce AI-centric positioning and go-to-market leverage for digital services across hyperscalers and enterprises.

What Went Wrong

  • GAAP net loss widened to $(621)M due to special items (including losses on early debt retirement), with net loss margin at (20.1)% vs (4.6)% YoY; Adjusted EBITDA margin ex special items fell to 25.5% from 27.9% in Q3 2024 amid public sector harvest normalization.
  • Wholesale revenue declined ~7.6% YoY; International & Other declined 13% on managed services, VPN, and voice. Mass Markets revenue fell 7.7% YoY despite fiber growth, reflecting ongoing legacy copper declines.
  • Q4 outlook flagged additional pressure from normalization in public sector harvest revenue and higher cloud service utilization costs; management reminded of a Q4 2024 one-time grow revenue item that creates a tough YoY comp.

Financial Results

Headline Metrics vs Prior Periods and Consensus

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$3.221 $3.092 $3.087
Revenue Consensus Mean ($USD Billions)$3.214*$3.113*$3.040*
Diluted EPS (GAAP) ($)$(0.15) $(0.92) $(0.62)
Primary EPS Consensus Mean ($)$(0.085)*$(0.266)*$(0.267)*
Adjusted EBITDA, ex Special Items ($USD Millions)$899 $1,011 $787
Adjusted EBITDA Margin, ex Special Items (%)27.9% 28.4% 25.5%
Free Cash Flow, excl Cash Special Items ($USD Billions)$1.198 $(0.209) $1.661

Values retrieved from S&P Global.*

Estimate comparison (Q3 2025):

  • Revenue beat: $3.087B actual vs $3.040B consensus — bold beat. *
  • EPS beat: $(0.20) ex special items vs $(0.267) consensus “Primary EPS” — bold beat; GAAP diluted EPS $(0.62) reflects special items. *
  • Adjusted EBITDA (company metric) $787M vs S&P EBITDA consensus ~$762M — bold beat; note definitional differences between company “Adjusted EBITDA” and S&P “EBITDA.” *

Segment Breakdown

Metric ($USD Millions)Q3 2024Q2 2025Q3 2025
Large Enterprise761 732 752
Mid-Market Enterprise542 500 488
Public Sector430 486 478
North America Enterprise Channels1,733 1,718 1,718
Wholesale712 690 658
North America Business Revenue2,445 2,408 2,376
International and Other92 82 80
Business Segment Revenue2,537 2,490 2,456
Mass Markets Segment Revenue684 602 631
Total Revenue3,221 3,092 3,087

Product Category (Business Segment)

Category ($USD Millions)Q3 2024Q2 2025Q3 2025
Grow1,077 1,127 1,160
Nurture729 634 611
Harvest550 554 497
Subtotal2,356 2,315 2,268
Other181 175 188
Business Segment Revenue2,537 2,490 2,456

KPIs (Mass Markets)

KPIQ3 2024Q2 2025Q3 2025
Fiber broadband subscribers (000s)1,035 1,150 1,190
Other broadband subscribers (000s)1,566 1,308 1,227
Total broadband subscribers (000s)2,601 2,458 2,417
Fiber broadband enabled units (millions)4.1 4.4 4.5
Total broadband enabled units (millions)22.0 22.0 22.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$3.2–$3.4B (Q1/Q2) $3.2–$3.4B; expect near high end (Q3) Maintained; higher end emphasis
Free Cash FlowFY 2025$700–$900M (Q1) $1.2–$1.4B (Q2); reiterated (Q3) Raised in Q2; maintained in Q3
Net Cash InterestFY 2025$1.2–$1.3B (Q1/Q2) $1.2–$1.3B; near low end (Q3) Maintained; lower end emphasis
Capital ExpendituresFY 2025$4.1–$4.3B (Q1/Q2) $4.1–$4.3B; expect low end (Q3) Maintained; lower end emphasis
Cash Income Taxes (Refunded) PaidFY 2025$100–$200M (Q1) ($400)–($300)M (Q2); reiterated (Q3) Shifted to net refund

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
AI/technology initiativesSigned Google Cloud fiber access partnership; growing NAS adoption ERP phase 1; AT&T FTTH sale announced; modernization target raised; “grow” mix improving +$1B PCF bookings (> $10B total); IoD off-net expanded to >10M locations; Palantir/QTS partnerships; NAS customers/ports/services up 30–36% QoQ Accelerating
Product performance (Enterprise)Waves and “grow” revenue strength Grow bucket expanding; one-time Q4 2024 grow item flagged NA enterprise “grow” +10.5% YoY; grow now 50% of NA enterprise revenue Improving mix
Public sector harvest normalizationNot highlightedQ4 guidance cautioned on normalization Q3 margins impacted by harvest declines; more normalization expected in Q4 Near-term headwind
Ecosystem and go-to-marketEarly digital momentumPortfolio mix improving; debt profile de-risking Connected ecosystem: Palantir, QTS, security/data partners to accelerate ports/services (P×Q model) Building leverage
Regulatory/legal/tax—RDOF giveback ($49M) noted; goodwill impairment $400M tax refund expected; timing risk if gov’t shutdown Supportive to FCF

Management Commentary

  • “We delivered strong financial results—revenue, EBITDA, and free cash flow all ahead of expectations—while advancing our transformation agenda… building the backbone of the AI economy.” — Kate Johnson, CEO.
  • “Grow now represents half of our North America enterprise revenue… facts show [legacy headwinds] thesis is increasingly incorrect.” — Chris Stansbury, CFO.
  • On PCF economics: “The composition of… bookings is equivalent in margin to prior tranches… primarily existing conduit overpulls.” — Management Q&A.
  • On balance sheet: “Debt is no longer a headwind… expected AT&T transaction proceeds will further reduce leverage and interest expense.” — CFO.

Q&A Highlights

  • PCF pipeline/margins: New $1B tranche broadly similar margin to prior overpulls; pipeline spans hyperscalers/NeoClouds with disciplined, value-accretive deal selection.
  • Enterprise “grow” drivers: Growth led by dark fiber, IP, Waves; PCF contributes but is not the majority and is static post-build, so long-term growth is driven by digital services.
  • Q4 headwinds/guidance: Expect further public sector harvest normalization; recall a Q4 2024 one-time grow item affecting YoY compares; reiterate near-high-end EBITDA and low-end interest guidance.
  • Capital structure/equity: Management prioritizing equity holders; will consider options but emphasized improving valuation as balance sheet de-risks.
  • Off-net NAS/Project Berkeley: IoD off-net removes footprint constraints; Berkeley device to enable cross-carrier mesh and “one port, many services” provisioning in 2026.

Estimates Context

  • Q3 2025 revenue beat: $3.087B actual vs $3.040B consensus; Q2 2025 was $3.092B actual vs $3.113B consensus; Q3 2024 was $3.221B actual vs $3.214B consensus. *
  • EPS beat: Q3 2025 Primary EPS consensus $(0.267) vs actual $(0.20) (company ex special items); GAAP diluted EPS $(0.62) reflects special items. *
  • EBITDA: S&P consensus ~$762M vs company Adjusted EBITDA (ex special items) $787M in Q3 2025; note possible definitional differences with S&P “EBITDA.” *

Values retrieved from S&P Global.*

Where estimates may adjust:

  • Upward revisions likely for near-term EBITDA/FCF trajectories given execution and cost-takeout progress; revenue trajectories may be tempered near term (public sector normalization, wholesale declines), but mix shift (grow/digital) supports medium-term estimate stability.

Key Takeaways for Investors

  • The quarter delivered a clean beat on revenue and EPS versus consensus, with strong FCF driven by timing and expected tax refunds; mix shift toward “grow” products is tangible and margin-accretive over time. *
  • Strategic execution (PCF, IoD off-net, ecosystem deals) strengthens Lumen’s AI network thesis and creates multi-pathways to $900M–$1.1B incremental business revenue exiting 2028 (PCF + Digital).
  • Near-term caution: Public sector harvest normalization and cloud utilization costs pressure Q4 revenue/margins; wholesale and legacy declines persist, requiring continued cost discipline.
  • Balance sheet de-risking is a material catalyst: $135M interest saved YTD; expected 2026 AT&T proceeds further reduce leverage and interest expense (~$535M annual savings potential).
  • Trading implications: Momentum around AI infrastructure and digital services plus guidance reiteration supports estimate stability; watch Q4 harvest normalization and FY refund timing.
  • Medium-term thesis: Mix shift to digital/NAS lowers capital intensity and supports margin expansion; ecosystem partnerships provide leverage to scale ports and services (P×Q flywheel).
  • Execution watch list: NAS off-net adoption pace, Berkeley device rollout, PCF build milestones (miles/routes), ERP phase 2 completion and cost-takeout realization vs the $1B run-rate target by 2027.

Notes on sources: Q3 2025 earnings materials and detailed financial schedules are from the company’s press release; Q&A and strategic commentary from the Q3 2025 earnings call; prior quarters from Q1/Q2 press releases; ecosystem/IoD partnerships from October press releases.

S&P Global consensus values provided where noted. Values retrieved from S&P Global.*