On November 5, 2024, Lumen Technologies Inc (LUMN, Financial) released its 8-K filing for the third quarter ended September 30, 2024. Lumen Technologies, with 450,000 route miles of fiber, is one of the largest telecommunications carriers in the United States, focusing on serving global enterprises. The company has shifted its operations towards enterprise services, which now account for about 75% of its revenue, following its merger with Level 3 in 2017 and the divestiture of much of its ILEC business in 2022.
Performance Overview
Lumen Technologies reported a total revenue of $3.221 billion for Q3 2024, slightly above the analyst estimate of $3.217 billion. The company recorded a net loss of $148 million, a significant increase from the $78 million loss reported in the same quarter last year. The diluted loss per share was $(0.15), compared to $(0.08) in Q3 2023, and excluding special items, the loss per share was $(0.13), missing the estimated earnings per share of $(0.09).
Financial Achievements and Challenges
Despite the financial setbacks, Lumen Technologies highlighted several operational achievements. The company reported a record quarter for net subscription additions in its Quantum Fiber business and introduced new sales of its Lumen Private Connectivity Fabric, which enhances liquidity and flexibility for debt reduction. The growing adoption of Lumen Digital's capabilities and promising network-as-a-service metrics are expected to bolster future enterprise revenue.
The largest technology companies in the world are choosing Lumen to help build the backbone for the AI economy," said Kate Johnson, president and CEO of Lumen Technologies. "We continue to transform Lumen's business while also leading a once-in-a-generation expansion of the internet."
Key Financial Metrics
The company's adjusted EBITDA for Q3 2024 was $899 million, down from $1.049 billion in the previous year, reflecting a challenging environment. The adjusted EBITDA margin, excluding special items, was 27.9%, compared to 28.8% in Q3 2023. Lumen generated free cash flow of $1.2 billion, a substantial increase from $43 million in the same quarter last year, highlighting improved cash management.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenue | $3.221 billion | $3.641 billion |
| Net Loss | $(148) million | $(78) million |
| Adjusted EBITDA | $899 million | $1.049 billion |
| Free Cash Flow | $1.2 billion | $43 million |
Analysis and Outlook
Lumen Technologies faces significant challenges as it navigates a competitive telecommunications landscape. The decline in revenue and widening net loss underscore the pressures from market dynamics and the company's strategic shifts. However, the operational progress and increased free cash flow indicate potential for future growth, particularly in enterprise services and digital capabilities.
As Lumen continues to transform its business model, the focus on enterprise solutions and digital services could position the company for long-term success. Investors will be keen to see how these strategic initiatives translate into financial performance in the coming quarters.
Explore the complete 8-K earnings release (here) from Lumen Technologies Inc for further details.
