Lumen Technologies (LUMN) investor relations material

Executive summary

• Strategic revenue rose to 53% of total business revenue, up from 51% in Q1, reflecting increased adoption of digital networking solutions and NaaS, supported by the Alkira acquisition.

• Closed the Alkira acquisition, enhancing digital capabilities for enterprise customers in AI and multi-cloud environments.

• Continued progress on modernization and simplification initiatives, including product portfolio simplification and reduction of SEC filers.

• Completed the $5.72 billion sale of the Mass Markets Fiber-to-the-Home business, generating a $565 million pre-tax gain and reducing recurring revenue and operating cash flows.

• Strategic focus remains on network modernization, AI-driven infrastructure, and cost optimization amid macroeconomic and industry headwinds.

Financial highlights

• Total revenue for Q2 2026 was $2.81 billion, down 9% year-over-year; strategic business revenue grew 14% to $1.289 billion, while legacy revenue declined 15% to $1.155 billion.

• Adjusted EBITDA (excluding special items) was $802 million, down from $877 million in the prior year quarter; margin was 28.6%.

• Free cash flow (excluding special items) was $327 million; capital expenditures (excluding special items) were $780 million.

• Net loss for Q2 2026 was $201 million, improved from $915 million loss in Q2 2025; diluted loss per share was $(0.20).

• Cash and cash equivalents at quarter-end were $1.876 billion; net cash provided by operating activities was $971 million.

Outlook and guidance

• Reiterated full-year 2026 guidance: Adjusted EBITDA (excluding special items) $3.1–$3.3 billion; free cash flow (excluding special items) $1.9–$2.1 billion.

• Capital expenditures expected at $3.2–$3.4 billion; net cash interest $650–$750 million; guidance reflects a $400 million tax refund.

• Management expects continued legacy revenue declines and margin pressure, but anticipates growth in strategic products and services.