Lumen Technologies (LUMN) investor relations material

Executive summary

• Q1 2026 revenue and adjusted EBITDA met expectations, supporting transformation and digital modernization initiatives.

• Completed sale of Mass Markets Fiber-to-the-Home business to AT&T for $5.72 billion pre-tax, generating a $596 million gain and reducing leverage below 4x.

• Announced agreement to acquire Alkira for $475 million in cash, enhancing programmable networking and cloud-native Network-as-a-Service capabilities, expected to close in Q3 2026.

• Strengthened balance sheet through debt reduction, revolver refinancing, and improved liquidity.

• Strategic focus on enterprise growth, network modernization, and AI-driven infrastructure amid ongoing macroeconomic challenges.

Financial highlights

• Q1 2026 revenue was $2.899 billion, down 9% year-over-year, primarily due to the divestiture and legacy service declines.

• Adjusted EBITDA was $849 million, down from $929 million year-over-year; margin rose to 44.1% from 26.1%.

• Free cash flow for Q1 was $756 million, including $729 million in proceeds from the FTTH divestiture.

• Net loss was $200 million, nearly flat year-over-year; diluted loss per share was $(0.20).

• Interest expense decreased by $122 million due to lower average debt and interest rates.

Outlook and guidance

• Full-year 2026 adjusted EBITDA guidance is $3.1–$3.3 billion; free cash flow guidance raised to $1.9–$2.1 billion, including divestiture proceeds.

• Capital expenditures projected at $3.2–$3.4 billion; net cash interest expected at $650–$750 million.

• Expectation of a $400 million tax refund in the first half of 2026.

• Liquidity sources expected to be sufficient for at least the next 12 months.

• Alkira acquisition expected to be accretive as platform scales, with near-term financial impact immaterial.