LUMN - Earnings call transcript Q1 2024 | Lumen Technologies, Inc.

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Operator

Greetings, and welcome to Lumen Technologies First Quarter 2024 Earnings Call. [Operator Instructions]. And as a reminder, this conference is being recorded, Tuesday, April 30, 2024.

I would now like to turn the conference over to Matthew [indiscernible], please go ahead.

Unknown Executive

Good afternoon, everyone, and thank you for joining Lumen Technologies First Quarter 2024 Earnings Call.

President, are Executive President Financial Vice Jim Senior today Officer; Chief Officer; call Breen, Stansbury, Chris President Vice the Kate and Johnson, Executive and On Relations. Investor and Chief

materials, harbor in which and I We'll statements begin, that, considered subject to for include can the should costs with to our your certain our X to I'll our Before uncertainties. on this our cautionary statements With statements be SEC statement section be XXXX reconciled conference measures Kate. be over discussed measures we metrics Slide presentation, need non-GAAP special to items filings. on the found quarter forward-looking risks All comparable [indiscernible] that the which GAAP attention forward-looking to call the Lumen's Relations referring conjunction website. earnings Investor turn certain as to certain safe exclude notes factors financial of risk call detailed today first the may of call and in most our in

Kathleen Johnson

us. afternoon, chance of excited thanks and for I'm everyone, all share joining with Lumen's to to have turnaround Good progress you. a

get solutions . But on network. I meet know, is expansion strategy workloads, you all on-demand data before in in performance. our the latency need ultra-low immense [indiscernible] for and enterprises to dynamic and customers' Effectively, our by hybrid secure focused the speed, transformation financial world. As support next-gen capacity with a update into connectivity we're our cloudifying to powered fiber empowering telecom blazing fast

and during period. created of in restructuring into the softer uncertainty sales As half that we shared debt translated the for customers our which last XXXX, partners, quarter, second

we revenue results. result, weaker and a EBITDA QX saw As XXXX

portfolio. maintain sequential Now despite growth product in year-over-year and QX pressures, our within we revenue these did

traction a components Network driving NaaS, customer turnaround We of our story. digital or material also Service, of important our as flagship made adoption Lumen in offering, both

due group Investor over our broad to level unveiled achieve our addressed debt, sheet with agreement have executed at TSA hard would balance of When successfully it the we've of that billion is flexibility mid-XXXX extending our significantly Day, agreement this that of the a through financial plans our $XX we would Now we transformation imagine been over stronger. creditors, our of XXXX securing to our strengthen expect our X transformation. balance the sheet can continue the and next $XX to billion billion to us our in to ] created maturities deal value in pleased runway new over to We're over beyond, you [ shareholders. liquidity. years $X.X access return ways while this and with And find for

resources our growth we're spend out in and to reductions. the Additionally, priorities AI, the automation people impact rightsize continuously and continuing reshape and taking redeploying to through of and vendor cost business form highest

actions cost our a contemplated our of materially reduced guidance. direct early QX. As XXXX such, These were already transformation result our we were in in base programs EBITDA and

Okay.

and better in base the Moving on with quarter first effortless our quarter, in delighting start the telecom on churn to customers commercial focused update. to transformation execution, excellence. with business, securing traditional our about This is of enterprise reduce I'll and sales sales excellent customers North time. our performance with experiences. quick, some enterprise year-over-year, strongest up performance the secure had XX% We sales digital American first driving

business, a video voice so won and American office example all public XX% and nearly sector sales where Additionally, for the recently we $XX is new million to contract serve data, the U.S. total value our by year-over-year. agency network, logo can better connectivity, sales the within increased contract government Congress people. great doubled transform and accountability A

indicator they should sales for improved a performance. be significantly the revenue by excited we're improved as leading Overall, results

a of edge services, hybrid complexity Gen custom seeing AI for private driven high-capacity, the dedicated I We form the this capturing our spike once-in-a-lifetime and of low-latency networks. what an we're a in rise We've requested on kind do dramatic in of that want It demand, architectures. of at is turnaround. and multi-cloud a to and be perhaps believe team tailwind this advent confident focused also to established leverage important demand, for network by demand in Lumen. this we will a is best are note the opportunity often we

crucial Okay. renewals, On including to migration, securing X key usage that about levers, and is installs, the program base, a disconnects. all

by I other affected did the that mentioned While we sequential the base TSA-related earlier, results in install our QX trends see were strong secured uncertainties levers.

double-digit migration renewals performance, double-click execution, product up percentages, nearly migrations to signs X% we solutions benefiting from transition were services disconnects portfolio. in large and legacy grow up compelling by If economics closing a of with as see deals improved from were our deal. we customers Specifically, X%, our next-gen on . better

we're well securing because systems NaaS We most Negative legacy pricing areas and off-net also in not our but because our the growth growth, of on-net headwinds dynamics complex digital-first supporting these secular customers modern and more from That this capabilities like our in masks portfolio. progress and the to across are the in we well-known said, focused our transition are and transformation on as IP, challenging making delivering part as we solutions unpredictable selling partnerships. peering like the base only own. when customers' of voice and TDM is

to transformation will those transparent make more the continue here we and investments our but ensure will adjust spend, resourcing to program not also to you. such, on results As returns we highest only our

more meeting giving truly to their our status with of and part focus you first on digital the a mid-markets NPS across Net Wholesale tell rose process and enterprise and churn revenue by ultimately, XX consistently. NPS. our products large as look I'm dramatic excited NPS experience and to momentum relentless platform involves exceeding NPS growth. or enhancing each. growth super of a we're than to delighting We're all segments improvements points updates. visibility customer XX%. cornerstone In improvements orders foundational by customer quarter, measured specifically, satisfaction, at A and better by by in and continued experience. rose optimization customer as customer with reduction them every We for a pivot in result, a Scores, expectations public customers that X year-over-year as And showed XX points, Promoter rose real-time And sector these more customer sales,

Alongside commercial by we're building delivering and our customers. networking our disruption to future excellence, driving capabilities next-gen

digital on-demand Our NaaS, and consume security a of And since in Lumen Lumen QX launched to span with has that been NaaS with XXXX. of bandwidth, control the is digital composable services delivered and hard team and services empowering native customers locations. all direct new of paths. It team started including which automated experience. truly customers online our with Lumen to with work, cloud at network secure and in networking family order has connectivity innovations, we transport latency network DDoS and enabling enterprise then, price, design, customer XX access low-friction a edge

Through industries feedback QX, fantastic. across the over is adoption customer customers XX we saw diversity with in and NaaS activated

recently hosting speaking example, with they've Arena to weeks to And is agility. game, minutes, of the from than the NaaS a Panthers Company, customers, Lines establish Internet in great reduced delighted experience. operational that delighting thanks to Lumen's weeks, For Cruise Norwegian Operating their playoff model connectivity to the Florida using which to for Lumen NaaS, traditional taking customer bandwidth connectivity establish Avaya their with bump service Internet fans time NHL shared improving is NaaS. Lumen minutes while in rather

All right.

on-ramp a We Let's created high-capacity while hyperscaler of high-capacity ExaSwitch. functioning talk as meet about this also switching to cloud platform enterprises. public optical to peering award-winning for demands the the

ExaSwitch more AI as redefine has the need because platform beyond it's of can the Now use why AI, things and into enterprise important performance Every data kind to and counts. been rise like security cases to and millisecond multi-cloud are reimagine its only switching exploding exchanges, security peering extending That's challenges. systems autonomous today's never connectivity needs. that far networking hyperscaler optical growth

called help this and our threats and more at we're Finally, security and will half have step Lotus Lumen level. new IP-based own detection available service network leverages Defender the a XXXX, patented broadly innovation connections, DIA labs. launching be from forward identify Lumen's taking customers In AI-powered service exciting threat capabilities to block Black that secure we of prevention as enabling second in enterprise the subscription NaaS an on by security connectivity major very

Let's look at mass our market business now.

We the penetration we're into new XXX,XXX opportunities as deploy see continue growth, we we're assets and presales greatest to possible. capital than and on track our motion where to to this as those execute quickly strategy for drive optimizing our year, deliver more fiber-enabled to locations

converting existing it's sales marketing Quantum achieved efforts, They're our highlighted saying continued, customers. year customers being fiber Fiber our with we've retention to our ever from quarterly Our me And It's fiber sales, it's best strong look, results it net late QX not improved including saying in last product. and adds reported. This was momentum the our best-in-class too. copper by best-in-class.

We're deliver sequentially Net continuing in hitting again Quantum year-over-year. amazing Scores Promoter Fiber rising positive and with once QX, XX% to

Finally, transformation, focus get rebuild I'll culture recognition. continues will that Lumen and from culture. said up, we wrap comment on the with a our people creating a that enabling company to and external I've on this people and is it's

XX alone. awards for in we fact, won culture In months past superior few the

new Officer. Ward as On about and call, than helps time, to Chief innovation made as important X hires, call. Jim our know, us talent. Breen, our track it to spoke SVP is you. traditional continue and this joined additions of lead joins many all tech, play years earnings on a game-changing experience that us we've with around us key CEO tech you importantly, [indiscernible], last new Officer; Lakshmanan, and communicate brings Microsoft, raising team. Chief and more will with of finally, telecom. critical I company in Satish our amazing More will talent since innovations our Dave [indiscernible], as Technology attract Relations, efforts leadership, to progress we Investor our including And to retail an and our new Chief he XX And Product our equity logistics And Board and from amazing disrupt research role telecom visibility military clearly of in transformation as Directors. a tech Officer, our of our of our Marketing EVP

turn [ well, future is I'm team very customers And Chris. Lumen's that, to call seeing progress. confident going I'm over ] jelling really to is The that we're our and are executing with the bright. our

Christopher Stansbury

the steps reshaping everyone. important and we afternoon, strengthening good took In and the Kate, towards sheet business. first our Thanks, balance quarter,

customer our quarter call. revenue position EBITDA some was we as inventory driving growth, earnings in for first TSA-related as factors last As performance discussed affected long-term expected, our well by uncertainty as and seasonality

more improve trends, ability to While ahead work our we hard execute. us demonstrating we're have of to

highlights. key A few

$X.X forward. than successfully growth the from sheet our our underscoring for of and providing to strengthen First, runway completed additional billion their maturities will as strategy we capital creates across as anticipation and to which first [indiscernible] rephasing TSA our broad turnaround balance pivot structure, quarter, our terms Kate more and we mentioned, in move the in debt continue support our creditors

As full included in and week, XXXX took last to as cost-out planned shape savings support continue These our were we processes to strategy. organization shift our improve material we actions guidance. our year

to shut down non-core takeout we of reshape [indiscernible] organizational as adoption forward, opportunities manual AI cost to legacy increased products. further realize and Going [indiscernible] automate additional our processes

in importantly, America most a accelerated strong Fiber both growth saw within our North year-over-year XX% business broadband net segments improvement and with engines sales and enterprise Quantum first mass performance quarter sales the as in Finally, our we additions. and market growth a within

to XXXX our quarter. improve All the this in of confidence guidance from expected a in with first low us EBITDA point gives

the category financial contracts harvest more as these Before a includes CDN EMEA all our the also CDN business quarter quarter product we new will XXXX, agreement international international as quarter, sales business I'd trending our within first as the reporting updated like our detail, sale results and last within We're in in covering provide the of schedules. historical with [indiscernible] fourth well to and of select segment, commercial and of revenue. impacts breaking [indiscernible] we're move contributions from completed associated CDN business several other to discussed changes which our out discuss first we providing channel

Please impacts our reported from year-over-year and sequential growth results, in mind, are excluded keep better than rates when rates. substantially are the these

revenue of schedules revenue trending Finally, customer amount this change. mid-market segment enterprise and within mass financial historical our our segment has reclassified to related channel, been our we small reflect to realignment into annual process, the our to from market a moved business

a was On due and in Let's reported of for billion, summary to divestitures, move revenue CDN. decline and $X.XX year-over-year of to Business Approximately commercial of quarter. impact discussion agreements to was agreements that the the $X.XXX commercial the impact segment approximately first financial divestitures, revenue billion. declined XX% CDN. to total XX% due of to XX.X% basis, the the XX% declined decline of

Free Adjusted $XXX X.X% was million $XXX quarter. flow quarter revenue a segment first $XXX with in in EBITDA million. declined the first Market the to Mass cash margin. XX.X% was million

for our wholesale, Within I'll international revenue review is which year-over-year X.X%. channels, revenue basis. business the detailed Next, quarter a enterprise our results our segment, other, America and on declined excluding North

in revenue As other we mentioned within a recur last had first not quarter onetime the and group quarter, our benefit product public we this sector quarter. fourth in the did

and our the Additionally, are as second a over that in on TSA guidance quarters. customer pressures in this These the XXXX provided early year we the mentioned half expected the first I and had quarter. earlier, lagging in the of abate gradually related were to coming 'XX revenue uncertainty February contemplated to effect through fully early trends

be continue followed X.X%. and sector by channel Overall, expect We to later business enterprise. to first this public in year, mid-markets North to declined the growth pivot to America large sustainable

declined Large the enterprise. first in quarter within enterprise revenue Large X.X%

product Our and as grow and revenue in was by continued well harvest nurture revenue. declines revenue product offset increased as X.X% other this growth year-over-year

Mid-markets trends variability as overall towards X.X% continued in year-over-year. expect declined drive revenue We we stabilization.

in lower our in to IP broadband contributed enterprise and declines and products. within product and harvest which by revenue voice, offset grow strength Continued was the nurture VPN

declined within nurture X.X%, revenue. other grow in revenue offset sector primarily Public than which by and and more influenced declines product harvest, our growth

and with sustainable first give wins to this year. to which Kate to to revenue, us As that to large ramp we channel in sector return mentioned, the this see continued sales time be these continue take public confidence bookings traction will space, growth

is XX.X% telco is legacy the by like TDM, This setting of quarter. are services. and Wholesale The partners which revenue driven portion in comprised declined harvest by XX.X% year-over-year the contract portfolio, year-over-year. Voice products Line, saw of Private wholesale primarily first that revenue

for will that area we Our to will harvest product cash. revenue likely decline over is manage continue an time and

in International primarily and EMEA driven of divestiture contracts the the and fourth of XX.X% quarter the of sale our other by revenue declined year. CDN business last select

our the core cycle represent channels, North enterprise categories. Moving reporting. to results on revenue product reference life which our strategic America I'll our based business

both enterprise as well As and strength channels large The Kate shared, in related revenue year-over-year maintained growth across we TSA year-over-year enterprise. driven all first by and fabric in sequentially higher IP within headwinds. was growth the despite X.X% products edge and broadband quarter fiber the primarily as improvement dark

results grow any our in While segment vary this carried XX% business our expect revenue can our an execute we for we total XX% enterprise approximately quarter, North represented in quarter. on turnaround. strength sustained the direct product revenue approximate margin of America Grow as and core

expect and continue to Nurture declining and Harvest, we headwinds Within these in see to -- categories. markets

lifetime experience proactive newer steps actions customers to in However, uplift we Lumen. continue take an these to to customer our technologies, improve customers' migrate and value provide and for

off-net customers Lumen's onto Additionally, and when we for help legacy optimization opportunities from network. migrate will continue pursue cost we to services TDM-based

the our this and Nurture revenue with XX% represents total declined revenue enterprise our an year-over-year quarter. carried North margin America XX% VPN segment driving XX.X% direct about of business services performance. Products Ethernet and Nurture approximate for

points Harvest to year-over-year. XXX revenue first TDM-based products than Harvest North improvement declined by of declines impacted quarter, approximately revenue America negatively and our basis private be the enterprise of represented voice XX.X% in an less [indiscernible] in XX% line.

For direct our approximate total quarter. XX% business segment, margin it carried this an

X.X%. Other products revenue declined

tends nature product products. the to revenue other Our to fluctuations due these of variable experience

to Now mass moving on markets.

basis that legacy revenue. revenue revenue services Also our approximately points broadband improved XXX and and voice exposure by approximately of year-over-year. broadband mass XX% fiber XX.X% represents markets to Our grew note other

approximately build broadband-enabled towards annual as XX $X.X March fiber million location bringing our targeted year. quarter, our were this $XXX,XXX, total pacing $XXX,XXX of target and the to adds During

first date, added we in our quarter, and the Fiber quarter. the was Fiber $XX net add ARPU to During and XXX,XXX. quarter our XX,XXX is approximately flat this fiber best year-over-year increased Quantum customers, total to brings which to reported sequentially

At than was Fiber broadband our quarter, of less approximately the our the XX%, first Quantum and penetration end at copper stood penetration legacy of XX%.

mass as will potential ahead, future arrangements securitization explore ventures options of improve divestitures assessment business look strategic market-by-market generate wholesaling Those incremental asset-backed maximize we a its joint the include we As to to our options of EBITDA contribution and its value. markets continue we and to range and cash.

to adjusted Now EBITDA. turning

of For was billion XXXX, EBITDA ago quarter adjusted quarter. the first to million $XXX $X.XXX the year compared in

Due These divested million million benefit The headwind approximately bookings, the ongoing well first large be net and first deals a margin of quarter of benefits EBITDA from included net cost our and revenue year-over-year EMEA this quarter headwind and second of management, actions year and business, efficiency of select XX% $XX related as to previously the post $XX as we improvements the $X from sales contracts. expected XXXX. of the quarter CDN our commercial closing million to net strong from items the to divestiture-related decline. the a point overall low a in sale first from of won for represent expect quarter agreements

Special quarter charges expected to agreement. the negotiation reflecting this of execution items EBITDA our and totaled impacting million, $XXX adjusted related TSA

For adjusted $XXX quarter expenditures for XX.X%. quarter XXXX EBITDA XXXX, margin the the million. first of first were was of our Capital

For quarter, and expected was refund included an of the million. approximately flow, $XXX million in free generated cash this tax first $XXX

support and free remain Importantly, we're the are leaning confident into to customers our flow guidance. rapid demand our growth in our cash network investments and facing

with your on year we're our XXXX outlook. all our for questions. And guidance full financial metrics. that, of Moving to ready We're reiterating

Operator

from [Operator with Instructions] Michael Your Citi. Rollins first comes question

Michael Rollins

topics. Two

then how an legacy versus designation. the that in legacy much initiatives to just much customer And for share to the revenues? you -- factors, for whether The revenue bit versus of year-over-year, revenue for I was help out that of Harvest things seasonal other try competition or unprofitable some lower-margin of the for business or driven it's the of could, have organic a performance if afterwards, and terms Then relationships? declined I you sequentially you Can X the acceleration topic vertical and customer X to the or in of other is Nurture, first have customer and that please. how drive your like

Christopher Stansbury

Customers split telecom say legacy We are questions. what declines and all broadly have generally these is very or talking don't about, the is industry But the that. think good I'd I right? everybody leaving that Michael, and services. outs

Our competition that of turn off expensive are operate. services some that We're off-net off-net is is also all increasingly driving to to trying services. to off trying turn And those of trends.

I this say we're the that continue. it's exists. seeing. it I seasonal, is So more behavior not continued that wouldn't would new something expect say and we It's that to

I And is needs really customers digitally products And the continue we're meet focusing newer overall the the our to past. the today and grow. portfolio, portion the of on that think that's bringing of you'll why category the changing is the than and that growth rather see where is. that's from that that's more biggest game point the focus our why consumed of important rules of needs customers

Michael Rollins

second the ventures. mentioned of you joint the topic, post-selling possibility assessment then business, mass And the for in market terms the of market-by-market and

wholesale to that carriers on considering third more? If a expand wireless offering you it's And are parties? a could you other on bit or basis, whether fiber

Christopher Stansbury

exist of number looking last competitors. week secret, we're obviously. at all arrangements There's was venture announcement with possible There joint our So where a an arrangements. no

that. be So we're given And there the be opportunities if is to may valuation sell added is any Wholesaling that to could looking right. X market at those.

then those how leverage on point driving we penetration and on So forward. and as we whole enablements here -- EBITDA investments the our increase incremental is go

communicate to things, answer making at one we certainly no around this And there's point. that. closer we'll as decisions those So get

Unknown Executive

you, question. the Thank we Operator, take will next Mike.

Operator

with Your next Sebastiano question Petti from comes JPMorgan.

Sebastiano Petti

would -- perhaps, hoping well. driving rate subscriber more the maybe perhaps mix, unpack and what's if hear service and as some product the Quantum momentum -- can that side perspective if be Chris, great. terms was your seeing to speed continued take in color give of NPS in Obviously, I But on great drivers the you that you growth from the a of what levers any could Fiber. level of on you're

Christopher Stansbury

our really marketing year speaking, on we to been again, by efforts. the said to got up So the amount enormous scale side, issues our last there's broadly the work was marketing of team -- that ability the by an focus and X team scale scale to motion. build the we until our of great had We was

efforts. And were so marketing our a localized focused lot efforts in the of past on very

have expanded market more lot was. media than today We There's there a in that.

We refine effective. that to penetration. approach it's media improved that continue driving that's sure And make to

speed for efficiently as as the It's ground, really things. their enablement about we shorten again, is penetration and getting back. we it's can that so time importantly, team, about And driving the and really X at good to can pay focus in that fast

good kudos effective, continue So we've done sure the to we programs those we'll team, what make but evolve to they're about very to feel date. to

Operator

Your from comes Batya next with question UBS. Levi

Batya Levi

bit the be XQ well? into context that decline And you for new expect on if provide next-gen touch we be can that these as environment in you competitive sales helpful. on services in up XQ? coming to little maybe you're in the that would building maybe point And low could strong with the business quarter, also revenue you funnel second Can more the a mentioned that

Kathleen Johnson

want to Sure, start? you

Christopher Stansbury

Yes.

So and I'll back to it take the Kate. turn first then part

say that And too the year. we because I sure make say that quarter installs forward. the think, it's I into really funnel quarter, it's converting Batya, the first we as we as -- legacy to about that point rigorous be and X first that, have focused we saw early openly. And going on go go is we're obviously but is we've be obviously with, execution would that pleased low to results through team is talked data it's point. continues in that to do the drag choppy to going that What the

cost about. of we EBITDA, to year. a been because savings So some yet activities generate call little that with early the confident able quarter-by-quarter talked to we're in performs the we've more of revenue this how

Kathleen Johnson

do ability want. conversation what to we And the I service, focusing do of so -- and they it's the to really, back that in this make really respect to so with in fire on anytime, reflected that have customers up a telecom, our really, dynamic on-prem about processing consume and And basically with in and not around but capacity and really complex a it cloudifying to anywhere environment, building they effectively. give capabilities of I makes any like every question are is it push of and to having just to network and future services, bandwidth when clear data applying environment your the it's all cost customer what notion edge resources where do the to from on easy digital all to demand. about competitive to And talk that and workloads the sense cloud so to platform

from the as We're committed it. for I Traditional in a translating We're customers that and pipe. are think for see I and what we're we're it getting just nice in wrapper I have we're investing that's increase board explained. That's services. our to demand to digital physically that products -- and is what telecom differentiating. and heavily, And our our a enable doesn't is only that. and doesn't hearing that very -- the ones account such, healthier oriented It's too what partners into across

Operator

Bank Barden with Dave America. Your line next of question of comes the from

David Barden

or savings first the just MPLS growing the of was -- wondering private years X product the existing that about next confidence business, that as coming thing and Kate, could, as that then the have kind question, backwards ago, if of the of stopped X getting X cannibalizes product kind are went done. or of And business SD-WAN I of the Batya's the So interplay if years speed, growing related the of congrats the different we the if to the high of we're generation now that question networks. this talking started your question, been up be SD-WAN just maybe isn't on MPLS arcs you about think driver TSA, than would today. small significantly. custom growth these kind very was meat level products I curve cost ago. a the And potatoes and X latency all for the could, Chris, would it low I'm next product of second . And kind opportunity.

is that interest roughly million And if talk contributes about it your offset is, can business to million of $XXX the reiterated where expense from? is the math comes all guidance, that right? -- fits the $XXX you incremental of it and numbers kind into Our you've how that all

Kathleen Johnson

pass to the I'll start over and mic Chris.

lot and see build us are So -- earlier a in Defender capabilities offerings. Lumen more of -- our portfolio lot which going amount out -- to a time remarks, market part the We're before, my ExaSwitch, entering available and story who doing NaaS, part we we over one. the first rather fabric how in with of great grows there I gives companies a with of to these differentiated of going creating some into of increased said also connectivity after. is dynamic regarding solutions. a the cannibalizing. value Number of a service portfolio question I bit a and new just there demand there's do aren't What the customers when for the X basically to approach as things. your net And era. and increase not create with can digital infinitely one, it upon space is services builds important new an flexible which we're like just a of new than proposition which It's . That's the we digital but this, ability platform described consume services

starting terms digitization more, it to thing can that help us take their experience of opportunity. where it share this provide seamless and huge is to second does we recognize are allows choose a go in customers they gives The faster customer and -- us which a

what acquire is them, the second the to saw you also the more selling So sell to of to new I happening. size of X deals happening, to customers customers, more which we're the net with shared earlier which Chris? And ways that way and metrics both is them. that grow, in is

Christopher Stansbury

year that's Yes. interest given the less back roughly last and pulled our timing to It pay million. we from the to expense, a deal that consummated. standpoint. fact just compensate to that and on we late we $XXX flow And for talked we plan that the year, consumer our and on year than fiber, ] cash that free from about $XXX,XXX of year This adjusted the year. correct guidance [ back when could was the little really million $X.X And last the Between a spend be that, time a gave range. capital cost a a considerations on build capital of in

that's that's So contemplated. how

I delevering, opportunities cash, of think be to -- we're David, that's of us right? though, done, additional there and sources sources not continue cash on for to to #X. new importantly, will focus use job

see go you'll So more as forward. we

Operator

Simon Morgan Your comes next question with Stanley. Flannery from

Simon Flannery

second sort a it But of wonder EBITDA with being the understand could Q according think I head looks like to little [ reductions. Chris, they're bit the help I more in I during you the ], quarter. cadence. us phased count the

QX. cost about So functions to will [indiscernible]. think the then QX what step of QX how Any kind line to of And the there. QX, do items sense over we be the

AI? kind business, out opportunity what's drive improved love little as what of bit sort getting touched in I was the big experience AI more -- the in deeply of dig think streams briefly strength? I'd a cost and Kate, comments, the of to to your see do on drive on to work of there those full timing you you And just buckets customer into

Christopher Stansbury

Yes.

just -- quarterly year. reality than cooling be the QX savings, to into say that doing obviously, you'll on point guidance. run highest I'm going EBITDA for lot at because QX highest The confident look cost seasonally is quarterly whatnot. for think a that careful timing, obviously quarter modeling, to QX Don't we're want other of a maintenance, you in lot So guidance don't will our don't to give is in always we energy be it's of use low our start rate here. get the specific when Simon, forget in of your at the I and QX. in benefits if see But the the I is we're the it's

Kathleen Johnson

the over these productivity to far. what some customers do shape super your and to But bunch help technologies remarks so was explained this. for of Lumen regarding I've into question about create digital them choose portion We're be experience We're just import us digital my shifting. you that in Chris to a company. requires things. our about to going used skills to progress really leveraging to We're the our of And excited new and prepared company, drive platforms. of net us a other term reshaping one

company. You're seeing that It's team. leadership entire across happening we do the at the

enterprise for folks seeing with really opportunity to you'll return for across we'll hard different our Microsoft and across two, capabilities, to us redeploy of as And adoption company populations seeing investments. what and beta see selectively we'll the both those amazing various to priority we last on where but course, as so that always organization Number the capabilities those being level upskill CoPilot. what reskill of well like across native higher year, we're at beta every depending the opportunity far, AI platform at do went XXX every company [indiscernible] take really on the those items. And, system this We're pleased and customers as being function, customers things we're and

examples. X you give I'll

XX We're to Knowledge get about We're that. equates that about in super Worker across time items. of person higher of a seeing productivity is we per hours minutes around excited first That company. to towards redeploy XXX,XXX The productivity. priority the day

our seeing we're XX% productivity, a increase in about is developer thing [indiscernible]. and AI deploying second The

also is now about platform, exciting to that so that's NaaS being digital talk can And the development extremely for I in think a highly we directly team. new productive attributable company a innovations XX a developing

since innovations ExaSwitch October. XX and platforms, all we've and delivered another our have We market that to Edge across security

achieve new the that October productivity So able in since that's that prior time periods. innovations XX we frame, of multiple were number times to net

of major there, after our It's go part lots continuing and we're progress turnaround. to So, of it. a

Operator

Deo comes MoffettNathanson. next Del with Nick question Your from

Nicholas Del Deo

from about then think mid-market more. And [indiscernible] most it's And second, fair cited. partners to First, by channel that waves public also solutions And AI. [indiscernible] that are that component I that demand of it being say Is for you've bookings to Kate, I sector. driven high-capacity benefiting turned think fiber was talked you the seeing this segment after that degree that dark and talked enterprise trend? about channel what the about a you growth being to on you've important talked an driver

channel I can the compensation that of deals in paying the share regarding to you're guess for them? and what So quality is partners bringing the the those you

Kathleen Johnson

for for I'll a we're question. referred start private also increase Yes, for in what fiber, in and seeing increase for to demand with dark seeing I custom waves your as sure. We're demand first an huge networks. forth, friction-free it push to companies huge so data as do back and of companies way to as their cloud or interconnect think possible. technology workloads in And need big a to data and that centers

one, to of Number conduits. a they're have us And couple we for coming reasons.

ability this grow. flexibility and continue So fiber to of there gives overpull there's to lot and room a to

of The second and Lumen. demand the of of the on mission value doing because of is proposition network, it business piece every the it's at because delivering platform capacity of with our around level digital

that's first So the part.

channel productivity. think the I part second regarding

We're Let improvement help on productive say excited focused to humanly seeing enough as We're as partners be yet. that. continue our but possible. and to me not to channel. just the it's We're to recruit there, excited be

enterprise getting I to just better have opportunity look as I these so rhythms through is like for to new feet cloud at more with commercial think on our indirect like it engine, offering. new connectivity we're true capabilities. which net a direct both around and Lumen security the And ExaSwitch at the building street, huge these a capabilities net And -- Defender selling and

story to to But anything? more Chris, add do coming. you want So the

Christopher Stansbury

Yes. hit Nick. Kate of And I most it. Yes, think

mid-market, motion was for Lumen, was really selling to heavy large that thing product public direct think And -- a well-established turn sector reliance a key sell at was first strong focused to opposite. a trying us. lot the the It's If really a understanding sales customer I there and set sector, enterprise large public the a about enterprise, frankly. on tissue There think motion. a of exact I almost was deeply muscle The connected customer. the there. Mid-markets mid-market wasn't customer. to to

And dramatically products so the bar was lower fixing partner and bigger base. to that there's ecosystem on the a expanding been reach tremendous customer the work

that's terms and And won't ecosystem, give but I and I tell that the work. can in As place products. is growth in a specifically, a really of that's is partner what new to selling processes lot growth, at of Kate you said, logos rate double getting those beginning numbers those digits measurement it our into are

motion is working. the So

because kind pivot et because we're Large probably lot where big, enterprise measurement, for it of focused. and products And is least going where is the the it's difficult of in a cetera. it's prepared instrumentation, most that obviously was terms of the

So a happened hasn't that has there. longer to be place. it work It's that see lot to just take of It's going not happened. turnaround

Unknown Executive

question. Operator the we next Nick. will take Thank you,

Operator

Williams with from TD Your next Greg question comes Cowen.

Gregory Williams

opportunities. I just X on have the ILEC

take market-by-market you a mentioned You approach.

sold enterprise the Just plant you some much noted sold wondering you Bright market. overlap specifically the of with wasn't operational When it. Speed, if you with there the about complexity

you of a -- So enterprise it a now lot like have segments. was the and that's break with cleaner intertwined plant

and Just take more more wondering if there's to for any time complexity opportunities?

Christopher Stansbury

look do. part And an us things more having impediment in Yes. is that's it we I are mean but flexibility of what contemplated It's everything to complexity, right think we no the do it's strategically. to -- there in that obviously at. that is way we

of So thinking. it's it's but a not consideration, . say a I driver would certainly our

Unknown Executive

next Operator, question. will the we take

Operator

next from with Frank comes Your Louthan question Raymond James.

Frank Louthan

now? Would that amount a where could stand-alone then X, some Lumen through best question, drive success. drive Digital -- And percentage Black that can of by company that is inside us second the out? be shareholder left Labs walk revenue go? pretty you spinning Can as value you fair a that on company? better that Lotus what is Slide And Platform to Or of

Kathleen Johnson

Thanks.

couple So of things.

shows a to opportunity the report on. is platform, first all those Edge growth That for digital NaaS, Slide and significant ready The not Fabric the is ExaSwitch, Security. capabilities, we're X something across

delivering and we're every why third, and you single first, we're company, ton growth customer to on then some one a become internally That's to about get customer key XXth That's the look maniacally different XX momentum on customer metric a focused in second, scale. we [indiscernible] . I across for XXth, industries we're door. sure And value. we our bring them to going at XXth, As is focus delight faster you critical shared and adoption. and start customer, [indiscernible] mass go making

tens net have more pools So we're future to And company. spaces, represents these and each of billions do, the excited Lumen across to before. the progress, lots the this some access the new is in hundreds marketplaces didn't the but about In available it that profit X of of of billions.

the And excited at so opportunity. we're

Lumen be doing network. The is that integrated fashion the have And safe. Their network incredible, them Black else in their we're reason right they patented Lotus is enable launching traffic. doubt portfolio. available capabilities those that because in And now. is our value country valuable weapon. take and without we're our incredibly with Labs an Nobody and [indiscernible] have secret see to is basically helped they proud why Defender a keep so data and the to our models developing in they're

will an value So we're excited you potential about part them of as see forward. and team integral moving the our

Unknown Executive

Frank. you, for got X Thank time we've question. last Operator,

Operator

with from comes question New next Your Jonathan Street. Chaplin

Jonathan Chaplin

couple I market business. on had just the a mass

you for go assets look hang you fiber on different And at markets. So agreements the sell wholesale JVs get it's assets, best your as if whether differently these assets instance, to or through assets inquiry process, and versa? I'm likely or selling was vice the timing if when I you to of you to more end monetize that wondering wondering think of off into how or to you'll copper

on new in go year net wondering if was this continues strong this if I'm and as you mentioned. the reached normal? momentum the then the built result you we the a through adds, And that quarter really new of or you sort level, quarter is as the

Christopher Stansbury

Yes.

I because on relates that don't news, going put we'll assessment, something think a to But frame to at. to time look and we're we that add it's have continue to it we as increase So That at as have that's net point certainly market-by-market share want continue obviously refine marketing to see the as goal. we're I The not that that this it. the performance, committing the approach, quarter-on-quarter. scaled to said,

I that quarters. on you continue we focus show team the And driving the performance. just coming from good to intense So can in hopefully, can tell there's results that

Jonathan Chaplin

be Chris, bit sort may, ARPU few if peers. more, where [indiscernible] for X Is slower accelerating ARPU. of And X as a It's on Is to well. expect for I I'd the guys It's taking you fastest that products you of ARPU X most the of the per fiber there this market, your growth? [indiscernible] there gigabit given second. -- a have something in back guys something holding

Christopher Stansbury

that's basis time. on And again, we're we've There's nothing drive competitive there's Or to time penetration? Obviously, penetration try what done trade-off right? market-by-market determine and back. between You prices, to at it structurally holding of given do that. that's you to a the work got as at then something driving that it raise the end a the that over front changes really make lot environment is

driving far is sub rather as than probably best we're pricing along as into we driving the price not that the to can game this off way, growth overall view can. fast approach. customer taking but turn Obviously we my better upfront the adoption, view, a Our

Operator

our Have that session. We your And participation call the does conclude great line. That conference your for and question-and-answer you everyone. please thank for you does today. a conclude day, that that, with ask disconnect

Lumen (LUMN) 30 Apr 242024 Q1 Earnings call transcript