Lumen’s first quarter results were met with a positive market reaction, reflecting management’s focus on operational discipline and early progress in its digital and AI infrastructure initiatives. CEO Kate Johnson credited improved execution, specifically citing advancements in network modernization, streamlined product offerings, and growth in the North American enterprise segment. She highlighted that the company’s wave services secured new deals with large clients like T-Mobile and AARP, and that disconnects of legacy services reached a five-quarter low. Johnson stated, “We strengthened our balance sheet with the term loan refinancing,” and attributed the outperformance to lower churn and the company’s digital transformation.
Is now the time to buy LUMN? Find out in our full research report (it’s free).
Lumen (LUMN) Q1 CY2025 Highlights:
- Revenue: $3.18 billion vs analyst estimates of $3.12 billion (3.3% year-on-year decline, 1.9% beat)
- Adjusted EPS: -$0.13 vs analyst estimates of -$0.27 (51.2% beat)
- Adjusted EBITDA: $929 million vs analyst estimates of $816.2 million (29.2% margin, 13.8% beat)
- EBITDA guidance for the full year is $3.3 billion at the midpoint, below analyst estimates of $3.33 billion
- Operating Margin: 3.4%, up from 1.4% in the same quarter last year
- Market Capitalization: $4.4 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Lumen’s Q1 Earnings Call
-
Michael Rollins (Citi) asked if double-digit growth in the “Grow” revenue bucket is sustainable and about the pace of legacy disconnects. CFO Chris Stansbury responded that growth is driven by large enterprise demand, and disconnects are expected but should be margin-neutral or positive.
-
Batya Levi (UBS) questioned the margin impact of the cloud model versus traditional telecom. CEO Kate Johnson explained that the digital platform reduces marginal costs, but it is too early to quantify precise margin improvements.
-
Jim Schneider (Goldman Sachs) sought clarity on the timing of PCF pipeline conversion and the risk of accelerated legacy service decommissioning. Johnson stated that pipeline deals are progressing and that network investments remain critical for AI competitiveness, despite any economic uncertainty.
-
Nick Del Deo (MoffettNathanson) asked about public sector revenue trends and digital platform pricing strategy. Stansbury said no one-off revenue events occurred this quarter, while Johnson explained that pricing focuses on value rather than competing on cost.
-
Frank Louthan (Raymond James) inquired about differentiation and traction of the NAS product. Johnson highlighted that Lumen’s integration of a digital platform with a large-scale fiber network is unique, providing customers with a flexible, cloud-like networking experience.
Catalysts in Upcoming Quarters
In future quarters, our analysts will be watching (1) the adoption rate of the Lumen Digital Platform and further expansion of Fabric Ports, (2) the pace and profitability of PCF deployment and new AI-driven partnerships, and (3) the company’s ability to offset legacy revenue declines with growth in digital services and enterprise solutions. Progress on cost savings and any updates on potential consumer fiber asset sales will also serve as important indicators for Lumen’s ongoing transformation.
Lumen currently trades at $4.28, up from $3.52 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
The Best Stocks for High-Quality Investors
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
