Lumen Reports Better-Than-Expected Q4 Earnings, Revenues Down Y/Y

Lumen Technologies, Inc. LUMN reported a fourth-quarter 2025 adjusted earnings (excluding special items) of 23 cents per share, which was significantly higher than the Zacks Consensus Estimate of a loss of 21 cents. The company reported adjusted loss per share of 9 cents in the prior-year quarter.

Quarterly total revenues were $3.041 billion, down 8.7% year over year and missed the Zacks Consensus Estimate by 1.4%. Full-year revenues were down 5% to $12.4 billion. 

Driven by significant AI-fueled connectivity demand, Lumen secured a total of $13 billion in PCF deals by the end of 2025. LUMN recognized revenues of $41 million and $116 million for the fourth quarter and full-year 2025, respectively, associated with the $13 billion in PCF deals. As AI demand surges, large companies across industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Increasing adoption of its network-as-a-service (NaaS) solutions bodes well. 

Lumen highlighted that the active customers for its NaaS platform grew 29% quarter over quarter. The company considers Internet on Demand, or IoT Offnet, to boost digital service sales and revenue growth. Lumen also noted that its connected ecosystem strategy with 16 ecosystem partners (like Palantir, Commvault and QTS) was producing tangible results with more than 180 potential sales opportunities. 

Lumen Technologies, Inc. Price, Consensus and EPS Surprise

Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote

The company achieved $400 million of run-rate cost benefit in 2025, higher than its target of $350 million. It expects $700 million in 2026 and $1 billion of run-rate cost benefit exiting 2027.

Lumen concluded the $5.75 billion cash sale of its Mass Markets fiber business to AT&T T, spread across 11 states, with more than one million fiber customers and four million-plus enabled locations.

Management used cash on hand and $4.8 billion in net proceeds to fully retire super-priority bonds, lowering annual cash interest expense by an additional $300 million. Total debt now reduced to less than $13 billion, down more than $5 billion since January 2025. Annual interest expense has been reduced by nearly $500 million in the last 12 months, unlocking massive cash flow gains.

Following the results announcement, LUMN stock is down 1.7% in the pre-market session today. In the past year, shares of LUMN have jumped 70.3% compared with the Diversified Communications Services industry’s growth of 18%.

Looking at LUMN’s Quarterly Details

By segment, Business revenues fell 8.8% year over year to $2.425 billion, caused by one-time dark fiber and higher public sector harvest revenue growth in the fourth quarter of 2024.

Revenues from Large Enterprises declined 1% to $758 million. Mid-Market Enterprise revenues declined 11% to $472 million. Public Sector revenues were down 18% to $457 million. Revenues of North America’s Enterprise Channels were down 9% to $1.687 billion. The metric for Wholesale decreased 8% to $661 million due to declines in voice, managed services and VPN.

Revenues from Mass Markets were down 7.9% year over year to $616 million.

LUMN’s Margin Performance

Total operating expenses increased 2% year over year to $3.241 billion.

Operating loss was $200 million against an operating income of $154 million in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $767 million from $1.052 billion for respective margins of 25.2% and 31.6%.

LUMN’s Cash Flow & Liquidity

In the fourth quarter, Lumen generated $562 million of net cash from operations compared with $688 million in the prior-year quarter.

Free cash outflow (excluding cash special items) was $765 million compared with $174 million in the prior-year quarter. Free cash flow was affected by a delay in a $400 million tax refund, now expected in the first half of 2026. 

As of Dec. 31, 2025, the company had $1 billion in cash and cash equivalents with $17.353 billion of long-term debt compared with the respective figures of $2.4 billion and $17.578 billion as of Sept. 30, 2025.

LUMN’s 2026 Outlook

Management reaffirmed that adjusted EBITDA will inflect to growth in 2026. For 2026, adjusted EBITDA is predicted to be between $3.1 billion and $3.3 billion.

Adjusted EBITDA includes the impact from the AT&T transaction and organic business revenue declines of 75 basis points. It excludes $400 million in transformation costs related to the multiyear target of cutting expenses by $1 billion by 2027.

Capital expenditures are estimated to be between $3.2 billion and $3.4 billion. The reduction from the 2025 capex of $4.367 billion is due to the sale of the fiber-to-the-home business. Capex associated with PCF deals is expected to be $1 billion, while the majority of the remaining Capex will be directed toward the core enterprise business. 

Free cash flow is now anticipated to be between $1.2 billion and $1.4 billion, compared with free cash flow (excluding cash special items) $1.041 billion reported in 2025.

LUMN’s Zacks Rank

Lumen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Some of the Peers

AT&T reported solid fourth-quarter 2025 results with healthy mobility and broadband demand trends. Both adjusted earnings and revenues surpassed the respective Zacks Consensus Estimate.

The company witnessed solid wireless traction and customer additions, which were partially offset by lower demand for legacy voice and data services. AT&T recorded strong subscriber growth backed by a resilient business model and robust cash flow position, driven by a diligent execution of operational plans. The company expects to continue investing in key areas of 5G and fiber and adjust its business according to the evolving market scenario to fuel long-term growth.

Quarterly GAAP operating revenues increased 3.6% year over year to $33.47 billion, largely due to higher Mobility service and equipment sales, Consumer Wireline and Mexico revenues, partially offset by lower Business Wireline revenues. The top line beat the consensus mark of $32.73 billion. For 2025, AT&T recorded revenues of $125.6 billion compared with $122.3 billion in 2024. 

Rogers Communications Inc RCI reported fourth-quarter 2025 adjusted earnings of $1.08 per share, which beat the Zacks Consensus Estimate by 10.2% and increased 3.8% year over year. Revenues of $4.43 billion beat the consensus mark by 1.31% and increased 13% year over year.
In domestic currency (Canadian dollar), adjusted earnings increased 3.4% year over year to C$1.51 per share. Total revenues increased 13% year over year to C$6.17 billion, primarily driven by growth in the Media businesses.

Verizon Communications VZ, reported solid fourth-quarter 2025 results, with both adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate on healthy mobility and broadband demand trends. The company registered solid broadband growth with total fixed wireless access net additions of 319,000, which increased the subscriber base to nearly 5.7 million. The company remains well poised to achieve its target of 8-9 million fixed wireless access subscribers by 2028.

Quarterly total operating revenues improved 2% to $36.38 billion with higher wireless equipment revenues driven by targeted pricing actions, customer growth, sales of perks and add-on services and growth in fixed wireless access. The top line beat the consensus estimate of $35.94 billion. For 2025, Verizon recorded total revenues of $138.19 billion, up 2.5% year over year.

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