Lumen's Strategic Revenue Mix Climbs as Legacy Shrinks Faster
Lumen Technologies reported total revenue of $2.805 billion in the second quarter, down 9% from a year earlier, even as strategic revenue rose to about 53% of business revenue.
Lumen Technologies (LUMN) reported second-quarter revenue of $2.805 billion, down 3% sequentially from $2.899 billion in the first quarter and down 9% from $3.092 billion a year earlier. Strategic revenue climbed to roughly 53% of total business revenue, up from 51% in the first quarter and 49% in the fourth quarter of 2024, continuing a mix shift that has defined the past several quarters.
The shift showed most clearly in the product breakdown. Strategic revenue grew to $1.289 billion, up 3% sequentially and 14% year over year, while legacy revenue fell to $1.155 billion, down 4% sequentially and 15% from a year earlier. Mass Markets revenue, which includes the divested Fiber-to-the-Home business, dropped to $361 million, down 21% sequentially and 40% from $602 million a year earlier. Wholesale revenue edged up 1% sequentially to $653 million after slipping to $648 million in the first quarter, though it remained down 5% from a year earlier. Mid-Market Enterprise revenue continued to soften, falling to $435 million, down 8% year over year, while Large Enterprise revenue rose 4% to $794 million.
Adjusted EBITDA excluding special items fell to $802 million from $849 million in the first quarter and $877 million a year earlier. The adjusted margin held roughly flat at 28.6%, compared with 28.4% a year earlier, but adjusted EBITDA margin compressed to 21.3% from 23.4% as special items rose to $204 million from $152 million, driven by higher modernization and simplification costs of $116 million, partly offset by lower transaction and separation costs of $48 million.
Net loss narrowed sharply to $201 million from $915 million a year earlier, when results included a $628 million goodwill impairment, though the loss widened slightly from $200 million in the first quarter. Diluted loss per share excluding special items widened to $(0.07) from $(0.03) a year earlier.
Free cash flow excluding special items swung to a positive $327 million from $(209) million a year earlier, but declined sharply from $756 million in the first quarter, when results were boosted by $729 million of Fiber-to-the-Home divestiture proceeds. Net cash provided by operating activities rose to $971 million from $570 million a year earlier but fell from $1.323 billion in the first quarter, which had also carried a $101 million pension contribution drag.
Lumen used divestiture proceeds to pay down debt. Long-term debt fell to $13.150 billion at June 30 from $17.353 billion at December 31, 2024, while cash and cash equivalents nearly doubled to $1.876 billion from $1.003 billion.
The company closed its acquisition of Alkira during the quarter, converting a deal that was pending as of the first-quarter release into a completed transaction. Lumen also disclosed new detail on its Network-as-a-Service business, reporting more than 3,000 customers with new customer adoption up 22% sequentially, active ports up 34% and active services up 29%, a level of quantified disclosure that replaced the qualitative language used in the first-quarter release.
Lumen reiterated its full-year 2024 outlook, guiding to adjusted EBITDA excluding special items of $3.1 billion to $3.3 billion, free cash flow excluding special items of $1.9 billion to $2.1 billion, and capital expenditures excluding special items of $3.2 billion to $3.4 billion.