Yahoo Finance Lumen Technologies Inc (LUMN) Q1 2024 Earnings Call Transcript Highlights: Strategic Shifts and ...
Revenue: Q1 reported at $3.29 billion, a 12% year-over-year decline.
Adjusted EBITDA: $977 million in Q1, with a margin of 29.7%.
Net Income: Not specifically mentioned, focus on EBITDA provided.
Free Cash Flow: $518 million in Q1.
Debt Restructuring: Addressed over $15 billion of debt, extending maturities and securing $2.3 billion in new liquidity.
Cost Reduction: Material cost base reduction early in Q2, included in 2024 EBITDA guidance.
North American Enterprise Sales: Increased by 27% year-over-year.
New Logo Sales: Increased by 21%.
Total Contract Value: Nearly doubled year-over-year.
Public Sector Contract: $73 million contract won for network transformation.
Fiber Net Adds: Best ever reported in Q1.
Quantum Fiber Net Promoter Score: Positive 67 in Q1.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you share how much of the organic ad business revenue decline was seasonal versus other factors, like competition or an acceleration in legacy revenues? A: Kate Johnson, President & CEO of Lumen Technologies, explained that the decline is part of industry-wide trends where customers are moving away from legacy telecom services. This is not a new or seasonal trend but a continuation of existing patterns. The focus is on transitioning to digital products that meet current customer needs.
Q: Regarding the mass market business, are you considering offering fiber on a wholesale basis to wireless carriers or other third parties? A: Matthew Debnam, Director of Investor Relations, noted that all possible arrangements are being considered, including wholesaling. The aim is to drive incremental enablements and improve EBITDA leverage on investments.
Q: Could you provide more details on what's driving the continued momentum in Quantum Fiber, especially in terms of subscriber growth and product/service levels? A: Kate Johnson highlighted the scaling up of marketing efforts and the expansion of media presence in the market as key drivers. The focus is on efficient enablement and rapid penetration to shorten the payback time.
Q: Can you provide more context on the strong sales funnel in Q1 and the competitive environment for your new next-gen services? A: Christopher Stansbury, CFO, mentioned it's too early to declare Q1 as the low point for business revenues due to ongoing legacy drag. Kate Johnson added that Lumen is focusing on future-oriented services that offer dynamic and on-demand capabilities, which are not widely available from competitors.
Q: What are the operational complexities in taking a market-by-market approach to the mass market business, especially considering potential joint ventures or asset sales? A: Christopher Stansbury acknowledged the complexity but assured it's manageable and not an impediment to strategic flexibility. The focus remains on strategic actions that align with Lumen's long-term goals.
Q: Regarding the EBITDA cadence and the impact of AI on operational efficiency, could you elaborate on the expected improvements? A: Kate Johnson discussed leveraging AI to enhance productivity and customer experience, noting significant gains in knowledge worker and developer productivity. Chris Stansbury added that cost savings from operational improvements would start showing in Q2 and reach full run rate by Q3, with Q1 expected to be the low point for EBITDA in 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
