Lumen Technologies, Inc. released its financial results for the third quarter (Q3) of 2023, revealing an adjusted loss per share (excluding special items) of 9 cents. This stands in stark contrast to the prior-year quarter, which saw adjusted earnings per share (EPS) of 14 cents. Following this announcement, Lumen Technologies’ stock experienced a significant decline.
At the time of this publication, Lumen Technologies Inc stock (LUMN) has witnessed a decline.
Lumen Technologies Inc
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Quarterly total revenues amounted to $3,641 million, representing a 17.1% decrease compared to the previous year. Sequentially, revenues were down by 1%. The second quarter’s figures were notably impacted by the finalization of the sale of the Latin America business and its 20-state ILEC business to Apollo.
The post-closing revenue impact for the third quarter of 2023, resulting from the actual amount received under post-closing agreements with the buyers of the divested businesses, was reported at $23 million.
As reported by Zack, Lumen Technologies has recently implemented a new reporting structure, merging International and Global Accounts (IGAM) with large enterprises under the large enterprise channel, while relocating the public sector to a separate channel.
Breaking down revenues by segment, Business revenues took a 10.1% hit, settling at $2,894 million, with the correctional facilities business sale being a notable factor. Large Enterprise revenues fell by 8% to $1,182 million. Mid-Market Enterprise revenues witnessed a 10% decline, landing at $498 million. Public Sector revenues experienced a 3% drop to $444 million. This resulted in a total 8% dip in Total Enterprise Channels’ revenues, which amounted to $2,124 million.
Meanwhile, Wholesale revenues experienced a 16% decrease, totaling $770 million. Mass Markets saw a significant year-over-year decline of 36%, generating $747 million in revenue.
Lumen Technologies anticipates robust momentum in its Quantum business in the coming quarters, with 19,000 Quantum fiber subscribers added in the reported quarter, bringing the total count to 896,000.
In Q3, total enablements reached approximately 141,000. As of September 30, 2023, the total enabled locations in the retained states stood at 3.5 million. The company aims to surpass 500,000 enabled locations by the end of 2023.
Operating expenses experienced a 14% year-over-year increase, reaching $3,418 million. Operating income for the quarter was $223 million, in stark contrast to the $1,384 million reported in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $1.049 billion from $1.688 billion, with respective margins of 28.8% and 38.5%, reflecting the adverse impact of divestiture-related commercial agreements.
Lumen Technologies generated $881 million in net cash from operations in Q3 as per the results, compared to $1,123 million in the same period last year. Free cash flow (excluding cash special items) for the year was $43 million, a notable decline from the $620 million reported in the year-ago quarter.
As of September 30, 2023, the company held $311 million in cash and cash equivalents, coupled with $19,740 million of long-term debt. These figures are compared to $411 million and $19,899 million, respectively, as of June 30, 2023. Looking ahead to 2023, Lumen expects adjusted EBITDA to fall within the range of $4.6-$4.8 billion, with free cash flow projected to be between breakeven and $200 million. Capital expenditures are estimated to range between $2.9 billion and $3.1 billion, and the effective income tax rate for the full year is projected to be nearly 26%.
