Lumen (LUMN) 5 Nov 24 2024 Q3 Earnings call transcript

Lumen Technologies recently held its third quarter 2024 earnings call, revealing key insights into the company's operational efficiency, strategic initiatives, and financial performance. The call was led by CEO Kathleen Johnson, who emphasized the company's progress in its transformation journey and outlined the strategic vectors driving its growth.

Operational Efficiency and Customer Satisfaction

Lumen's third quarter performance showed solid sales growth, with North American large enterprise and mid-market sales up nearly 14% year-over-year. The company also reported significant improvements in customer satisfaction across all enterprise customer channels. Notably, transactional Net Promoter Scores improved by 17 points for large enterprise, 11 points for wholesale, 28 points for mid-market, and a whopping 98 points for public sector. These scores reflect Lumen's focus on enhancing customer experience and loyalty.

Building the Backbone for the AI Economy

Lumen is actively positioning itself as a key player in the AI economy, securing over $8 billion in PCF (Private Connectivity Fabric) sales, demonstrating its strong foothold in this rapidly growing market. The company has formed strategic partnerships with major technology companies like Microsoft, Meta, AWS, and Google, positioning Lumen as the trusted network for AI.

Cloudifying the Industry and Digital Transformation

Lumen is also capitalizing on the cloudification trend in the telecom industry, driving Network-as-a-Service (NaaS) adoption to over 400 customers. The company's digital platform, which integrates with its fiber network, enables enterprises to digitally design, price, order, and consume secured networking in a hybrid multi-cloud world. This differentiator positions Lumen for high-value digital revenue growth.

Financial Performance and Future Outlook

While the call highlighted the company's operational and strategic advancements, it also acknowledged the challenges posed by secular headwinds on legacy revenues and the investments required for transformation. Lumen is focused on cost-out efforts, deleveraging its balance sheet, and driving growth through its assets and intellectual property. The company expects to report FY '24 EBITDA in the range of $3.9 billion to $4 billion, with a lower EBITDA in 2025 due to continued legacy declines and start-up costs for PCF contracts.

In conclusion, Lumen Technologies' third quarter 2024 earnings call underscored the company's strategic focus on operational efficiency, building the backbone for the AI economy, and cloudifying the industry. Despite the challenges presented by secular headwinds and the need for significant transformation investments, Lumen remains optimistic about its long-term growth prospects. The company's strategic initiatives, coupled with its solid financial performance, position Lumen for a promising future in the digital networking landscape.