Earnings release
Page 1
LUMEN NEWS RELEASE Lumen Technologies Reports Solid Second Quarter 2026 Results ; Digital Transformation Accelerates 2026-08-04 Company advances its enterprise disruption strategy and growth conviction ; closes Alkira acquisition to unlock digital revenue opportunity DENVER -- ( BUSINESS WIRE ) -- Lumen Technologies , Inc. ( NYSE : LUMN ) today reported second quarter 2026 results demonstrating continued execution against its transformation strategy and progress toward the financial and operational goals outlined at Investor Day . During the quarter , Lumen delivered financial results in line with expectations , continued improving its business revenue mix , advanced simplification initiatives , and strengthened its digital platform strategy for enterprise customers operating in an Al - driven , multi - cloud world . Among the company's highlights from the quarter : • Financial Performance : Delivered solid second quarter results with Strategic revenue increasing to approximately 53 % of total business revenue , up from 51 % in the first quarter . • Operational Execution : Redeployed resources towards higher - growth , higher margin digital opportunities by rationalizing the product portfolio . Continue to deliver on Modernization and Simplification ; further reducing internal systems complexity . • Growth Pivot : On track towards full year guidance and long - term framework from Investor Day . Adoption of digital networking services is high , with more than 3,000 NaaS customers today and quarter - over - quarter growth across key usage metrics : new customer adoption up 22 % , active ports up 34 % , and active services up 29 % . • Alkira Acquisition : Closed the acquisition of Alkira , extending Lumen's digital capabilities and helping enterprises connect clouds , sites , partners , and Al workloads more quickly and easily . " Lumen is putting innovation back where it belongs - inside the network itself , " said Lumen CEO Kate Johnson . " By 1
Page 2
embedding digital intelligence directly into the physical network layer, we’re delivering higher-impact business outcomes instead of competing on price alone. That’s a fundamentally di erent value proposition in enterprise networking, and a new chapter for Lumen customers and investors." “Our second quarter results re ect continued execution against our nancial objectives and ongoing momentum in the business. Strategic revenue increased to 53% of total business revenue, up from 51% in the rst quarter, as customers increasingly adopt our digital networking solutions,” said Lumen President and CFO Chris Stansbury. Second Quarter 2026 Highlights Reported revenues of $2.805 billion for the second quarter 2026 Reported Net Cash Provided by Operating Activities of $971 million for the second quarter 2026 compared to Net Cash Provided by Operating Activities of $570 million for the second quarter 2025 Generated Free Cash Flow 1 of $327 million for the second quarter 2026, excluding cash paid for Special Items 1 of $258 million, compared to Free Cash Flow 1 of $(209) million for the second quarter 2025, excluding cash paid for Special Items 1 of $112 million Reported Net Loss of $(201) million for the second quarter 2026, compared to Net Loss of $(915) million for the second quarter 2025 Reported diluted loss per share of $(0.20) for the second quarter 2026, compared to diluted loss per share of $(0.92) for the second quarter 2025. Excluding Special Items 1, diluted loss per share was $(0.07) for the second quarter 2026, compared to $(0.03) diluted loss per share for the second quarter 2025 Generated Adjusted EBITDA 1 of $802 million for the second quarter 2026, compared to $877 million for the second quarter 2025, excluding the e ects of Special Items 1 of $204 million and $152 million, respectively ____________________ 1 Represents a non-GAAP nancial measure as later de ned below under "Non-GAAP Financial Measures". Financial Results 2
Page 3
Metric, as reported Second Quarter ($ in millions, except per share data) 2026 2025 Large Enterprise $ 794 766 Mid-Market Enterprise 435 473 Public Sector 490 483 North America Enterprise Channels 1,719 1,722 Wholesale 653 688 North America Business Revenue 2,372 2,410 International and Other 72 80 Business Revenue 2,444 2,490 Mass Markets Revenue 361 602 Total Revenue $ 2,805 3,092 Cost of Services and Products 1,415 1,624 Selling, General and Administrative Expenses779 755 Net Loss on Sale of Business 31 — Stock-based Compensation Expense 18 12 Net Loss (201) (915) Net Loss, Excluding Special Items(1)(2) (73) (29) Adjusted EBITDA(1) 598 725 Adjusted EBITDA, Excluding Special Items(1)(3) 802 877 Net Loss Margin (7.2)% (29.6)% Net Loss Margin, Excluding Special Items(1)(2) (2.6)% (0.9)% Adjusted EBITDA Margin(1) 21.3% 23.4% Adjusted EBITDA Margin, Excluding Special Items(1)(3) 28.6% 28.4% Net Cash Provided by Operating Activities971 570 Capital Expenditures 902 891 Capital Expenditures, Excluding Special Items(1)(4) 780 824 Unlevered Cash Flow(1) 157 54 Unlevered Cash Flow, Excluding Special Items(1)(5) 415 166 Free Cash Flow(1)(4) 69 (321) Free Cash Flow, Excluding Special Items(1)(5) 327 (209) Net Loss per Common Share - Diluted$ (0.20) $ (0.92) Net Loss per Common Share - Diluted, Excluding Special Items(1)(2) $ (0.07) $ (0.03) Weighted Average Shares Outstanding (in millions) - Diluted1,004.1 994.5 (1) See "Non-GAAP Financial Measures" at the end of this release for de nitions of non-GAAP nancial measures and reconciliations to the most directly comparable GAAP measures. (2) Excludes Special Items (net of the income tax e ect thereof) in the amounts of $128 million and $886 million for the second quarter of 2026 and 2025, respectively. (3) Excludes Special Items in the amounts of $204 million and $152 million for the second quarter of 2026 and 2025, respectively. (4) Excludes Special Items in the amounts of $122 million and $67 million for the second quarter of 2026 and 2025, respectively. (5) Excludes Special Items in the amounts of $258 million and $112 million for the second quarter of 2026 and 2025, respectively. 3
Page 4
Revenue Second Quarter First Quarter QoQ Percent Second Quarter YoY Percent ($ in millions) 2026 2026 Change2025 Change Revenue By Sales Channel Large Enterprise$ 794 778 2% 766 4% Mid-Market Enterprise435 439 (1)% 473 (8)% Public Sector 490 506 (3)% 483 1% North America Enterprise Channels1,719 1,723 —% 1,722 —% Wholesale 653 648 1% 688 (5)% North America Business Revenue2,372 2,371 —% 2,410 (2)% International and Other72 73 (1)% 80 (10)% Business Revenue 2,444 2,444 —% 2,490 (2)% Mass Markets Revenue 361 455 (21)% 602 (40)% Total Revenue $ 2,805 2,899 (3)% 3,092 (9)% Business Revenue by Product Category Strategic $ 1,289 1,246 3% 1,130 14% Legacy 1,155 1,198 (4)% 1,360 (15)% Business Revenue $ 2,444 2,444 —% 2,490 (2)% Revenue Total Revenue was $2.805 billion for the second quarter 2026, compared to $3.092 billion for the second quarter 2025. Cash Flow Net Cash Provided by Operating Activities was $971 million in the second quarter 2026, compared to $570 million in the second quarter 2025. Free Cash Flow, excluding Special Items, was $327 million in the second quarter 2026, compared to $(209) million in the second quarter 2025. Liquidity As of Jun. 30, 2026, Lumen had cash and cash equivalents of $1.876 billion. 2026 Financial Outlook The Company reiterated its full-year 2026 nancial outlook, which is detailed below: 4
Page 5
Metric (1)(2) Outlook Adjusted EBITDA excluding Special Items(3) $3.1 to $3.3 billion Free Cash Flow excluding Special Items(3) $1.9 to $2.1 billion Net Cash Interest $650 to $750 million Capital Expenditures excluding Special Items$3.2 to $3.4 billion Cash Income Taxes (Refunded) ($350) to ($450) million Other Metrics(3) Range Income tax expense $45 to $200 million Total other expense, net $1.1 to $1.3 billion Depreciation and amortization expense$2.6 to $2.8 billion Stock-based compensation expense $60 to $80 million (1) Outlook metrics re ect our expectations as of the date hereof. Actual results may vary and are subject to a number of risks and uncertainties, many of which are beyond our control. See “Forward-Looking Statements.” (2) Re ects a $400 million refund from recent tax legislation. Excludes the taxes related to the Mass Markets Fiber-to-the-Home divestiture. (3) Adjusted EBITDA, Free Cash Flow and Capital Expenditures, in each case, excluding Special Items, are non-GAAP nancial measures. For de nitions of these non-GAAP nancial measures and reconciliations of historical non-GAAP nancial measures to the most directly comparable GAAP measures, see "Non-GAAP Financial Measures" at the end of this release and our Investor Relations website. A reconciliation of these forward-looking non-GAAP nancial measures to corresponding GAAP measures cannot be provided without unreasonable e ort due to the inherent uncertainty and di culty of forecasting, with su cient precision, the timing and amount of certain material non-recurring items that have not yet occurred. Forward-looking non-GAAP nancial measures may vary materially from the corresponding GAAP nancial measures. For the full year 2026, the Company currently expects certain expenses, which are reconciling items to net loss, to be in the ranges re ected above. Actual results may vary and are subject to a number of risks and uncertainties, many of which are beyond our control. See “Forward-Looking Statements.” Investor Call Lumen’s management team will host a conference call at 5:00 p.m. ET today, Aug 4, 2026. The conference call will be streamed live over the Lumen website at ir.lumen.com. Additional information regarding second quarter 2026 results, including the presentation materials, will be available on the Investor Relations website prior to the call. A webcast replay of the call will also be available on our website for one year. About Lumen Technologies: Lumen is unleashing the world's digital potential. We ignite business growth by connecting people, data, and applications – quickly, securely, and e ortlessly. As the trusted network for AI, Lumen uses the scale of our network to help companies realize AI's full potential. From metro connectivity to long-haul data transport to our edge cloud, security, managed service, and digital platform capabilities, we meet our customers’ needs today and as they build for tomorrow. For news and insights visit news.lumen.com, LinkedIn: /lumentechnologies, X: @lumentechco, Facebook: /lumentechnologies, Instagram: @lumentechnologies and YouTube: /lumentechnologies. Lumen and Lumen Technologies are registered trademarks of Lumen Technologies LLC in the United States. Lumen Technologies LLC 5
Page 6
is a wholly-owned a liate of Lumen Technologies, Inc. Forward-Looking Statements Except for historical and factual information, the matters set forth in this release and our other oral or written statements identi ed by words such as “estimates,” “expects,” “anticipates,” “believes,” “plans,” “intends,” “will,” and similar expressions with respect to the future are forward-looking statements as de ned by the federal securities laws, and are subject to the “safe harbor” protections thereunder. The forward-looking statements included in this release including without limitation statements regarding our future nancial results of operations, cash ows, or nancial condition, our modernization e orts and related target cost savings, expectations regarding the timing and amount of tax refunds, our long-term framework and progress toward nancial and operational goals outlined at Investor Day; our ability to improve our business revenue mix, grow strategic revenues, increase adoption and usage of our digital networking and Network-as-a-Service o erings, and execute our AI, multi-cloud and digital platform strategies; our ability to realize anticipated bene ts from the Alkira acquisition, including enhanced digital networking capabilities for enterprises connecting clouds, sites, partners and AI workloads, our product rationalization, workforce, network infrastructure and IT systems initiatives, including the anticipated timing and amount of related cost savings and capital expenditures; our ability to redeploy resources toward higher-growth digital opportunities; our ability to complete, integrate or realize anticipated bene ts from divestitures, transition and separation services, debt transactions, re nancing activities and other strategic transactions; and the assumptions on which they are based are not guarantees of future results and are based on current expectations only, are inherently speculative, and are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties include those described in our Securities and Exchange Commission ("SEC") lings, including those set forth in the Risk Factors section and under the heading "Special Note Regarding Forward-Looking Statements" in our most recently led Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 to be led with the SEC, and in our other lings with the SEC. Additional factors or risks that we currently deem immaterial, that are not presently known to us, or that arise in the future could also cause our actual results to di er materially from our expected results. Given these uncertainties, investors are cautioned not to unduly rely upon our forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Furthermore, any information about our intentions contained in any of our forward-looking statements re ects our intentions as of the date of such forward-looking statement, and is based upon, among other things, our assessment of regulatory, technological, industry, competitive, economic, or market conditions as of such date. We may change our intentions, strategies or plans (including our capital allocation plans) at any time and without notice, based upon any changes in such 6
Page 7
factors or otherwise, and we undertake no obligation to make any public announcement of such changed intentions, except to the extent required by applicable law. Lumen Technologies, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED) ($ in millions, except per share amounts; shares in thousands) Three months ended June 30,(Decrease) / Increase Six months ended June 30,(Decrease) / Increase2026 2025 2026 2025 OPERATING REVENUE$ 2,805 3,092 (9)% 5,704 6,274 (9)% OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) 1,415 1,624 (13)% 2,850 3,311 (14)% Selling, general and administrative 779 755 3% 1,573 1,430 10% Net loss (gain) on sale of business 31 — nm (565) — nm Depreciation and amortization 668 688 (3)% 1,332 1,401 (5)% Goodwill impairment— 628 nm — 628 nm Total operating expenses2,893 3,695 (22)% 5,190 6,770 (23)% OPERATING (LOSS) INCOME(88) (603) (85)% 514 (496) nm OTHER (EXPENSE) INCOME Interest expense(201) (338) (41)% (426) (685) (38)% Net gain (loss) on early retirement of debt6 (236) nm (220) (271) (19)% Other income, net28 28 —% 54 58 (7)% Total other expense, net(167) (546) (69)% (592) (898) (34)% Income tax (bene t) expense(54) (234) (77)% 323 (278) nm NET LOSS $ (201) $ (915) (78)%$ (401) $ (1,116) (64)% BASIC LOSS PER SHARE$ (0.20) (0.92) (78)% (0.40) (1.12) (64)% DILUTED LOSS PER SHARE$ (0.20) (0.92) (78)% (0.40) (1.12) (64)% WEIGHTED AVERAGE SHARES OUTSTANDING Basic 1,004,104994,543 1% 1,001,498992,906 1% Diluted 1,004,104994,543 1% 1,001,498992,906 1% nm - Percentages greater than 200% and comparisons between positive and negative values are considered not meaningful. 7
Page 8
Lumen Technologies, Inc. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2026 AND DECEMBER 31, 2025 (UNAUDITED) ($ in millions) June 30, 2026December 31, 2025 ASSETS CURRENT ASSETS Cash and cash equivalents$ 1,876 1,003 Accounts receivable, less allowance of $45 and $671,377 1,314 Assets held for sale — 4,285 Other 856 1,307 Total current assets 4,109 7,909 Property, plant and equipment, net of accumulated depreciation of $24,377 and $23,744 20,300 19,575 OTHER ASSETS Other intangible assets, net 4,040 4,463 Other, net 2,333 2,395 Total other assets 6,373 6,858 TOTAL ASSETS $ 30,782 34,342 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY CURRENT LIABILITIES Current maturities of long-term debt$ 56 88 Accounts payable 1,035 1,508 Accrued expenses and other liabilities Salaries and bene ts 654 854 Income and other taxes 755 279 Current operating lease liabilities 289 266 Interest 176 149 Other 299 203 Liabilities held for sale — 38 Current portion of deferred revenue999 1,005 Total current liabilities 4,263 4,390 LONG-TERM DEBT 13,150 17,353 DEFERRED CREDITS AND OTHER LIABILITIES Deferred income taxes, net 1,787 2,270 Bene t plan obligations, net 1,932 2,103 Deferred revenue 8,178 6,406 Other 2,960 2,937 Total deferred credits and other liabilities14,857 13,716 STOCKHOLDERS' DEFICIT Common stock 19,178 19,185 Accumulated other comprehensive loss(564) (601) Accumulated de cit (20,102) (19,701) Total stockholders' de cit (1,488) (1,117) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT$ 30,782 34,342 8
Page 9
Lumen Technologies, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED) ($ in millions) Six months ended June 30, 2026 2025 OPERATING ACTIVITIES Net loss $ (401) (1,116) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,332 1,401 Net gain on sale of business (565) — Goodwill impairment — 628 Deferred income taxes (484) (409) Provision for uncollectible accounts 7 31 Net loss on early retirement of debt 220 271 Stock-based compensation 31 22 Changes in current assets and liabilities, net423 (50) Retirement bene ts (130) (1) Change in deferred revenue 1,772 718 Changes in other assets and liabilities, net65 69 Other, net 24 101 Net cash provided by operating activities2,294 1,665 INVESTING ACTIVITIES Capital expenditures (1,845) (1,682) Proceeds from sale of business 4,977 — Proceeds from sale of property, plant and equipment, and other assets21 31 Other, net 3 9 Net cash provided by (used in) investing activities3,156 (1,642) FINANCING ACTIVITIES Net proceeds from issuance of long-term debt1,728 4,261 Payments of long-term debt (6,253) (4,284) Debt issuance and extinguishment costs and related fees(15) (308) Other, net (37) (13) Net cash used in nancing activities(4,577) (344) Net increase (decrease) in cash, cash equivalents and restricted cash873 (321) Cash, cash equivalents and restricted cash at beginning of period1,014 1,900 Cash, cash equivalents and restricted cash at end of period$ 1,887 1,579 Cash, cash equivalents and restricted cash: Cash and cash equivalents $ 1,876 1,568 Restricted cash 11 11 Total $ 1,887 1,579 Non-GAAP Financial Measures In addition to providing key metrics for management to evaluate the Company's performance, the Company 9
Page 10
believes that the non-GAAP nancial measures described below and included in this release and which may be referred to on the conference call discussing the Company's second quarter 2026 nancial results assist investors in their understanding of period-to-period operating performance and in identifying historical and prospective trends. Non-GAAP nancial measures are not presented to be replacements or alternatives to the measures prepared in accordance with accounting principles generally accepted in the United States (GAAP), and investors are urged to consider these non-GAAP nancial measures in addition to, and not in substitution for, or superior to, nancial measures prepared in accordance with GAAP. Lumen may calculate its non-GAAP nancial measures di erently from similarly titled measures presented by other companies. Reconciliations of non-GAAP nancial measures to the most comparable GAAP measures are included in the attached nancial schedules and our Investor Relations website. Special Items. We use the term Special Items to describe items that impacted a period’s statement of operations or cash ows which the Company believes do not relate to the ordinary course of the Company's business and do not re ect the Company's underlying business performance. As described herein, the Company presents certain GAAP and non-GAAP nancial measures both including and excluding the e ects of Special Items. The largest components of our Special Items re ected in this release are net gain on sale of business related to the sale of our Mass Markets Fiber-to-the-Home business to AT&T and net losses associated with the early retirement of debt. The other main components of our Special Items include Modernization and Simpli cation costs, Transaction and Separation costs, and Income from Transition and Separation Services. Modernization and Simpli cation costs are associated with a multi-year transformation initiative to streamline our network infrastructure, product portfolio, and IT systems, and to modernize our workforce, designed to deliver $1 billion in annualized cost savings on a run-rate basis exiting 2027. Transaction and Separation costs re ect transaction and separation costs associated with the sale of our Mass Markets Fiber-to-the-Home business to AT&T and additional transaction and separation costs associated with supporting transition and separation services of our previous divestitures. Income from Transition and Separation Services includes charges we billed for transitional services and IT professional services provided to the purchasers in connection with our recent divestitures. Other items impacting Adjusted EBITDA and Net Loss include remittance of awards and associated fees related to the voluntary relinquishment of our program awards under the FCC's Rural Digital Opportunity Fund (“RDOF”), and certain charges primarily related to the recognition of losses on disposal of certain operating assets related to our divestitures and certain charges or payments related to litigation ‑ related expenses arising from speci c matters that are not indicative of normal, recurring business activities. Net Loss Excluding Special Items ($) is de ned as Net Loss from the Statements of Operations excluding Special Items impacting Net Loss, which are further described above and detailed in the attached schedules. The Company 10
Page 11
also presents Diluted Net Loss per Share excluding Special Items, calculated as Net Loss excluding Special Items divided by the weighted average of the diluted number of common shares outstanding in the relevant period. Net Loss Excluding Special Items (%) is de ned as Net Loss excluding Special Items divided by total revenue. Management believes that Net Loss excluding Special Items, Net Loss Margin excluding Special Items and Diluted Net Loss Per Share excluding Special Items are relevant and useful metrics to provide to investors. There are material limitations to using these non-GAAP nancial measures, including the di culty associated with comparing companies that use similarly-titled performance measures whose calculations may di er from our calculations. Additionally, by excluding Special Items, these non-GAAP nancial measures may exclude items that investors believe are important components of our performance. Such measures should not be considered a substitute for, or superior to, other measures of nancial performance reported in accordance with GAAP. Adjusted EBITDA ($) is de ned as Net Loss from the Statements of Operations before Income tax expense (bene t), Total other expense, net (which represents the net impact of interest expense, net loss on early retirement of debt, and other income, net), depreciation and amortization expense, stock-based compensation expense, and goodwill impairment. The Company also presents Adjusted EBITDA excluding Special Items, which are further described above. Adjusted EBITDA Margin (%) is de ned as Adjusted EBITDA divided by total revenue. The Company also presents Adjusted EBITDA Margin excluding Special Items, which are further described above. Management believes that Adjusted EBITDA and Adjusted EBITDA Margin (with and without Special Items) are relevant and useful metrics to provide to investors, as they are an important part of our internal reporting and are key measures used by management to evaluate pro tability and operating performance of Lumen and to make resource allocation decisions. Management believes such measures are especially important in a capital-intensive industry such as telecommunications. Management also uses Adjusted EBITDA and Adjusted EBITDA Margin (and similarly uses these terms excluding Special Items) to compare our performance to that of our competitors and to eliminate certain non-cash and non-operating items in order to consistently measure from period to period our ability to fund capital expenditures and growth, service debt, and determine bonuses. Adjusted EBITDA excludes stock-based compensation expense because of the non-cash nature of this item. Adjusted EBITDA also excludes Total other expense, net (which represents the net impact of interest expense, net loss (gain) on early retirement of debt, and other income, net) and Income tax expense (bene t). There are material limitations to using Adjusted EBITDA and Adjusted EBITDA Margin (in each case, with and without Special Items) as a nancial measure, including the di culty associated with comparing companies that use 11
Page 12
similarly-titled performance measures whose calculations may di er from our calculations. Additionally, by excluding the above-listed items, Adjusted EBITDA and Adjusted EBITDA Margin (in each case, with and without Special Items) may exclude items that investors believe are important components of our performance. Adjusted EBITDA and Adjusted EBITDA Margin (either with or without Special Items) should not be considered a substitute for, or superior to, other measures of nancial performance reported in accordance with GAAP. Capital Expenditures excluding Special Items is de ned as Capital Expenditures from the Statements of Cash Flows excluding Special Items. Management believes that Capital Expenditures excluding Special Items is a relevant and useful metric to provide investors. There are material limitations to using Capital Expenditures excluding Special Items, including the di culty associated with comparing companies that use similarly-titled performance measures whose calculations may di er from our calculations. Additionally, by excluding Special Items, these non-GAAP nancial measures may exclude items that investors believe are important components of our performance. Capital Expenditures excluding Special Items should not be considered a substitute for, or superior to, other measures of nancial performance reported in accordance with GAAP. Unlevered Cash Flow is de ned as net cash provided by (used in) operating activities less capital expenditures, plus cash interest paid and less interest income, all as disclosed in the Statements of Cash Flows. Management believes that Unlevered Cash Flow is a relevant metric to provide to investors, because it re ects the operational performance of Lumen and, measured over time, enables management and investors to monitor the underlying business’ growth pattern and ability to generate cash. The Company also presents Unlevered Cash Flow excluding Special Items, which are further described above. There are material limitations to using Unlevered Cash Flow (with or without Special Items) to measure our cash performance as it excludes certain material items that investors may believe are important components of our cash ows. Comparisons of our Unlevered Cash Flow to that of some of our competitors may be of limited usefulness as other companies may use similarly-titled performance measures whose calculations may di er from our calculations. Additionally, this nancial measure is subject to variability quarter over quarter as a result of the timing of payments related to accounts receivable, accounts payable, payroll, and capital expenditures. Unlevered Cash Flow (with or without Special Items) should not be considered a substitute for, or superior to, other measures of liquidity reported in accordance with GAAP. Free Cash Flow is de ned as net cash provided by (used in) operating activities less capital expenditures as disclosed in the Statements of Cash Flows. Management believes that Free Cash Flow is a relevant metric to provide 12
Page 13
to investors, as it is an indicator of our ability to generate cash to service our debt. The Company also presents Free Cash Flow excluding Special Items, which are further described above. There are material limitations to using Free Cash Flow (with or without Special Items) to measure our performance as it excludes certain material items that investors may believe are important components of our cash ows. Comparisons of our Free Cash Flow to that of some of our competitors may be of limited usefulness as other companies may use similarly-titled performance measures whose calculations may di er from our calculations. Additionally, this nancial measure is subject to variability quarter over quarter as a result of the timing of payments related to interest expense, accounts receivable, accounts payable, payroll and capital expenditures. Free Cash Flow (either with or without Special Items) should not be considered a substitute for, or superior to, other measures of liquidity reported in accordance with GAAP. 13
Page 14
Lumen Technologies, Inc. Non-GAAP Special Items (UNAUDITED) ($ in millions) Actual QTD Actual YTD Special Items Impacting Adjusted EBITDA2Q26 2Q25 2Q26 2Q25 Net loss (gain) on sale of business$ 31 — (565) — Transaction and separation costs(1) 48 92 101 108 Modernization and simpli cation(2) 116 41 222 91 Other(3) 9 19 16 52 Total Special Items impacting Adjusted EBITDA$ 204 152 (226) 251 Actual QTD Actual YTD Special Items Impacting Net Loss2Q26 2Q25 2Q26 2Q25 Net loss (gain) on sale of business$ 31 — (565) — Transaction and separation costs(1) 48 92 101 108 Modernization and simpli cation(2) 116 41 222 91 Other(3) 9 19 16 52 Goodwill impairment — 628 — 628 Net (gain) loss on early retirement of debt(4) (6) 236 220 271 Income from transition and separation services(5) (35) (39) (76) (76) Total Special Items impacting Net Loss163 977 (82) 1,074 Income tax e ect of Special Items(6) (35) (91) (57) (116) Total Special Items impacting Net Loss, net of tax$ 128 886 (139) 958 Actual QTD Actual YTD Special Items Impacting Cash Flows2Q26 2Q25 2Q26 2Q25 Transaction and separation costs(1) $ 28 10 112 26 Modernization and simpli cation(2)(7) 120 57 230 95 Capital expenditures for modernization and simpli cation(8) 122 67 206 105 Income from transition and separation services(5) (20) (27) (34) (81) Other(9) 8 5 21 17 RDOF Relinquishment Payment(10) — — 99 — Total Special Items impacting Cash Flows$ 258 112 634 162 (1) Primarily re ects transaction and separation costs associated with (i) the Q1 2026 sale of our Mass Markets Fiber-to-the-Home business to AT&T, (ii) additional transaction and separation costs associated with supporting transition and separation services of our previous divestitures and (iii) the Q2 2025 expense of $49 million for fees related to the relinquishment of our funding received under the FCC's Rural Digital Opportunity Fund. (2) Includes costs incurred related to network infrastructure, product portfolio, IT systems, and workforce modernization designed to deliver $1 billion annualized in cost savings on a run-rate basis exiting 2027. (3) Includes primarily the recognition of a loss on disposal of certain operating assets in Q1 2025 related to our divestitures. (4) Re ects net (gain) loss as a result of cash tender o ers and re nancing of certain debt instrument and credit facilities. (5) Re ects income from transition and separation services and includes charges we billed for transition services and IT professional services provided to the purchasers in connection with our divestitures. (6) Tax e ect calculated using the annualized e ective statutory tax rate, excluding any non-recurring discrete items, which was 21.3% for Q2 2026, 25.0% for Q1 2026, and 26.0% for Q1 and Q2 2025. (7) Includes the related cash payments of expenses captured as described in footnote 2 above. (8) Includes primarily the related cash payments for capital expenditures incurred under the programs described in footnote 2 above. (9) Includes primarily payments related to litigation ‑ related expenses arising from speci c matters that are not indicative of normal, 14
Page 15
recurring business activities. (10) Re ects the Q1 2026 payment for remittance of awards and associated fees related to the voluntary relinquishment of our RDOF awards. As a result, we will no longer receive funding through the RDOF program. Lumen Technologies, Inc. Non-GAAP Cash Flow Reconciliation (UNAUDITED) ($ in millions) Actual QTD Actual YTD 2Q26 2Q25 2Q26 2Q25 Net cash provided by operating activities(1) $ 971 570 2,294 1,665 Capital expenditures (902) (891) (1,845) (1,682) Free Cash Flow(1) 69 (321) 449 (17) Cash interest paid 122 396 371 676 Interest income (34) (21) (47) (42) Unlevered Cash Flow(1) $ 157 54 773 617 Free Cash Flow(1) $ 69 (321) 449 (17) Transaction and separation costs(2) 28 10 112 26 Modernization and simpli cation(2) 120 57 230 95 Capital expenditures for modernization and simpli cation(2) 122 67 206 105 Income from transition and separation services(2) (20) (27) (34) (81) Other(2) 8 5 21 17 RDOF Relinquishment Payment(2) — — 99 — Free Cash Flow excluding Special Items(1) $ 327 (209) 1,083 145 Unlevered Cash Flow(1) $ 157 54 773 617 Transaction and separation costs(2) 28 10 112 26 Modernization and simpli cation(2) 120 57 230 95 Capital expenditures for modernization and simpli cation(2) 122 67 206 105 Income from transition and separation services(2) (20) (27) (34) (81) Other(2) 8 5 21 17 RDOF Relinquishments Payment(2) — — 99 — Unlevered Cash Flow excluding Special Items(1) $ 415 166 1,407 779 Capital expenditures $ (902) (891) $ (1,845) (1,682) Capital expenditures for modernization and simpli cation(2) 122 67 206 105 Capital expenditures excluding Special Items$ (780) (824) $ (1,639) (1,577) (1) Includes $729 million of proceeds from the Mass Markets Fiber-to-the-Home divestiture for the allocated fair value associated with contractual credits and commercial agreements that are classi ed as cash ow from operations and the impact of a $101 million voluntary pension contribution in Q1 2026. (2) Refer to Non-GAAP Special Items table for details of the Special Items impacting cash ows included above. 15
Page 16
Lumen Technologies, Inc. Adjusted EBITDA and Reconciliation of Non-GAAP Financial Measures (UNAUDITED) ($ in millions) Actual QTD Actual YTD 2Q26 2Q25 2Q26 2Q25 Net loss $ (201) (915) (401) (1,116) Income tax expense (bene t)(54) (234) 323 (278) Total other expense, net167 546 592 898 Depreciation and amortization expense668 688 1,332 1,401 Stock-based compensation expense18 12 31 22 Goodwill impairment — 628 — 628 Adjusted EBITDA $ 598 725 1,877 1,555 Net loss (gain) on sale of business(1) 31 — (565) — Transaction and separation costs(1) 48 92 101 108 Modernization and simpli cation(1) 116 41 222 91 Other(1) 9 19 16 52 Adjusted EBITDA excluding Special Items$ 802 877 1,651 1,806 Net loss $ (201) (915) (401) (1,116) Net loss (gain) on sale of business(1) 31 — (565) — Transaction and separation costs(1) 48 92 101 108 Modernization and simpli cation(1) 116 41 222 91 Other(1) 9 19 16 52 Goodwill impairment(1) — 628 — 628 Net (gain) loss on early retirement of debt(1) (6) 236 220 271 Income from transition and separation services(1) (35) (39) (76) (76) Income tax e ect of Special Items(1) (35) (91) (57) (116) Net loss excluding Special Items(1) $ (73) (29) (540) (158) Total revenue $ 2,805 3,092 5,704 6,274 Net loss margin (7.2)% (29.6)% (7.0)% (17.8)% Net loss margin, excluding special items and income tax e ect thereof (2.6)% (0.9)% (9.5)% (2.5)% Adjusted EBITDA margin21.3% 23.4% 32.9% 24.8% Adjusted EBITDA margin excluding special items28.6% 28.4% 28.9% 28.8% Net Loss per Common Share - Diluted$ (0.20) (0.92) $ (0.40) (1.12) Net Loss per Common Share - Diluted, Excluding Special Items(1) $ (0.07) (0.03) $ (0.54) (0.16) Weighted Average Shares Outstanding (in millions) - Diluted 1,004.1 994.5 1,001.5 992.9 (1) Refer to Non-GAAP Special Items table for details of the Special Items included above. Media Relations Contacts: Anita Gomes anita.gomes@lumen.com +1 858-229-8538 16
Page 17
Investor Relations Contact: Jim Breen, CFA investor.relations@lumen.com +1 603-404-7003 Source: Lumen Technologies 17