Lumen’s second quarter was marked by a negative market reaction, as revenue declined and missed Wall Street’s expectations. Management attributed this underperformance to the $46 million one-time giveback related to the Rural Digital Opportunity Fund (RDOF) and persistent declines in legacy business lines. CEO Kate Johnson described the quarter as “a very productive” one, emphasizing the sale of the consumer fiber-to-the-home business to AT&T and progress on building the AI-ready network backbone. Management also highlighted ongoing cost reduction efforts and operational streamlining as key contributors to mitigating the impact of these headwinds.
Is now the time to buy LUMN? Find out in our full research report (it’s free).
Lumen (LUMN) Q2 CY2025 Highlights:
- Revenue: $3.09 billion vs analyst estimates of $3.11 billion (5.4% year-on-year decline, 0.7% miss)
- Adjusted EPS: -$0.03 vs analyst estimates of -$0.27 (88.7% beat)
- Adjusted EBITDA: $877 million vs analyst estimates of $833.8 million (28.4% margin, 5.2% beat)
- EBITDA guidance for the full year is $3.3 billion at the midpoint, below analyst estimates of $3.33 billion
- Operating Margin: -19.5%, down from 4.1% in the same quarter last year
- Market Capitalization: $4.05 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Lumen’s Q2 Earnings Call
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Michael Ian Rollins (Citi) asked how much of the North American enterprise revenue trend was due to operational progress versus temporary items. CFO Chris Stansbury emphasized the lasting impact of 'Grow' product growth and said Harvest revenue gains from public sector work are likely temporary.
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Sebastiano Carmine Petti (JPMorgan) sought clarity on cost savings progress and implications for 2026 EBITDA. Stansbury confirmed cost-out initiatives are ahead of schedule but said 2026 guidance remains unchanged until further visibility.
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Batya Levi (UBS) asked about incremental costs included in EBITDA guidance and the margin impact of new PCF deals. CEO Kate Johnson explained most new contracts are higher margin, lower risk overpull work; Stansbury detailed short-term cost headwinds from cloud migration and forced disconnects.
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Nicholas Ralph Del Deo (MoffettNathanson) pressed for details on temporary rate increases in public sector Harvest revenue. Stansbury stated the impact is mixed—offsetting higher costs in some cases, but temporary overall.
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Gregory Bradford Williams (TD Cowen) questioned the economics and timing of new digital ecosystem partnerships. Johnson described the marketplace model, explaining that integrated offerings with technology partners should lower Lumen’s cost of sale and expand commercial reach.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will be watching (1) the pace of NaaS adoption and integration with technology partner marketplaces, (2) progress in executing PCF contracts and the build-out of AI-ready fiber infrastructure, and (3) sustained cost reductions and margin stabilization as legacy businesses are wound down. Execution on the AT&T transaction and realization of associated financial benefits will also be key milestones.
Lumen currently trades at $3.94, down from $4.48 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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