0000018926-25-000093
SEC filingConsolidated revenue declined 5% YoY in Q2 2025 due to Business and Mass Markets declines; $628M goodwill impairment drove operating loss.
For the three months ended June 30, 2025, Lumen reported consolidated operating revenue of $3,092 million, a decrease of $176 million (5%) from $3,268 million in the same period of 2024. The decline was driven by a $88 million decrease in Business segment revenue and an $88 million decrease in Mass Markets segment revenue. Operating expenses increased by $562 million (18%) to $3,695 million, primarily due to a $628 million goodwill impairment charge. Consequently, operating income swung from a profit of $135 million to a loss of $603 million. Net loss was $915 million compared to a loss of $49 million in the prior year, with basic EPS of ($0.92) versus ($0.05). For the six-month period, revenue declined 4% to $6,274 million, operating loss was $496 million (versus income of $180 million), and net loss was $1,116 million (versus income of $8 million). Adjusted EBITDA, a non-GAAP measure, decreased 17% to $725 million in Q2 2025 from $875 million in Q2 2024, reflecting higher costs and revenue pressure.
Business Segment: Revenue in Q2 2025 was $2,490 million, down 3% YoY, driven by declines in Nurture (-15% to $634 million), Harvest (-2% to $554 million), and Other (-11% to $175 million), partially offset by growth in Grow (+6% to $1,127 million). The Grow category benefited from dark fiber and conduit (+$37 million) and IP services (+$17 million). Segment expenses decreased 5%, leading to adjusted EBITDA of $1,152 million (margin 46% vs 45% in Q2 2024).
Mass Markets Segment: Revenue was $602 million, down 13% YoY, with Fiber Broadband up 20% (+$36 million) but Other Broadband down 18% (-$53 million) and Voice and Other down 34% (-$71 million) due to copper customer losses and RDOF relinquishment. Segment expenses decreased 9%, yielding adjusted EBITDA of $317 million (margin 53% vs 54% in Q2 2024).
Lumen is executing a strategic transformation centered on digital networking and AI. The planned divestiture of the Mass Markets fiber-to-the-home business to AT&T for $5.75 billion is expected to close in H1 2026, with net proceeds used to pay down $4.8 billion in superpriority debt, reducing annual interest expense by ~$300 million and fiber-related capex by ~$1 billion. The company projects 2025 capital expenditures of $4.1-4.3 billion. Management sees continued demand for dark fiber and IP services (Grow), while legacy revenue (Nurture, Harvest) will continue to decline. The OBBBA tax legislation is expected to significantly reduce 2025 federal income tax liability, with a $400 million refund claim filed. No specific revenue or earnings guidance was provided, but the focus remains on debt reduction and investing in high-growth network services.
CFO of $1.665B significantly exceeded net loss of $(1.116)B, driven by non-cash charges: D&A $1.401B, goodwill impairment $0.628B, and deferred tax benefit $0.409B. Working capital provided net inflows of $0.430B (accounts payable +$0.172B, deferred revenue +$0.718B, partially offset by receivables -$0.080B and other current liabilities -$0.229B). Capex of $(1.682)B exceeded CFO, implying negative free cash flow. No share repurchases or dividends were reported. Financing activities show net debt paydown of $23M despite $4.261B issuance and $4.284B payments, plus $0.308B debt issuance costs. Cash balance decreased $0.321B to $1.579B. Key anomaly: large operating cash flow despite net loss, typical of capital-intensive telecom with high D&A.