Lumen Technologies Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Rollins - Citi - Analyst : Two topics, if I could, please. First, on the Business revenue. Just curious if you could provide some additional context on the reasons that the Grow revenue was up 10% year over year during the first quarter, including how much may be coming from existing versus new customers? And can this bucket continue to sustain double-digit growth, as you look out over the next few quarters? And then, just a second topic: you mentioned earlier some of the legacy TDM revenue that might need to come out. I'm just curious what happened to the what was anticipated to be front-end loaded during the first quarter, in terms of some of this churn, including within the public sector? And how much is left that may come out during the second quarter or the rest of this year?

Question: Batya Levi - UBS - Analyst : Can you provide, maybe, a little bit more color on how cloud economics is different from telco? And if you could like size the difference in margins for both worlds. I think that would be helpful to understand it. And could some of the strategies that you're implementing on the cloud communications side could also be implemented on mass markets, maybe, to accelerate the profitability of that unit? And just a quick follow-up on the fiber side. As you continue the strategic review, can you just remind us on how you would think about incremental fiber builds and if you're seeing any change in cost to both?

Question: James Schneider - Goldman Sachs - Analyst : Two, if I may. One is relative to the PCF pipeline. I'm just curious how you would expect the conversion of the remaining $3.5 billion of the pipeline to potentially roll in? And would you expect additional hyperscaler deals to precede enterprise deals? Or you think it could be a little bit more enterprise-loaded in the near term? And then, maybe, secondly, with respect to the overall enterprise spending environment, I believe in the FAQ, you referenced that you haven't seen any change to that, yet, relative to those more advanced fiber deals. But could you, maybe, address the flip side of that? Typically, in times of budget pressure, enterprises consider decommissioning legacy servers a little bit faster than they might have otherwise. So I'm wondering if you see any potential for downside on that side of things.

Question: Nicholas Del Deo - MoffettNathanson - Analyst : I had two. First, going back to Public Sector. Chris, last quarter, you had talked about some large payments you got from Middle Mile project in California that helped revenue there. Did something similar happen again this quarter? I'm just trying to get a bit of a better sense of the underlying trends there. And then, second, for Kate, how are you pricing some of the new services that you walked us through on the digital platform? Are you thinking that you're going to price at a discount because they're more efficient and easier to deliver? Or are you thinking about pricing at a premium because you think they're better products?

Question: Gregory Williams - TD Cowen - Analyst : Just two questions. One, I think you noted CapEx is $791 million. It sounds like it's going to ramp up pretty fast. And I know, Chris, you mentioned free cash flow could be lumpy. But can you help us, in a sense, of the cadence of the CapEx spend through the balance of the year? And same question on the upfront hyperscale fees that you get. That would help. Second question, just around Public Sector. You noted it was a point of strength, which sounds encouraging because the question I have is: Are you seeing any risk on the DOGE efficiency cuts in the sector? You noted Public could be strong. But a few of your peers noted some pressure from government cuts.

Question: Frank Louthan - Raymond James - Analyst : More color on your NaaS product. How are you differentiating yourself in the market with that and what traction you're getting there? And then, secondly, one more clarification on the Public Sector. Can you give us some color on the weakness you referenced? Is it going to be weaker, relative to what you reported this quarter? Or, going forward, from this level? How should we think about it?

Question: Frank Louthan - Raymond James - Analyst : The first part of the question was around the connectivity fabric, the NaaS product. How are you differentiating that in the industry? Who's buying that product? Where are you finding traction with that in the market?

Question: Jonathan Chaplin - New Street Research - Analyst : Just one question for Kate. The explanation of how the Lumen connectivity platform is going to be disruptive to the industry was really helpful, Kate. I was wondering if you could give us some context on who's disrupted? So on the revenue side, I understand how the platform facilitates revenue growth for customers. How much of the revenue that goes on to that platform is coming at expense of your Nurture and Harvest categories? And then, how much, from outside of Lumen? And on the cost disruption side, who's getting disrupted there? Is it the traditional data center companies or is it your enterprise-competitive AT&T and Verizon?