Lumen Technologies, Inc.

Greetings, everyone, and welcome to Lumen Technologies' fourth quarter and full year 2025 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the star followed by one on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Tuesday, February 3, 2026. Your speakers for today are Kate Johnson, CEO, and Chris Stansbury, CFO. I would now like to turn the conference over to Jim Breen, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining Luma Technologies on today's call. On the call today are Kate Johnson, President and Chief Executive Officer, and Chris Stansbury, Executive Vice President and Chief Financial Officer. Before we begin, this conference may include forward-looking statements subject to certain risks and uncertainties. All forward-looking statements should be considered in conjunction with the cautionary statements and the risk factors in our SEC filings. We will be referring to certain non-GAAP financial measures reconciled to the most comparable GAAP measures, which can be found on our earnings press release. In addition, certain metrics discussed today exclude costs for special items that detail the earnings materials, which can be found on our investor relations section of the Lumen website. With that, I'll turn it over to Kate.

Thanks, Jim, and thanks, everybody, for joining the call. We had a great 2025, laying a solid foundation to execute our strategy to become the trusted network for AI. And, of course, the big news is that yesterday we closed the transaction with AT&T. This marks a defining moment for Lumen, completing our pivot to become a simpler, stronger, enterprise-focused technology infrastructure company. The impact of the deal on our capital structure and financials is very significant. With the $4.8 billion in net proceeds and cash on hand, we've paid off all our super priority bonds in the last 24 hours. Recall that in the last month, we also paid off our second lien debt. Our total debt now stands at less than $13 billion, and our net leverage has been reduced by a full turn, now below four times. All of this capital markets activity has reduced our interest expense by roughly $500 million, or nearly 45% down from 2025 levels. And lastly, this divestiture reduces our annual CapEx by over a billion dollars. driving a significant reduction in capital intensity as we stop fiber to the home build and focus our capital on building a digital network services company. Closing this transaction marks a new day for Lumen. We're focused on serving public and private enterprises as the trusted network for AI. And our 2025 results clearly demonstrate the power of this focus. We reported strong 2025 financial results for revenue, EBITDA, and free cash flow. Our business revenue mix continues to improve with fourth quarter North American enterprise revenue, grow revenue, totaling 52%, eclipsing nurture and harvest revenues. We continue to expect this trend to inflect our business revenue back to growth in 2028. EBITDA was at the high end of our guidance range, which included the RDOF give back in 2Q, and free cash flow was solid, even without the $400 million tax refund that is now expected to come in the first half of 2026. We exceeded our increased target for cost reduction, ending the year at over 400 million in run rate savings. Exiting 2026, we're targeting another $300 million of cost out, totaling $700 million run rate savings, which positions us to hit our three-year $1 billion cost out target as well as our expected EBITDA growth this year, as previously guided. Also noteworthy, we had a banner performance in PCF sales in the fourth quarter. You may recall that just over 18 months ago, we announced our first $5.5 billion in PCF deals with a goal of reaching $12 billion over time. As of today, we are now at nearly $13 billion with more deals in the pipeline. And we had another strong quarter of growth in our NAS business. Rising ports per customer show that enterprises are starting to standardize on the Lumen fabric as their programmable network control plane for Cloud 2.0. Each additional port expands our platform economics by unlocking higher margin digital services revenue, accelerating cloud and AI on-ramp adoption, and deepening ecosystem network effects for Lumen and partner delivered services. Lastly, we added two amazing new executives to our team. Jim Fowler, our new chief technology and product officer, who is uniquely suited to help us execute our vision. And Jeff Sherriss, our new chief revenue officer, who is uniquely suited to help us drive commercial scale. We're proud of the team we've built and all of their accomplishments throughout 2025. And we're pleased to see both the credit and equity markets rewarding the Lumen team for all of that work. Looking ahead to 26 and beyond i'd like to reiterate our belief that there's an urgent need for structural change in network architectures and business models to more closely aligned with customer needs in a multi cloud Ai first world. This is the investment thesis behind our three pillar strategy as we build the backbone for Ai cloudify and identify telecom and expand our connected ecosystem i'll briefly touch on each strategic imperative, starting with the backbone work. We successfully reached our 2025 goal of implementing 17 million intercity fiber miles. The roughly $2.5 billion of new PCF deals that we inked in Q4 will raise our total network expansion to a whopping 58 million fiber miles in 2031, while simultaneously expanding our capacity for enterprise customers. But as we've shared, Our physical expansion is about more than just the number of fiber miles. It's also about giving customers bandwidth expansion, lightning fast implementation timelines, rich data center interconnect, and investment in geographies where they need it most. And as we all know, every fiber mile isn't created equal. That's why we're investing significantly in three major network upgrades. building 400 gig rapid route waves across 36 routes with more on the way, enabling 400 gig services for data centers across key markets, and focusing on metro expansion so that we connect the most needed routes, data centers, and cities across America. To support this work, we've expanded our partnership with Corning, ensuring we have priority access to the newest state of the art fiber technology delivering the AI backbone for today's and tomorrow's most important customers. In a world of Cloud 2.0, the largest tech companies are choosing Lumen to help construct the supply side of the AI economy. And that's because of our physical network prowess. Our network size, scale, and quality position us to provide superior performance on three key metrics emerging in the AI race. Fastest time to first token, GPU idle time, and interconnect latency. What's more, as data centers begin to decentralize to accommodate energy supply constraints, our vast network provides valuable proximity. Together, our capital investments and PCF deals create a strategic competitive advantage, and we're expanding and upgrading our network alongside the most influential companies in the AI race. making it easier for enterprises to consume AI. And speaking of the consumption side of the economy, this is where businesses are recognizing that yesterday's network doesn't support AI and Cloud 2.0. They need quick, secure, effortless, on-demand services to move their data from anywhere to anywhere in real time. That's why Lumen is cloudifying and agentifying the network. Think of it as building a programmable network platform that finally puts networking on par with compute and storage in the world of cloud. And our customers love it, as shown by another great quarter of adoption metrics. The number of active customers grew by 29% quarter over quarter. The number of NAS fabric ports deployed grew 31%. And the number of services sold grew 26% in that same period. Recall that in October, We announced NAS Internet On Demand, OffNet, and while it's still early, we believe OffNet growth significantly expands our addressable market for NAS services. Great brands across industries are adopting this new capability, with more than 900 OffNet ports sold so far. The investments we're making in building a programmable network are driving significant growth in high-value digital revenues. which we believe will ultimately drive higher return for Lumen investors. And we'll share more on this and Project Berkeley at Investor Day. Finally, let's talk about the progress we're making since launching the Lumen connected ecosystem six months ago. The team is fully staffed and building a commercial flywheel to marry AI ready Lumen validated designs with partner cloud solutions, enhancing joint value props and accelerating our collective time to value for customers. Not only do these partnerships give us greater commercial reach, they give us a seat at the table where business decisions are being made. Instead of networking being purchased by infrastructure procurement teams as an afterthought, our Lumen team is included in the entire lifecycle of the sale, elevating awareness of the critical importance of network and differentiating our company in the marketplace. We've signed 16 connected ecosystem partnerships to date, yielding more than 180 potential sales opportunities so far. Recently, we've made a slew of announcements, including at AWS reInvent, we shared a gated preview for AWS Interconnect to help AI workloads dynamically scale bandwidth while providing high availability and security. At Microsoft Inspire, we announced Lumen Defender with Microsoft Sentinel. And at MeterUp, We launched our joint network management offering to give customers preferred connectivity solutions and faster time to value. With every connected ecosystem partner, we're working to deliver scenarios and outcomes that transcend legacy telco capabilities. We're uniquely positioned to do this because of our API-driven, programmable network and digital services portfolio, all of which enable a new world of customer-obsessed, partner-delivered technology solutions. All right, to wrap it up, it's a new day for this company. Lumen is separating itself from the traditional telecom pack. It's not a story about sharetake or price protection in a declining legacy market. This is about taking a once commoditized asset, innovating new architectures and capabilities, and commercializing it through a modern business model so that enterprises can focus on using AI to reimagine their workflows and business models during the biggest technology shift in history. It's a strategy that for several quarters has helped us slow overall revenue decline more effectively than our peers. And as our strategic revenues eclipse the size of our declining legacy revenue, it's a strategy that we expect will ultimately deliver new revenue streams that are both margin accretive and require less capital investment, ultimately improving overall margins and free cash flow even further. I'll hand it over to Chris to talk more about our financial performance and guidance.