Lumen Technologies Set for Q4 Earnings Amid Revenue Decline

Lumen Technologies is poised to report its Q4 2024 results with analysts expecting a loss and a revenue decline. The upcoming report reflects ongoing challenges despite strategic shifts towards growth products.

Date: 01-02-2025

AI Rating: 4

Revenue Decline and Expected Loss
Lumen Technologies is facing significant challenges as it prepares to release its fourth-quarter results. The expected total revenues are pegged at $3.22 billion, which signifies a fall of 8.4% year-over-year. Additionally, analysts estimate an earnings loss of 8 cents per share, compared to a profit of 8 cents per share in the same quarter last year. These figures suggest a negative outlook for the company's profitability in the near term.

Impact of Legacy Business and Strategic Shift
The company's legacy business continues to experience declines, leading to overall revenue reductions. This was highlighted by an 11.5% year-over-year revenue decline last quarter due to various negative impacts, including divestitures. However, Lumen's transition toward newer growth products, specifically fiber and cloud solutions, could provide some relief. This strategic pivot highlights management’s efforts to diversify and bolster the company's revenue sources amidst inevitable legacy business challenges.

Incremental Free Cash Flow Guidance
Despite the negatives, Lumen has raised its free cash flow guidance for 2024, now estimating between $1.2 billion and $1.4 billion, up from previous expectations of $1-$1.2 billion. This increase may positively influence investor sentiment, as it indicates a better-than-expected cash generation from operations, particularly driven by growth in PCF sales.

Overall Financial Position
While the market may respond positively to the raised free cash flow guidance, the expectations of a loss and revenue decline in Q4 combined with the ongoing issues in the legacy segment could suppress stock price performance. Investors may remain cautious due to prevailing uncertainties in the broader economic landscape and competitive market conditions.

Stocks: LUMN