Lumen Technologies CEO: ‘We’re Not Satisfied’ And Are Focused On Growth
The service provider’s revenues declined across the business and Lumen is ‘open’ to selling off non-core assets as it relies on fiber and the cloud-based Lumen platform for future growth, said CEO Jeff Storey during the Q1 2021 earnings call.
Lumen Technologies, formerly known as CenturyLink, has been hit hard by the COVID-19 pandemic and has a “strong sense of urgency to drive growth,” according to Jeff Storey, Lumen’s president and CEO.
The service provider is heavily investing in its core assets, including fiber, edge computing, and the cloud-based Lumen platform, which brings together global networking, cloud edge computing, security expertise and collaboration services, as ways to drive long-term growth and success, Storey said during the company‘s Q1 2021 earnings call on Wednesday evening.
“I want you to hear directly from me. We’re not satisfied and are focused on growth,” Storey said, noting COVID-19-related financial impacts to its business and public sectors, which continue to challenge near-term revenues.
Storey said that Lumen is willing to consider divestitures of non-core assets as a means of returning to growth in the future. “We recognize with change coming for our customers, those are core assets driving growth and if it‘s not core, we’re open and opportunities to talking about changes,” he said.
CenturyLink in 2019 had said it was “evaluating strategic alternatives” for its consumer business at the time.
Monroe, La.-based Lumen generated 71 percent of its revenue from business services, a segment that had been stressed in recent quarters because of declining small- and midsize-business revenue and the impact of the COVID-19 pandemic on business buying trends.
Lumen this quarter began breaking its enterprise segment, includes the company’s high-bandwidth data services, managed services and SD-WAN services, into two segments: Large Enterprise and Mid-Market Enterprise. Large Enterprise dipped 3 percent to $937 million during the quarter compared to revenues of $966 million a year ago. Mid-Market also slipped by 5.9 percent from $761 million in Q1 2020 to $716 this quarter.
More than 85 percent of U.S. enterprises are within 5 milliseconds of latency of Lumen’s edge cloud facilities and the company is “well on the way” to reaching its goal of 95 percent of U.S. enterprises by the end of 2021, Storey said.
In enterprise product categories, compute and application services declined 2.3 percent year over year, as did IP and data services, which declined by 2.2 percent. Fiber infrastructure services, however, increased 1.5 percent year over year, Neel Dev, Lumen’s CFO told investors. Dev said that lengthening enterprise sales cycles in current environment, a large customer disconnect in the company’s International and Global Accounts Management (IGAM) segment, several connectivity projects winding down in the public sector were responsible for the declines seen in the company’s business sector.
The service provider eliminated its SMB reporting segment during the first quarter.
Lumen’s total Business Segment revenue totaled $3.56 billion during the first quarter, a 4.5 percent decrease from last year’s result of $3.73. The consumer segment, which Lumen renamed “Mass Markets” in Q1, brought in 29 percent of the company’s revenue.
Wholesale revenue also continued to slump during Q1 2021, falling 4.1 percent to $929 million from $969 million in the year-ago quarter.
For the first quarter that ended on March 31, Lumen reported net income of $475 million compared to $314 million in the same quarter a year ago. The company reported total revenue of $5.03 billion and diluted earnings per share of 45 cents, a 3.8 percent decline compared with $5.23 billion and 35 cents per share in Q1 2020.