Lumen Technologies Inc.'s stock experienced a slight decline in after-hours trading on Tuesday, following a significant rise during the regular session. The telecommunications company has announced a mixed set of results for its latest quarter.
Net Loss and Impairment Charge
During the second quarter, Lumen reported a net loss of $8.736 billion, equivalent to $8.88 per share. This is in stark contrast to the net income of $344 million, or 34 cents per share, recorded in the same period last year. CEO Kate Johnson explained that the net loss includes a noncash goodwill impairment charge of $8.793 billion. This charge is primarily attributed to the difference between the company's market capitalization and the carrying value, particularly in its North America business reporting unit.
Adjusted Earnings and EBITDA
On an adjusted basis, Lumen earned 10 cents per share for the quarter, down from 35 cents per share in the previous year. The FactSet consensus had anticipated earnings of 8 cents per share. Additionally, the company reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.229 billion, compared to $1.811 billion in the same period last year. Analysts were expecting $1.17 billion.
Lumen's revenue decreased from $4.61 billion to $3.66 billion, falling slightly short of analyst expectations of $3.67 billion. It's important to note that the revenue total from the previous year includes contributions of $707 million from businesses that have since been divested.
While Lumen's second-quarter results were mixed, the company remains focused on navigating the ever-changing telecommunications landscape.
Lumen, a leading provider of next-generation growth products, has reported solid revenue performance as it embarks on a transformative journey. By strategically migrating from legacy services, expanding its addressable market, and fostering product innovation, Lumen has successfully improved its operational excellence to deliver enhanced customer experiences.
Cash Flow Analysis
In the latest quarter, Lumen experienced negative free cash flow amounting to $896 million. Comparatively, it achieved positive free cash flow of $635 million during the same period last year and recorded negative cash flow of $45 million in the preceding March quarter. Despite these figures, the company surpassed the FactSet consensus expectation of $379 million in negative free cash flow.
Following the announcement, Lumen's stock experienced a slight decline of approximately 3% in after-hours trading on Tuesday. However, earlier in the day's regular trading session, the stock performed exceptionally well, closing 13.4% higher.
Outlook and Adjustments
Lumen maintains a steadfast outlook for the full fiscal year, with only a reduction in its projected stock-based compensation from $125 million to $65 million. The company anticipates adjusted Ebitda of $4.6 billion to $4.8 billion by 2023 and expects free cash flow ranging from break-even to $200 million.