Lumen Profit Up, SMB Revenue Down Post CenturyLink Rebrand

Bigger profit, but lower revenue highlight Lumen Technologies‘ latest earnings report, its first since rebranding from CenturyLink.

That’s compared to the third quarter of 2019. Profit was $366 million, up from $302 million for the year-ago quarter. Revenue was $5.16 billion, which was down from $5.35 billion for the year-ago quarter.

Breaking it down — enterprise revenue was $1.44 billion, up nearly 1%, while SMB revenue was $635 million, down nearly 6%.

CenturyLink rebranded its enterprise business to Lumen in September, while the residential/consumer side remains CenturyLink.

Lumen’s Jeff Storey

“As amazing as our capabilities are today, we continue to invest to ensure our platform offers the fastest, most capable and resilient fiber-based services to support our customers’ application and data needs,” said Jeff Storey, Lumen’s president and CEO. “This approach enables us to deliver a continually improving platform that will help improve our revenue trajectory and take advantage of the growing addressable markets for these services. I’m also very pleased with the pace at which we are simplifying and digitizing the way businesses purchase and consume their networking, cloud edge and security solutions from us.”

COVID-19 Impact

Neel Dev is Lumen’s CFO. He said international and global accounts revenue declined 3.6% during the third quarter compared to the year-ago quarter. That’s due to the COVID-19 resurgence and weakness in Lumen’s international business.

The decrease in SMB revenue stems from declines in legacy voice services and lower sales activity, he said. Furthermore, wholesale revenue decreased 6.7% year-over-year.

“In summary, across our business groups and as we have all seen across the broader economy, the acceleration of the digital economy is impacting every business,” Dev said. “While some are able to lean into it and we are seeing good demand from those customers, others are challenged in this environment and delaying buying decisions.”

Dev also said Lumen’s new partnership with Zoom will provide financial benefits in the months ahead. Lumen will offer Zoom as part of its unified communications and collaboration (UCC) suite. Lumen will deliver enhanced services around Zoom’s video-first UC platform to its base of customers globally.

“So over the long term, it will help us have an alternative for our voice and collaboration brand,” he said. “We hope to use that to mitigate some of the churn in that business. Also, keep in mind, when customers use Zoom or Microsoft Teams or any other voice app, there is a corresponding demand on the underlying network infrastructure. And with our broad set of products and services, we usually lean into those upgrades as well. So there are several benefits.”

Importance of Partnerships

In addition to Zoom, Storey pointed out partnerships with VMware and VeloCloud. These partnership bring dual advantages to Lumen.

“One, they utilize our services,” he said. “But secondly, we can drive network capacity and success in the network business from them selling through the Lumen platform. But then also, we can provide those same capabilities to our customers and productize those capabilities with our customers. I am not ready to announce other partnerships, but that’s a key part of our strategy is to go out and build relationships with companies and partners that are doing these things. And I expect us to be able to offer AI and augmented reality, and various capabilities on the Lumen platform through partnerships and relationships with other companies.”