Lumen Technologies (LUMN) Stock Slips After Earnings Miss Despite Revenue Beat

TLDR

Lumen Q1 revenue came in at $2.9B, beating estimates of $2.83B EPS loss of $0.47 missed the expected $0.13 loss by a wide margin Lumen is acquiring cloud networking firm Alkira for $475M in cash Strategic revenue topped 50% of total business revenue for the first time Free cash flow guidance raised to $1.9B–$2.1B for 2026

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Lumen Technologies reported first-quarter 2026 revenue of $2.9 billion, topping Wall Street’s estimate of $2.83 billion. The stock slipped 0.32% in after-hours trading to $9.30 following the results.

$LUMN Q1’26 EARNINGS HIGHLIGHTS

Revenue: $2.899B (Est. $2.83B) ; -9% YoY
Adj. EPS: $(0.47) (Est. $(0.13))
Alkira Deal: To acquire Alkira for $475M in all-cash transaction
FY FCF Guide: $1.9B-$2.1B, up from prior $1.2B-$1.4B
Strategic Revenue: 51% of total… pic.twitter.com/Vbf4JmuyEU

— Wall St Engine (@wallstengine) May 5, 2026

The earnings per share loss, however, was hard to ignore. Lumen posted a loss of $0.47 per share, well below the expected $0.13 loss — a miss of over 260%.

Adjusted EBITDA came in at $849 million with a 29.3% margin, down from $929 million in the same quarter last year.

Lumen Technologies, Inc., LUMN

Alongside results, Lumen announced it would acquire Alkira, a cloud networking platform, for $475 million in cash. The deal is designed to give Lumen a software-based network control plane that lets customers build and modify networks in minutes.

CFO Chris Stansbury called Alkira a completion of the digital platform Lumen was already building. “It accelerates it, it is capex that we do not have to invest now,” he told Reuters.

Management expects the deal to be margin-neutral in the short term before turning accretive. Lumen said it will stay below 4.0x leverage even after the deal closes.

Strategic Revenue Crosses 50% for the First Time

One of the cleaner data points from the quarter: strategic revenue hit $1.246 billion, or 51% of total business revenue. That’s the first time it has topped legacy revenue, up from 45% a year ago.

Strategic revenue grew 9.4% year-over-year and 4.7% sequentially. Legacy revenue fell 13.5% over the same period.

Public Sector was a standout, with revenue of $506 million — up 5.2% year-over-year and 10.5% quarter-over-quarter.

The company’s Private Connectivity Fabric (PCF) segment saw mid-single-digit growth, helped by new State of California business. Lumen now holds nearly $13 billion in total PCF contracts, including a deal to expand Anthropic’s fiber network across North America.

NaaS customer numbers grew 25% quarter-over-quarter to around 2,500 customers as of May 1, 2026. Fabric ports deployed grew 35% sequentially.

Guidance and Outlook

Lumen raised its free cash flow forecast for 2026 to $1.9B–$2.1B, up from a prior range of $1.2B–$1.4B. The increase is largely tied to $729 million in proceeds from the sale of its fiber-to-the-home business to AT&T, reclassified as operating cash flows.

Capital expenditures are guided at $3.2B–$3.4B for the full year, with adjusted EBITDA expected between $3.1B and $3.3B.

The Alkira acquisition, once closed, would expand Lumen’s total addressable market to around $70 billion — split between $12 billion in North-South connectivity and $58 billion in East-West connectivity between data centers and cloud providers.

Lumen’s stock has returned 118% over the past year and is up nearly 19% year-to-date. The 52-week high sits at $11.95, with current trading near $9.30.

Management is targeting an EBITDA inflection by end of 2026 and a return to business revenue growth by 2028.

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