Lumen met Wall Street’s revenue expectations in the third quarter of 2026, with management highlighting a pronounced shift toward higher-margin strategic and digital services. CEO Kate Johnson attributed this performance to growing enterprise demand for flexible, programmable networks able to support artificial intelligence (AI) workloads and rapid data movement. She noted that strategic sales, including AI-related network services and platform offerings, drove a 10% year-over-year increase in strategic revenue, now comprising most of Lumen’s business line.
Is now the time to buy LUMN? Find out in our full research report (it’s free for active Edge members).
Lumen (LUMN) Q3 2026 highlights:
- Revenue $2.72 billion vs S&P analysts’ estimates of $2.73 billion (12.1% year-on-year decline, in line)
- Adjusted EPS -$0.14 vs S&P analysts’ estimates of -$0.24 (41% beat)
- Adjusted EBITDA $715 million vs analyst estimates of $688.3 million (26.3% margin, 3.9% beat)
- EBITDA guidance $3.2 billion at the midpoint for the full year, in line with analyst expectations
- Operating margin -6.2%, down from -3.8% in the same quarter last year
- Market capitalization $4.10 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Lumen’s Q3 earnings call
- Michael Rollins (Citi) asked how much strategic sales growth comes from new customers versus expansion within the existing base. CEO Kate Johnson responded that while new AI-driven entrants contribute, most growth is from existing enterprises adopting more digital services.
- Frank Louthan (Raymond James) pressed on the timing of a return to total business revenue growth and challenges in connecting customers. CFO Chris Stansbury said the company still targets an inflection by 2028, with Alkira offsetting faster copper exits, and that supply chain issues have not slowed wave installs.
- Greg Williams (TD Cowen) inquired about the trajectory of digital revenue growth and the cadence of copper decommissioning proceeds. Stansbury confirmed early signs of a ramp in digital adoption and noted copper proceeds would be phased in as states progress through the process.
- Sebastiano Petti (JPMorgan) questioned the impact of copper decommissioning on operating costs and the timing of related savings. Stansbury acknowledged that expense reductions may lag revenue declines but expects overall EBITDA impact to be neutral given copper sale proceeds.
- Batya Levi (UBS) asked about pricing power and customer willingness to pay for advanced, risk-aware networking services. Johnson explained that value-based selling for intelligent services and operational simplicity is restoring pricing power and differentiating Lumen from legacy telco competitors.
Catalysts in upcoming quarters
Going forward, the StockStory team will watch (1) progress on customer migration to the Lumen Intelligent Internet and digital platforms, (2) execution and timing of copper decommissioning and related cost reductions, and (3) continued growth in strategic AI-driven network services and NaaS adoption. The ability to maintain pricing power for advanced offerings and manage regulatory hurdles will also be critical indicators.
Lumen currently trades at $3.98, down from $4.47 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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