It has been about a month since the last earnings report for Lumen (LUMN Quick QuoteLUMN - Free Report) . Shares have added about 1.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Lumen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Lumen Posts Wider-Than-Expected Q1 Loss

Lumen reported a first-quarter 2026 adjusted loss (excluding special items) of 47 cents per share, significantly wider than the Zacks Consensus Estimate of a loss of 6 cents. The company reported adjusted loss per share of 13 cents in the prior-year quarter.

Quarterly total revenues were $2.899 billion, down 9% year over year, but topped the Zacks Consensus Estimate by 2.1%. 

Strategic revenues remained a key bright spot, reaching 51% of total business revenues in the quarter, up from 49% in the fourth quarter. Strategic revenues were $1.246 billion, up 9.4% year over year, while legacy revenues declined 13.5% to $1.198 billion. The shift reflects continued traction in newer offerings. 

With about $13 billion in PCF deals, Lumen recognized revenues of $78 million associated with these deals. Management noted that about $32 million of that figure reflected a delivery milestone payment that is not expected to repeat in the second quarter. As AI demand surges, large companies across industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. 

Lumen highlighted ongoing adoption of its NaaS offering, with customer adoption up 25% sequentially in the first quarter. Active ports rose 35% sequentially, while services sold across ports increased 32% from the prior quarter. Lumen now has 2,500 NaaS customers, with more than 30% repeat purchasers.

Quarterly Details

By segment, Business revenues fell 3.2% year over year to $2.444 billion, with North America business down 2.8% to $2.37 billion.

Revenues from Large Enterprises were up 1% to $778 million. Mid-Market Enterprise revenues declined 10% to $439 million. Public Sector revenues were up 5% to $506 million. Revenues of North America’s Enterprise Channels were down 1% to $1.723 billion. The metric for Wholesale decreased 8% to $648 million. 

Revenues from Mass Markets were down 31% year over year to $455 million, reflecting the impact of divestitures.

Margin Performance

Total operating expenses were down 25% year over year to $2.297 billion.

Operating income was $602 million compared with operating income of $107 million in the year-ago quarter. 

Adjusted EBITDA (excluding special items) slipped to $849 million from $929 million, reflecting expected revenue trends, higher healthcare costs and the completed sale of fiber-to-the-home assets. Adjusted EBITDA margin excluding special items was 29.3%, up 10 basis points year over year.

Cash Flow & Liquidity

In the first quarter, Lumen generated $1.323 billion of net cash from operations compared with $1.095 billion in the prior-year quarter.

Free cash flow (excluding cash special items) was $756 million compared with $354 million in the prior-year quarter. Capital expenditures excluding special items were $859 million.

As of March 31, 2026, the company had $1.625 billion in cash and cash equivalents with $12.925 billion of long-term debt compared with the respective figures of $1 billion and $17.353 billion as of Dec. 31, 2025. Lumen refinanced its revolver with a new $825 million facility.

Outlook

For 2026, adjusted EBITDA is predicted to be between $3.1 billion and $3.3 billion.

Capital expenditures are estimated to be between $3.2 billion and $3.4 billion. 

Free cash flow is now anticipated to be between $1.9 billion and $2.1 billion, compared with free cash flow (excluding cash special items) of $1.041 billion reported in 2025. Lumen raised its 2026 free cash flow guidance as $729 million of cash proceeds from the Mass Markets fiber-to-the-home divestiture is being classified as cash flow from operations. 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -400% due to these changes.

VGM Scores

At this time, Lumen has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a score of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Lumen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Lumen belongs to the Zacks Diversified Communication Services industry. Another stock from the same industry, Rogers Communication (RCI Quick QuoteRCI - Free Report) , has gained 3.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

Rogers Communication reported revenues of $4 billion in the last reported quarter, representing a year-over-year change of +15.3%. EPS of $0.74 for the same period compares with $0.69 a year ago.

Rogers Communication is expected to post earnings of $0.83 per share for the current quarter, representing a year-over-year change of +1.2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

Rogers Communication has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.