Lumen Technologies, Formerly CenturyLink, Sees Enterprise Gains But Sliding SMB Sales During ‘New Era’

Lumen Technologies, formerly known as CenturyLink, saw solid enterprise sales during the company’s third fiscal quarter, but SMB sales continued their downward trajectory as Lumen CEO Jeff Storey laid out Lumen’s forward-looking goals.

CenturyLink, which changed its name to Lumen Technologies in September, is coming to the aid of business customers who are aggressively pursuing digital transformation, according to Jeff Storey, Lumen’s president and CEO.

CenturyLink’s rebrand to Lumen Technologies was meant to highlight the company’s focus on next-generation network services to help businesses transform, including smart cities, virtual collaboration, and high-performance networking and security, the telecom giant said in September. In its first earnings call since becoming Lumen, the company said Wednesday evening that it is “firmly in a position” to help customers acquire, analyze and act on their data via applications securely delivered across a hybrid cloud environment, all the way from large data centers to the edge.

“It’s more than just a new name and logo. In a world that is rapidly changing, this signals a new era for our company where we combine an all-digital delivery model, software-defined networking, and one of the best fiber and network infrastructures into a platform of capabilities designed to drive our customers’ success,” Storey told investors during the company’s third-quarter 2020 earnings call.

[Related: CenturyLink Changes Name To Lumen Technologies, Intros SMB Fiber Offering]

Lumen’s goal is to deliver the fastest, most secure platform for next-generation applications and data, Storey said, especially as customers augment their capabilities to support new work environments and emerging technologies.

Meanwhile, Lumen is continuing to stay successful in the enterprise—its “bread and butter”—a segment that includes the company’s high-bandwidth data services, managed services and SD-WAN services. The enterprise business saw a slight uptick to $1.44 billion during the carrier’s fiscal third quarter compared with $1.43 billion in 2019’s third quarter. Lumen's enterprise segment benefited from the company’s federal government business during the quarter and installs from deals inked earlier in the year, said Lumen CFO Neel Dev.

Monroe, La.-based Lumen generates about three-quarters of its revenue from business services, a segment that had been stressed in recent quarters because of small- and midsize-business revenue. The SMB segment continued to struggle in the third quarter as it absorbed more impact from the pandemic, Dev said.

SMB sales continued to tumble, falling 5.7 percent during the quarter to $635 million compared with $674 million in third-quarter 2019. Storey said that the financial results for the SMB segment were in line with the company’s expectations. He added that Lumen is “encouraged” by the steady demand the company is seeing, but that the SMB sales cycles will continue to be impacted by pandemic.

“We’re seeing the infrastructure we provide is absolutely critical to keep [SMBs] in business and to support their businesses, but we’re not seeing a lot of sales activity either,” Storey said. “We’re being cognizant of the fact that [SMBs] are going through a hard time.”

The carrier during its last fiscal quarter said it hopes to attract more SMB customers in the same way it’s gained traction with enterprises, through its fiber-based network offerings and valuable services, such as embedded security, edge computing, IP enablement and managed services.

Wholesale revenue also continued to slump during the third quarter, falling 6.9 percent to $949 million from $1.02 billion in the year-ago quarter.

“The acceleration of the digital economy is impacting every business. While some are able to lean into it and we are seeing good demand from those customers, others are challenged in this environment and are delaying buying decisions,” Dev said.

Consumer revenue also continued its downward trajectory, falling 4.3 percent to $1.31 billion during the quarter compared with second-quarter 2019’s $1.37 billion. Storey in 2019 revealed that the carrier was considering shopping around its consumer business. Just as in the second quarter, however, the company said it remains pleased with the demand for broadband it’s seeing as many employees continue to work from home as a result of the pandemic. The CenturyLink brand name will remain intact for consumer and small-business customer services, the company said.

For the quarter ended Sept. 30, Lumen reported net income of $366 million, an increase of about 12 percent compared with last year’s $302 million. The company reported total revenue of $5.17 billion and diluted earnings per share of 34 cents compared with $5.35 billion and 28 cents per share in the year-ago quarter.