Lumen (LUMN) 7 Feb 232022 Q4 Earnings call transcript

Greetings and welcome to the Lumen Technologies Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, February 7, 2023. I would now like to turn the conference over to Mike McCormack, Senior Vice President, Investor Relations. Please go ahead.

Thank you and good afternoon, everyone and thank you for joining us for the Lumen Technologies fourth quarter 2022 earnings call.

call and Kate President Chris Financial the Chief President and on Officer. Officer; Executive Stansbury, me today Johnson, are and Chief Joining Executive Vice

cautionary Safe call begin, and fourth in our uncertainties. on certain and should include filings. presentation, statements this statements attention need forward-looking we that XXXX on be to All the notes conjunction call Before to X forward-looking I quarter with our X considered risks conference Factors Harbor which of statements statement Slide to the your Slide in Risk may SEC subject our

will We that to can certain press financial measures the on found measures our earnings be reconciled to referring be release. GAAP most comparable non-GAAP

detailed be In of Lumen materials, addition, certain on discussed found website. exclude metrics section as our which in all today of can costs Investor items the Relations earnings the special for

I’ll With call Kate. to that, turn the over

us few and cover Thanks for everyone and afternoon, thanks joining outlook XXXX discuss fourth a today. our measures. Mike. In will Chris quarter Good minutes, results

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talk move we XXXX. to couple that and as items XXXX Before a enter the our important it’s we of I about of on results outlook, discussion

our First, to revenue and are of optimization expect are initiatives we for sustainable these financial growth. shortly. priorities scalable on and provide details strong execution X Chris leaning EBITDA these EBITDA and we critical than in and Lumen investments into We And and less CapEx, stability will years. believe growth position

Quantum about let’s Second, our talk pacing.

hit we quarter. previously, have button during fourth said the pause the we As

absolutely for frank, returns metrics location for predictable we than the the a metrics Quantum project. be X to we all undertook quarter. this was a of goal, and of achieve the Quantum assessment our IRR, By million a our on impacted shareholders. just of the opportunity more Quantum are focusing for million believe more we exciting established said outcome a not target evaluation We it position more That Now success. have able to enablement is which button long-term to pause natural stop button, enablement higher to Quantum long-term critical proper where for is build outcome A locations. XX focused was overall

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results. over that, quarter call And the with Chris fourth turn to Chris? discuss will to I our

provides afternoon of the To removing the of information a Kate how and good XX, first program. you, X-K start, into the impact provide public X-K for and we impact quarter better company. on CAF more of internally business to we had This alignment large review sales to channels provides clarity everyone. large which out these back hope IGAM ILEC modified reporting, pulled as of should II The also Thank chance filed the LATAM businesses and you our the as and January I XXXX enterprise which structure with collapsed new well sector outlined when channel financial modeling ‘XX, reporting for the manage enterprise.

Supply macro for in face XXXX, to chains outlook our Let continue me my headwinds. I thoughts. impacts key labor and facing on some the will but remarks, strained Later we headwind with address full as near-term, to of year discuss we all inflation. are remains macro the move

as of divestiture to to year. from as the In LATAM addition, our ILEC offset well we business through likely are dissynergies, actively headwinds are our business, resulting XX-state those working this persist but

and has we positioning and for near-term Lumen these our I in Lumen playing my to will is an this position This a investments enable and grow. systems us to team. later will discuss Kate to time exciting company energized win. remarks. and pivot our platform, our investments of require process these pressures, the Despite are internal of impact solidify offense to

the year as the for X.X% results. II and a after prior during fourth With sale sequentially on on our that, I X.X% year-over-year referencing of CAF financial in the will business the currency program. mentioned with be summary I adjusting the basis, the modified well impact move facilities revenue results of as declined quarter a businesses and divested of XXXX period. to the which the our and removes earlier that of closed impact will X-K basis business disclosures constant aligns correctional Overall, approximately

revenue year-over-year XX.X% and EBITDA $X.XXX Markets the We fourth of sequentially. a declined X.X% generated billion and adjusted X.X% in reported margin. Mass quarter

billion free shares XXXX. of in the quarter, quarter. repurchased estimated $XXX approximately $XXX debt flow common owed on business stock was million Our $XX And by during net for cash fourth we the After during all reduced million. million XX divestitures, the we XXXX paying taxes

This correctional fourth ‘XX, last applicable, the year-over-year more approximately a the quarter the our of the the to referencing detailed facilities while which to declined was metrics quarter correctional that X% on total basis, related business a of about of $X.X the for will in impact $X the quarter revenue are the by sale sale facilities quarter adjusted XXXX. revenue, impacted business. million. comparisons Moving all to facilities year-over-year to The growth foreign a look basis, of fourth where of I at and modified headwind fourth exchange impacts benefit million of FX is the $XX was in On billion. year-over-year business correctional remove be revenue

Enterprise revenue business our to two billion $XXX year-over-year. $X.XXX our year-over-year key Within which our X.X% and is excluding Channels, revenue revenue X.X% to year-over-year segments, Markets Mass declined segment, wholesale, Within X.X% declined business declined million.

now Enterprise revenue to and Channels Large basis points exposure legacy dropping year-over-year to represents Enterprise XXX of declined within year-over-year. than revenue. Our continues enterprise voice Channel X.X% less improve revenue XX%

IGAM this the public in we and As channel noted, be its quarter, reporting, providing, and I enterprise previously to have enterprise new the large starting moved sector we will channel. into collapsed large own have

enterprise enterprise channel, revenue enterprise largest improved year-over-year large and our was trends both representing sequentially Now had and our channel. strongest performing

revenue sector declined Public XX.X%.

We as we have had in channel and improving significant wins progresses. expect to year see the this trends

basis, manage decline year-over-year. headwinds. declined voice, we cash. for channel with We also sector Mid-market X.X%. points. the significant is quarter channel Wholesale a comparisons year-over-year sequential had last one a X.X% XXX year-over-year, and revenue impacting contract basis which X.X% in expire the the public grew declined revenue will On VPN by This that likely revenue most time is this and over

move adjusted will referenced referencing our modified basis I I business I to be earlier. on changes the percentage reporting, same As product lifecycle

margin strength North saw model incorporates of waves, and Grow As carried and We the XX% Star prior economic approximate with plan revenue X.X% represents the business XX% and communications. to year disrupt direct security services grew our for help declines Kate Grow us fourth this over an legacy unified from in detailed products our year-over-year in segment, in a growth. plans period now quarter. up innovate XX% quarter. mentioned,

to public improve first negatively revenue comparisons that of This represented Kate This note enterprise a earlier. some focus would approximately points forward impacted impact For here to real continue portfolio. our we basis growth our the which accelerate continue believe that that ‘XX. will forward. color, to by mentioned of the going Grow mix be in A Grow key revenue outside-in focus fourth through sales added will majority half will expired. sector of our Grow but opportunity XXX we related was products contract Grow time, going the will have of the with quarter, our to I take the

quarter. and in and by direct an The business this driven revenue declined represents and XX% our about VPN now XX% carried products segment decline was margin X.X% year-over-year the quarter. of fourth Nurture Ethernet, Nurture approximate

We Grow migrate efforts revenue into on our and good are strategy to this making Nurture products. progress back our

in Harvest products quarter. revenue declined X.X% fourth the year-over-year

continues work team the Harvest rate products. these product to hard to Our to a manage lower set, helping within this which of of extend life is decline to

and XX% approximate products X.X% customers the to Other our represents Harvest with and managing In year-over-year are now quarter. Grow this fourth an carried products, products. Nurture approximately business declined quarter. direct back of addition, as XX% revenue our margin Nurture in segment, we

revenue of fluctuations due to these experience other products. nature to Our nonrecurring tends the product largely

Moving on to Mass Markets.

revenue earlier, X.X% Mass total year-over-year mentioned I As and sequentially. declined Markets X.X%

and revenue. Mass of revenue the year-over-year, XX% represented XX% fiber approximately fourth quarter, over by grew Our broadband Markets Markets in Mass

exposure has revenue year-over-year. basis services other Our to legacy voice XXX improved points and by

discussed, evaluation were changes subscriber Quantum Kate our value. we a made improvement are result that This the Fiber As the significant was will scale we in change with approaching impact location by thoughtful strategy year. occur expect will long-term late in our results get said, this opportunity. how a we have That significant to metrics our This until shareholder continue impacted new in pause and evaluation. had in in to we which through plan, to Quantum we place

locations approximately During the bringing quarter, as to XX,XXX, X.X total over December the of total million enablements enabled were XX.

added Quantum customers, Quantum Fiber subscribers XX,XXX and Fiber During our to brings quarter, XXX,XXX. we this the

accelerating we’ve XXXX. growth stable each during was sequentially ARPU Fiber quarter at but $XX, year-over-year approximately seen

XX%. As stood of less was XX, Fiber copper footprint penetration of approximately legacy XX%. than our broadband penetration at December Quantum

XX-month is XX%. vintage at was XXXX and approximately now mark the over penetration Fiber Quantum Our XX%

XX% mark. the XX-month at vintage XXXX at Our approximately was

again superior and positive value indication delivers. this NPS of an quality, score Fiber was the service Quantum Our greater quarter, Fiber that Quantum XX than

As we on the million locations mentioned, few X targeting million incremental have roughly generating recalibration, addressable years. X recalibrated to returns for build are Based we next healthy to are for to footprint we the shareholders. million overall Kate our X locations ensure over that our million XX or

We not continue to have in payment is impacting monitor changes how and economic customer customers, discernible we observed patterns. any the environment our

EBITDA. adjusted to Turning

XXXX, billion For billion ago to year $X.XXX the in was compared quarter adjusted quarter. the $X.XXX of fourth EBITDA

$XXX items As of are and partially designation EMEA the investments a from growth. cost and Special seeing OpEx the sale business. to upon to loss in we totaled on our pressures non-cash I addition as gain costs, mentioned a related drive earlier, reported quarter ILEC business primarily XX-state inflation this our to separation transaction million offset our by of held-for-sale

XX.X%, Our year-ago slightly expenditures of the for $XXX XXXX XXXX fourth quarter quarter down period. from margin fourth XX.X% were was EBITDA in Capital the million.

Additionally, $XXX flow million. fourth generated XXXX, the cash company quarter the of free of in

Our at net our of $XX.X December debt expected billion. reported estimated stands net $XX.X was XXXX, billion XX, debt and as

our million the half Our net settle expected of to We on these estimated first XXXX. $X to closed related tax during $XXX utilizing the XXXX, debt billion. reflects obligations which in we taxes anticipate hand the totals to cash paying divestitures

Kate investments to we Given X that anticipate near-term. in identified, the to leverage the X.Xx to rise between

approach thereafter. leverage we expect as decline year-end to peak We and XXXX

to be in this by are bridging and to we $XXX impacted Combined $XXX divested our full II completion estimate to there a dissynergies, $X.X between headwind the guidance, drivers million adjusted EBITDA the expect the incremental CAF year to EBITDA range year we full $XXX approximately year. that When to business We be a million of EBITDA, EBITDA billion in other inflationary keep For in year XXXX, few adjusted pressures. full related $X.X to addition will to billion. of with million mind. expect our

to dissynergies. working mitigate these of impact actively the We’re

OpEx to and will position will digitization, investing couple of in how to our to we simplification. IT experience As $XXX million. $XXX number Service we success. years, items outlined be of waterfall to enable aggressively ERP, Kate be customer million chart as next Network operate. over optimization a investments These the investments total for will and growth, ourselves and discussed, sustained The focus are a EBITDA as long-term investments of These such CapEx and both these growth improve guidance include simplify expected

our stabilize thereafter. as Importantly, we EBITDA expect to exit revenue and with we growth XXXX

to spending. Moving capital

this XXXX, the $XXX investments capital $X.X we are million total the $X.X range For to year in totaling Growth billion guidance. expenditures expect optimization to $XXX included billion. full in million of in

XXXX to in incremental expect a enable locations we enablement project from $X,XXX We we emerge an reevaluation. anticipate cost of XXXX. in Quantum XXX,XXX our Additionally, per as

to Lastly, rebuilding $XX wake fall. our capital Hurricane to last efforts in million expenditure guidance includes of the Ian million related $XX

on Moving flow. cash to free

million by will and required efforts. to $XXX to year in impact XXXX. free not of million for In generate $XXX of be related We our contributions to the cash fund growth flow flow do Ian as We discretionary as range free $XXX million our to the XXXX $X million impacted full expect cash XXXX. optimization or in well recovery have planned investments Hurricane the pension any total,

and Additionally, is are and flow out tax free the sale cash deals from businesses, excluded guidance. ILEC are due the the our those the cash LATAM cash XXXX being from of on proceeds of paid

our As timing related has typically and seasonally to bonus expenses a first prepaid expenses. payments of higher other reminder, quarter

$X.X for We the interest expense expect net billion of billion XXXX. to $X.X range cash in

years, third-party expect flows. material for costs the costs items be services no to compared primarily support to income The impact we net with cash to in dedicated in In special will divestitures. significant ramp-up prior terms by other of services these for for driven a our XXXX, reimbursement transition

we are positioning closing, growth. for Lumen In

City York our more Monday, performance the will investing plans, Day we forward and longer-term in the we’re years goals. June internally, with to around and provide and expected X. on ourselves progress our progress those our in detail on sharing tangible of our plans as making afternoon to on X at we over next Investor financial look deliver you New We’re We execute

More will coming date. the months. details follow that save in please So

for are With that, ready we questions. your

Stanley. question Please [Operator is our first go Flannery the you. with ahead. And line Thank Instructions] from Morgan of Simon

the Day what the coming an the up, company stability. are got the little and Great. that but you this opportunities. of things during EBITDA to think rate EBITDA a be on for know improving? in path around revenue BEAD interest to could understand couple side of Kate suggest at Thanks. turn this should of Thank you that the us the how revenue thanks Analyst decline? path to into bit XXXX the less How a within decline, looking of milestones of kind Quantum? of you all fits we Help of we’ve do of And sort are inflection given I much. you and there’ll we the things, be about positioning for program you’re rate very posture expectations get towards aggressive then moment? sort your years? just that’s on Is of you BEAD to talk comfortable something fiber this Do

Thanks, Simon. Sure.

So reset first a XXXX year. is and foremost,

talked new some We talked about get we rolling. it’s about to a And mission. about new going leadership. We time talked So priorities. new take us to

haven’t done bring that we I story to of couple before. things we the think a

form and disciplined growth into form some is of the in The market, approach the high an the at of injecting leaders the focus end the I’m of execution in. bringing marketing, first new mindset energy with that sales engine of in really the

I early traction some So about I’m form think of will and like things funnel that we the pipeline. that, get excited in and

to doesn’t into really, question your have about shoots we green you super ‘XX, X-year any I stabilization total started BEAD, think as to year go we’re the sort BEAD With million in BEAD our more include enablements flowing haven’t funds that our projection about X story XX million – is of to this is of projection funding. respect The to explicitly. going is the or early. show yet. for And

does going upside story story. to represent So we that out, know to our pan how potential don’t but really a it is

Great. lot. Thanks a

our from And go Cusick ahead. line of Philip is next from the question JPMorgan. Please

thank Hi, you.

how that Following can in the of investment, million $XXX million is for enterprise of share shrinking And the think business into you it up ongoing just potential you more If is how we and in? long And is growth growing sort market space, $XXX investment in terms to that the period revenue one-time underlying dig ERP costs? first or the very that? new a of back take this about versus of on should in EBITDA Thanks to a market we over market, a to go need much. time? much

great question. So

I working usual the How thrive? it’s to business do in the applications? How as Our place customers pivot is stuff, I a of that capabilities customers, and and employees to from new drive to have my customers? these defense in as about build, innovate if about problems well existing mindset dealing which offense. new from about problems working Where get locations about giant building it, home secure address operations, data been our talked both about world, my addressing buy years. process And problems, hybrid cost-effective or place meaning, obsess How finding playing them do how all for moving I or But hybrid capability basically that’s partnering. think changing to I from of are with core do doing they I my improvement? a the – capabilities, with those that with do are net either you really for

of into security us. solution to you As core that as lean set we a of changing and edge the represents that do networking Chris, the new well, need bit in all glide complexity drive But that of of add that huge their growth really to we changes is opportunity a that needs up all we I know for sort think on to both anything solution and have. networking that? want order top net and stack really to

Yes.

what invest to to some which to continue what piece allow focused to growth, for on, got self-serve us ERP we and got possible. some spending stop to beyond enable – of network but one we’ve to so will going talked is easier the And experience with. we’ve allow would digitize that seamless terms in that to hey, things, things to to is a customer end, The doing – about that. end bit, got that it automate do So really a we and that, of are more us things, service, then Phil. more as We’ve it things in wherever drive the of business do that, to And us is makes get dissynergies, but example. obviously simplify

understanding so network quickly and is from really it there. can deploy customers So the that where access

my in this So be complete year. journey will in this that’s but things I probably a in spend. terms that of what’s there, of none those X-year is referenced comments

by to of to I why things That’s get As really today. stabilization we the it clear. based be relates of year, we to revenue the want and EBITDA we can have think end next off

cleanly low-hanging executing rigor So OS, our That’s and between product there we of go when have down from a as selling say Kate focus. and But that we that were renewed can And I that’s about growth is is extra. accurately more the There product standpoint, the today, sales fruit lot think could have. we we talked efforts. kind is a the And road. what with not as can supercharging very growth some behind frankly, there connectivity after. we

the reason sight tell But end today. you of going by we this why by year. in-house That’s that I’m we sit it’s next got year. fixed that here the is I can of of what line tell we’ve you So that not said to we and said have second given half

XX we’ve If companies and you and predecessor I all, up don’t in I a about are that what have the a – is things some And June, can changes but to under sound disrespectful coming little at as that’s to while. of years around. going Lumen plans business really dramatically team, how this forgive us like changing from can there mean and Day and you’ve opposed as things know for turning another an Analyst iteration turn hood we’ve the follow-up heard really, only, new the give I me for this start that of anything before? to faith heard and sort together been Is feels to that

Yes.

really the that, be a excited I now, And to So and important is that the shift. bringing opportunity. focus I’m is to a And think now things here of here on huge execution. I’m I’m one table this maniacal that’s there because

from every you as that was no combined drive of that at bringing when focused already to really know revenue leaders and from everything right? invest priorities do hadn’t in sales think capital sales operational and pivot of And leaders innovate there cost trying really was efficiency. no And potential be we success. the companies and dollar been a company from good. collection North was marketing how we inwardly to take-out you the position the about as engine, go-to-market growth. for of our are, about we look Every to enable technology, I going in looked driving that anchoring And for that Star. now Lumen There here bunch support to need the There was a I’m that. was this synergy think customer It’s now Lumen EBITDA, a focusing of The contributor on a on business, time. all really with set of because is to a But think mergers, and no to good obsession. are that the exciting growth, to incredibly dollar in we customer combination allocation powerful.

you. Thank helpful. That’s

Thanks, Phil.

Next question, please.

And America. go with the Please David of our line Bank of from Barden ahead. next is question

Hey, welcome guys. congrats the the taking the much new for job, pit. Thank questions. And Kate, you on to so and mosh

got about you’ve Chris, guess, a I few, legacy disrupting talking So could. I guess I been if declines. I

about mean that If you in then to of being about to today? a Does fourth a you of Lumen in there specific the right respect $XXX and looking if stuff And priority capital? is asset that walk million you Thank could And come could at you. quarter, we’re more really more be inside stock what that of simplifying. idea for landed means? you base being Chris, talked buyback through us radically that Kate, was with terms the apologize. I could the ask the I kind whose that allocating how on third. choice that strategic

Yes, sure.

is because What migration, And manage good how of the kind Look, think, and So that want And And that sell is lifetime to a in until of of really off. if more value disrupt be trajectory can cannibalization. is fear you of motion, can historical the really they can hopefully, is die. new broadly mindset. from cannibalization that. the be growth can sell there absent saying products. this legacy we question on telecom thing, things first I is keep you’re that loud I going for much in you customer longer customer to you better that

So the products, aggressively stack. customers end-of-life managing up what we’re talking is about moving

VPN like to security don’t contract and about end ways there, of there customers voice, and it. renew, are out wrap but think the about IP is who can So legacy around who want we a things nearing Think right?

those I of about. addressing that’s proactively that something been and focus and that’s key hasn’t the I a low-hanging more talked fruit So migrations think some

and tough getting it change. we look, the performance conversations relates it investors. is our solidify your with the I back forward buyback, by that It was was But We’ve way conversations about decision. it. of Lumen’s had all was guided fact stakeholders it and by there have you As for a the big about a And growth. going had peers to to other

And In that. in near-term, ownership that funds index so an there to have who other the dividend dividend position relied and investors did that knew Lumen. were the we on cutting

were rebalancing support And stock those index back big to that those bought stock the so through around time the we shifts. funds

was in terms manage fourth we the that the And so that in how thinking quarter. of

of it? you do some simplification. David, And question asked didn’t Could a hear want it. repeat – you about I to you

question priority the business, the Kate, I kind think confines the I I sort radical Yes. of of of simplification and might look like. is interpretation thing, side of one the fourth within that think, the like of of think, of that streamlining – the what the processes was

and divestitures, types asset kinds turned further other Thanks. be might that over of side not stones of strategic Another been to-date? have things

that’s said. two through think both portfolio, of of And we how with of SKUs, do this of well sort formula. as had the you to to SKUs. we’ve when is a sides proliferation we product all equation, how Yes. support about things the the could as of think, we simplification the mergers our mean discussed, simplification understanding I around was I systems better, what it, winning fewer sell going And sell proliferation the pieces those of IT as what it, of be mindset I I

our So, remarks. those were – that intention was of the

overall the directly people, that we to do strategically coming our to strategy, data effortlessly, that connect keep digitally if and back map to I applications Regarding statement. you mission think statement, quickly, and anything will securely

understand. Great. you much. I Thank so

David. Thanks

question please. Next

Williams from of Greg Please question the next go ahead. Co. Our Cowen is & with line

coming in and to have a overbuilders, on level are your territory? million My of comfort and question echoing Great. determines down just in on $XX third-party Quantum overbuilders Is XXX,XXX I puts the million contemplated fact on build that the of not on you what the my end? those it just is $X high range guidance that Thanks. low What’s enablement. the of your believe And I end $XXX the $XX million Kate. over now larger and is building? reduction is Thanks the taking forecast. million question the second from sort – first heard of for congrats, questions that takes then Fiber and the been fears it’s are third-party coming in as just overall build range that reduced you your your to

it’s Chris. Greg, Hey

and the macro. concerned pieces beyond I terms like frankly, things, spend inflationary that the our about time the the control, things being more just guidance In are that would of range, I are environment say the broader that

say tell the can back sales guidance well. piece things as for the pay is people quotas, to mapped biggest you So, variability. that’s of I the that probably and like changed directly the I way we has performance would

our to drive that high is and the things low. to the of guidance is. that the really it’s us beyond control us between all where So, around to designed But that move

metros your product. piece, risk. of some cost was valid enablements As mean in can the frankly, see putting focused we being stop one, sure remain on the But that the that ground, enablement have are – I focused even around I serving, fiber concerned that I a sake the penetration think to about per are we a think is Quantum from talked more number customers in I XXXX. fiber I and of to think point the so need making that a want we going those obviously it that and right. our relates on for about and of that in and We very numbers that’s markets make large we ground a in and sure those on you it to putting

planning a and and bit than all performance we when And estimate yield, market seeing so a goes proceed little so then we that to to the really it I it accurately we are painful comes in engineering can our think this to rather the out on have to is having been of even again. go meaning though near-term, good engineering to we cost that planning over able construction back plan

and opinion, having a So, activities for building hit that we years then we of I where that XX this that the in sake million than today good of conversation $X,XXX, markets where me stream X than from internally. asking annuity much one now, to the all And going you that I are rather is have enablements, really building it. the seeing on rather would see really hit are But the own opinion, we you some some and are think from our fiber. around is mindset my are returns overbuilders guys

Thank it. you. Got

Thanks Greg.

question Next please.

ahead. And of Levi our from go next from question UBS. line the is Batya Please

through line for that shift the it growth organic coming that more from services? you color Great. you dissynergies we investments inflation Thank you. It a decline lower maybe aside drivers in top is as looks you. mix on transition, go is assume of XX% this expecting a the higher EBITDA bit more decline? Can and another impact the and organic where trends growth. provide little year like from Thank or are worsening for Does from margin

Yes. Batya, Chris. it’s

key okay. focus I It’s bucket. do really have the now where is which thing the is largest growing think the And is. bucket not enough, that’s we that grow

really you bucket. we move see organic in at as grow into Margin reason declines declining that and a have digit buckets So, the harvest that total rates. nurture is the are is not concern we high-single

at look direct it’s beneficial move you when we But presentation. when grow our to the products. in that margins, the actually us into disclosed have We

bucket. still have do So, at declining we that’s the migration business managing that and grow roughly how it’s rates really two-thirds very the we about supercharge because of high

– isn’t the to actually performance pretty we where want starting starting strong. the it itself but point the is So, be,

good got have a there. base We

say would I thing. that’s So, one

The obviously, where is, environment a everybody macro spend. tough they in are second thoughtful thing being about very money we the is

doing you if tough about in think So, a it are environment. reset, we doing us a

I those what’s things driving combined really that. are think So, both of

we how investment follow-up, the going about to quick a should or just half up growth? the you Is dissynergies, first that the is trough that offset for as think be ramp you Maybe have year? EBITDA the through of decline because pacing

get too scientific Look, a that around lot have I obviously want don’t variability. to of because we

the For when doing example, have in our summer construction. we it’s in OpEx OpEx quarter-to-quarter, more hotter and are higher we

would our you indicator that like lot a way to And we there rate is most to growth. is would I I be are first I leading over there. is moving show the the of that be important number. that’s say to in time, we the going revenue So, slowing. that pieces thing to on think decline think guys able And

I predict I think want year to we that. see start a way get measure that to until stabilization. But that’s to Again, watch in and our best I X-year it’s success. don’t to the journey time, the you And so when over would

you. Thank Okay.

Batya. Thanks

please. question Next

question Citi. ahead. Please Our Michael go Rollins is from of next the line with

bit one if the of in cycle are you sector. had And the some just more what’s Thanks. could of And announcements have a Good other the number Curious sales better share over you just public the then little XXXX with happening entering in detail months, of a in afternoon. in terms particularly given pipeline? you that past question. the backlog, currently

the Thanks. dissynergies from those dissynergies, encapsulate are of those dissynergies segment? the regarding bridge separate the do isolated to divestitures, mass to decision markets business the or On the operations

Kate. is this Mike, Hey

address from the question first So, public happening business, are you what’s your is absolutely thing to the perspective, in a about right. enterprise sector

We convert a that this seeing a are about we of healthy and excited backlog, year. lot have

all sort for I continues to strong. regarding we and of purchases environment, think with technology. decision-making, enterprise And macroeconomic steady of required the pipeline see be Our approvals more

buying where our to through I need at think help get that them Chris? the existential problems right how value we that story making address great pitching plays pivot be cycles. and and their those most we customers help can we into are

really ops. dissynergies the Yes. the with are It And nothing has do around divestitures. to

that’s So there that more overhead EBITDA. efficiencies some And going away really automate dissynergies. things obviously, we can is corporate where is forward. doesn’t if get chunks when on there big there you go But of sell can the other internally off we focus the to is

dissynergies were we eat internally going can where that. as because at be Now, will that higher we to that than it last are savings initiatives we year, we cost say for that’s this a on talking thought little bit we start about I actually away they think would have some year, and calling got other

that’s So, good.

peak leverage, go net or whole getting you of X it it other debt of towards the on the potential goes is cycle one before even back follow-up, X.X. EBITDA lower? mentioned there your growth, goal could through leverage the this to to that higher Is And for be

EMEA on because assumption that our assuming we now any Yes. quite year. And doesn’t that the until closing, right is estimated deal That are excludes peak. frankly, happen early next

that, the go leverage expect and Obviously, exit would given all we not capital an on we us we year. – is I would and then manage So, that reduction, are that obviously, as those leverage we go ratio continued the back forward focused with leverage spending that and obviously, growth high, doing, down. would bring expect because on said we next a us be this that year until give and – we proceeds when that closes, those that would from some doesn’t spending that leverage dynamically. from yes, debt But spending is, where that. peak operationally, would standpoint, exit But focus would then allocation buybacks benefits it above

Thanks.

Thanks Mike.

please. question Next

with James. from go with is Frank question your line question. Raymond of Please Louthan next ahead our And the

changing will my any to mergers? do That’s past billing think will take first Great. integrating Thank from be it systems the or How you. long you question. And integrate systems? you the IT

still getting many talk you when that the that long of question, really the some growth, of and you of don’t rid the given second support will would just that, mentioned may take, obligations regulatory how The how give about businesses some – these longer may some harder to can that have be us contractual you be that If obligations or great. eliminate? on term of color that

IT overnight simplifying the stories. With infrastructure, these one complex. are to it’s things Neither of respect

prioritization the the We we that’s things the we much do driving towards that medium planning – will customer of what’s how customer much level as and actually difficulty as our and satisfaction, do long-term. have and well how a will experience, short, in and can how impact lens

give to are planning framework the right we at able of So, clarity. you the building more to stages be

The what second question? – was that of was the piece

Around their and of sale products products.

don’t simplified and The to that it thoughtful how have simplifying use doing a that revenue, than evaluate our – obviously. a to product do experience better we talk our EBITDA, businesses some maybe great have we the so, new we narrowing to get less whenever taking life create of teams the capabilities terms to disciplined and where customers, focus, can is And of doing customers North is When accrete a that modern to and benefit we to we very to about cycle have Star, every day. to in whenever these is we have move be customer as whenever framework in they how something partners and of approach more what our doing well. framework the of technologies

doing are of in throes the we early right that. So,

not on without consideration. careful off are going or We overnight anything to be turning

I those lot if game quite longer a billing out where old are Part supported and from on. going there by be, for – Frank, been one standpoint. I billing want a I we And are be systems address want lot you there there frankly, have of this products because add quick Yes. systems determining that has what at would the that with business been there so head of or have, maturing because scenarios Kate is only that thing I integrating are disaster just cases, product is we than really in to doing to no the cycle endpoint a life case billing systems some to know

front thing about end near-term, to way, we And deal the will then end. we migrate the So, with may in as sees, just forward. new with where not what in the we build which we or can simplifying really a going the the front deal seamless it’s customer will,

So, it’s a we are into but blindly running know, not you complicated, as billing well replacement program.

Thank Great. you Okay. very much.

Thanks Frank.

Next question.

question. the question And Please go our with Nick Deo SVB next is of ahead from line MoffettNathanson. with your Del

for need taking Chris... anything for other get deck. And got saw I Kate, used share Jeff, questions. cash most on? in the to and flow do of financial going I my focused financial is focused per your as measures, Kate Thanks What one most was to growth the profitable on. a are emphasize for kind profitable and have predecessor, the one aligned growth for he metrics Hi. free be the to them? mention you And there organization around you to Chris.

So…

ahead. Go Sorry.

go ahead. your Please question. No, ask

that that over as about over with spending journey was or going if but relatively then I in for a to X-year of ask of even time, Chris, you respect should want the I terms of we to spend. a don’t think And say think years? Yes. we I XXXX to optimization think sort course with spending, heavier being said X X-year it’s journey, the upfront of should guidance, we and tapering for expect growth

we for the Look, I first two ourselves success are will Star respect success. with jump there accountable plan. holding in that measurements in North for to key are measurements to

is employees And employee great a is right. a first because way, the becomes of product a doing a experience great Making it The customers. the experience that and business one-to-one we correlation are customer selling. design also customer both our ease between together for easier around both product It there by bringing the win-win. and criteria experience, for and materially technology influenced is the

measurement main second which have profitable is discussed revenue growth. I really The

level. highest the that’s said, that at Now

applications operational, we and for as We to our way. securely to build have intensify so thinking there considerable have we going we of mapping effortlessly. company our this our as and engines people, descriptors connect digitally mission that the hundreds operations, we for about are securely, are corporate to as segment to measurements, both quickly, in the of literally for effortlessly, go-to-market, metrics as for time Mass statement and financial Business be KPIs done And segment, transform reliable we execute Those all the data Market and spent a well. quickly,

So, We are it’s on more not a a complex for at bit KPIs can we on Investor light that sure. short little but shine set. Day,

as standpoint, couple And we is, to it behind as profile the still get next assume years, If be relates are just the fact there that And we we careful. we we line the the to year-to-year. capacity are flat so are the big from one can. at the that, relatively got and now, this fast more as to once. divestitures two on And agreements I Yes. would would particularly hard key going could it’s service spend over finish I Nick providing organizational an do that But I year, we of do much is last another think to from thinking so we year, can working we only faster. as really, given

would CapEx just the a same standpoint lot from a it that I year, year. looks initiatives on this growth as next assume and those simplification, So,

Okay. Thank you.

Thanks Nick.

question Next please.

is Fargo. question Luebchow line Wells next with go our ahead. from And Please the of Eric

team. the the taking for welcome, Kate, and question to Thanks

So, nurture a the question on bucket.

to substitution understand like that much We an maybe the harvest quarters. that like opportunity X% that that done cannibalization due direction last a off? you How you. can there grow? to how turn more more declining us And into help trajectory have is or maybe churn the better of have you nature couple whether maybe you legacy could other is think price And could in of or much some buckets? is Thank in into aggressively of if of maybe around eventually there seen X% buckets you that

that. take will I Yes.

the been So, have rerate bucket declines harvest by part, activity. aided, in

yet. can re-rates. what say, shifting benefits That’s can lot do of started part we are we kind more would into – gotten So, have is we really there doing in on That what a I we of haven’t of life it cost, managing as more at into what do on XXXX. the got growth, looking

yet that, say would I come. to that’s So,

there As it relates to nurture, rerate not the there. is much really activity of been in way

today. of probably you two because about at VPN, lot they they we have the the recently their And I signed have where we harder have opportunity. the or if meets think because nurture a the want can something VPN something like that’s of to think customers like customers need contracts that do. is don’t contract VPN VPN and that that an we more of really continue have It’s the it end are with

what we think got to have we more term like. get around growth look those So, a longer rates little clarity can

We have that. an opinion on

Day. certainly early some at it’s Investor more provide would think I on little that’s a to share the we color that, but something

Chris. Thanks

time just one for have got Thanks Eric. question. more Jen, we

Please Feldman go ahead. from from line the Sachs. is question of final Goldman Brett Our

meaningful the I little million are you How of half Thanks less addressability I the complete, footprint sort represent, go that’s managing this for you of If that you. a locations. landline lot the road costs now, to the think or in further about the that Kate. squeezing locations there welcome, out me of going there are you obviously thinking a to at it fixed get still than savings? portion and Thank the to those would path? the of legacy can you not when footprint be down XX amount start little in those your can time. a of that in And taking is embedded now? area. point about something Is the Is markets When million right updated of EBITDA and opportunity, in revenue coming on talk upgrade that’s X is back a out fiber deck, that

rural. of plans areas have that, metros. remains. Quantum take obviously that got will The are and dense lot I said, as major footprint, still a are urban that we – our Brett. have And look when And at areas Yes. for we our you existing

to because going be fiber to areas to the density looking just sense. not make are We run lower don’t numbers

we the As it relates more XX performance than been stable sold. their – overall states to those areas, though, have they that has

So, the performance there has been good.

like We costs point, at are those as us, But on. will that this assets closely goes continue will rates are them manage closely. that things very and for to attractive time we and to manage

Thank you.

Thanks am to Kate comments. Brett. turn going over I to for it closing

The the to are future. end And position our of host more our very, So, with the the investments you Investor to everybody. same thank that, that warm look want for with questions. journey couple call. we bright for And ones our for years this for very today. I And thanks for we with forward next about years great joining the over June. sharing the you the welcome make we say Thanks hope when all I come just goals business. have and level you next going I for to excitement us of of will the are to for the great few I away in right Day

ask to that like service participation your day, and your Kate. does everyone. This call. using conferencing thank disconnect for Have you, conference We everyone today. great a please lines. Thank Lumen you conclude We the would