Analyst(s): Futurum Research
Publication Date: August 6, 2026

Lumen Technologies’ Q2 FY 2026 earnings show continued progress in shifting the business toward strategic and digital networking services. The quarter centered on Network-as-a-Service adoption, Alkira integration, enterprise voice rationalization, and a more disciplined capital approach to private connectivity fiber.

What is Covered in this Article

• Lumen’s Q2 FY 2026 financial results
• NaaS adoption and usage gains
• Alkira’s multi-cloud networking role
• Portfolio rationalization and enterprise voice phaseout
• Guidance and Final Thoughts

The News: Lumen Technologies (NYSE: LUMN) reported Q2 FY 2026 revenue of $2.805 billion, down 9.3% year-over-year (YoY), above Wall Street consensus of $2.74 billion. Business revenue was $2.444 billion, down 1.8% YoY, with strategic revenue of $1.289 billion, up 14.1% YoY, and legacy revenue of $1.155 billion, down 15.1% YoY. North America Enterprise Channels revenue was $1.719 billion, roughly flat YoY, while Wholesale revenue was $653 million, down 5.1% YoY. Adjusted EBITDA excluding special items was $802 million, down from $877 million in Q2 FY 2025, while adjusted EBITDA margin excluding special items was 28.6%, up from 28.4% a year ago. Net loss excluding special items was $73 million, compared with a net loss excluding special items of $29 million in Q2 FY 2025. Diluted loss per share excluding special items was $0.07, compared with diluted loss per share excluding special items of $0.03 in Q2 FY 2025.

“Our second quarter results reflect continued execution against our financial objectives and ongoing momentum in the business. Strategic revenue increased to 53% of total business revenue, up from 51% in the first quarter, as customers increasingly adopt our digital networking solutions,” said Lumen President and CFO Chris Stansbury.

Lumen Technologies Q2 FY 2026: AI-Era Connectivity Drives Strategic Shift

Analyst Take: Lumen’s Q2 FY 2026 results show a company trying to turn an asset-heavy telecom model into a more software-led enterprise networking business. The revenue base is still pressured by legacy product decline, but strategic revenue mix improved to 53% of total business revenue, up from 45% in the prior-year quarter. The company’s focus on Network-as-a-Service, high-capacity waves, multi-cloud networking, and security-attached services gives it a clearer route to enterprise relevance in AI-driven infrastructure plans. The near-term challenge is converting adoption and usage metrics into larger recurring digital revenue at a faster pace.

NaaS Adoption Signals Share Gain, Not Just Migration

Lumen reported more than 3,000 Network-as-a-Service customers, with Q2 FY 2026 new customer adoption up 22% sequentially, active ports up 34%, and active services up 29%. More than 20% of first-time NaaS adopters were new to Lumen, which matters because it shows the platform can open doors beyond the installed base. The company also noted that many existing customers added NaaS circuits rather than simply moving legacy circuits over, reducing the risk that growth is only internal substitution. These metrics were achieved in a North-South connectivity market growing at less than 1% per year, according to management’s framing, which points to a share-taking motion. The next test is whether customers add second, third, and fourth services per port, where incremental cost and capital intensity should decline. Lumen’s NaaS strategy now needs service attach rates to catch up with adoption velocity.

Alkira Expands Lumen’s Role in Multi-Cloud Networking

The Alkira acquisition gives Lumen a cloud-native control plane for connecting and securing distributed enterprise environments across clouds, data centers, branches, partners, and AI workloads. Lumen plans to integrate Alkira with Lumen Connect over the next 18 months, with the goal of giving customers a digital experience to discover, buy, provision, and manage services across North-South and East-West traffic flows. The near-term revenue contribution is immaterial, but the strategic value sits in expanding Lumen’s conversation beyond connectivity procurement into CIO and CTO priorities around AI readiness and multi-cloud design. Early cross-sell work is already underway, with nearly 4,000 Lumen employees trained on the Alkira value proposition after closing. The company is also making DIA ports digitally discoverable and service-ready, creating a path to add Lumen Defender, DDoS, Multi-Cloud Gateway, and other higher-margin services without truck rolls. Alkira gives Lumen a better chance to monetize network control rather than just bandwidth.

Portfolio Rationalization Improves Focus but Raises Execution Risk

Lumen’s decision to phase out enterprise voice and communications products fits its broader effort to shift capital and talent away from legacy services. Enterprise voice contributed only a very low single-digit percentage of sales, which limits near-term go-to-market risk, but customer migration still requires careful execution. The company is segmenting the base, focusing on larger customers with broader Lumen relationships while using partner options for customers that still need voice. Copper exit, product simplification, and modernization are linked initiatives, with the company targeting $700 million in run-rate savings exiting FY 2026 and $1 billion exiting FY 2027. Better circuit-level economics are allowing Lumen to make sharper decisions about where to maintain, migrate, or shut down legacy assets. The portfolio cleanup can support margin expansion, but only if customer transitions avoid collateral churn in strategic accounts.

Guidance and Final Thoughts

Lumen reiterated its FY 2026 outlook, including adjusted EBITDA excluding special items of $3.1 billion to $3.3 billion, free cash flow excluding special items of $1.9 billion to $2.1 billion, and capital expenditures excluding special items of $3.2 billion to $3.4 billion. The company also guided net cash interest of $650 million to $750 million and cash income taxes refunded of $350 million to $450 million, reflecting a $400 million refund tied to recent tax legislation. Strategic waves remain a key forward indicator, with 100 gig and 400 gig waves revenue in North America enterprise channels up nearly 11% YoY and related sales up nearly 35% YoY in Q2 FY 2026. Lumen also continues to see private connectivity fiber opportunities, but it is prioritizing underused existing assets over new builds with weaker returns.

Lumen’s transformation increasingly depends on expanding software-defined networking and digital services faster than legacy communications revenue declines. Network-as-a-Service, Alkira’s cloud networking capabilities, and higher-capacity optical connectivity provide a stronger strategic foundation, but the pace of customer migration and service attachment will determine how quickly the revenue mix improves. Sustained execution will hinge on whether digital networking adoption, platform integration, and disciplined capital allocation can consistently outpace structural headwinds in the legacy business.

See the full press release on Lumen Technologies’ Q2 FY 2026 financial results on the Company website.

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