Fiber firm Lumen Technologies pulled in $2.8 billion for the second quarter of the year, buoyed by gains with its network-as-a-service (NaaS) offering.

Lumen’s profits marked a nine percent decrease year-on-year (YoY), while its strategic revenue, including sales of its 100 Gbps (100G) and 400G optical wavelength services, increased to around 53 percent of total business revenue, up 17.8 percent YoY.

Lumen CFO Chris Stansbury pointed to the mix shift in these results as “the clearest proof point behind our transformation," with the pivot “happening faster than we expected.”

Overall business revenue fell two percent YoY to $2.4bn, while Lumen’s mass markets revenue dropped 40 percent following the divestiture of the company’s fiber-to-the-home (FTTH) business to AT&T for $5.75 billion.

The latest quarter saw Lumen narrow its net loss by 78 percent YoY, dropping from $915 million to $201 million. The firm also adjusted its full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) 2026 outlook up to $3.3bn.

Lumen touted its NaaS base grew to more than 3,000 customers in the quarter, with CEO Kate Johnson claiming more than 20 percent of these were brand new customers.

“Somewhere around 60 percent … of the customers that were already Lumen customers were adding NaaS circuits. They weren’t migrating,” Johnson added. “This is clearly a share take; it’s not a one-for-one translation of the legacy business into strategic.”

Lumen's legacy

That legacy included voice, copper, and private line provisions, with voice sales recently shuttered at Lumen, reportedly leading to cuts across its partner division. Stansbury stressed that Lumen would meet its existing commitments for the decision was not an “end of life” one.

As Lumen exits copper, Johnson revealed possible replacements include fixed wireless and satellite.

“Part of our voice strategy is basically to provide whatever capability makes sense for that customer and to give them choice along the way. … We have the capability to drop a Starlink puck in place of the infrastructure site that they have today to give them immediate capabilities to replace.”

Johnson’s remarks came as Starlink's parent company SpaceX, announced its own financials, with SpaceX President Gwynne Shotwell calling time on terrestrial connectivity by claiming it would soon displace enterprise connectivity providers with greater disruption than consumer-facing services.

Lumen’s Alkira future

Lumen also linked the rise in 100G and 400G demand to enterprises and neoclouds increasing network capacity for AI, with Stansbury expecting its recent Alkira acquisition to accelerate Lumen’s digital transformation.

“The complexity of allowing networking to work today, which as you scale that for AI, is impossible. … Cloud-native solutions, which is what Alkira brings, are massively disruptive,” the CFO said.

Stansbury was more sheepish on the average monthly recurring revenue (MRR) from an Alkira customer, saying it was too early to tell what Lumen would be expecting on that front. Johnson concurred, but expected Lumen to upsize existing Alkira deals, with Alkira and NaaS freeing it up to sell higher-margin services across both its own and third-party fiber networks.

The approach reduces the need to own every layer of the underlying infrastructure, with Stansbury commenting that this “allows us to deliver services across everyone’s fiber, not just Lumen’s.”

According to the CFO, Lumen’s pivot complements its strategy of monetizing underused conduit installed a quarter of a century ago, which allowed hyperscale customers to deploy networks faster and, through differentiated services, brought Lumen closer to those clients.

By contrast, new fiber construction is less attractive because returns can be “at or below cost of capital levels,” Stansbury said, with Lumen to keep using existing assets where it makes sense. “There is a definite opportunity to deploy more of those underutilized assets for the hyperscalers with great returns."