How LUMN (Lumen Technologies) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a telecommunications provider like LUMN makes money is essential for investors and anyone interested in the business of digital infrastructure and connectivity. In this post, we break down LUMN's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick LUMN Overview

LUMN operates a global communications network, providing fiber-based connectivity, internet, voice, and cloud solutions to enterprise, wholesale, and government customers. Revenue comes primarily from recurring service contracts for data transmission, broadband, and managed network services. The company’s business segments typically include Enterprise Services, Wholesale, and Consumer, though recent filings emphasize a strategic focus on business and government clients.

Revenue Breakdown

• Total Revenue (Q3 2025): $3.09B (−4.2% YoY)
  • [Segment breakdown not disclosed in latest filing; historically, Enterprise and Wholesale are primary contributors.]
  • Growth is pressured by legacy service declines, but partially offset by demand for next-generation fiber and cloud connectivity.

Gross Profit and Margins

• Gross Profit: [Not disclosed in Q3 2025 filing]
  • Cost of Revenue: [Not disclosed]
  • LUMN maintains moderate margins due to the capital-intensive nature of network operations and ongoing transition from legacy to high-margin digital services.
• Most costs come from network operations, maintenance, and technology infrastructure.

Operating Income and Expenses

• Operating Income: [Not disclosed in Q3 2025 filing]
• Operating Expenses: $3.20B (+128.3% YoY)
  • R&D: [Not separately disclosed]
  • SG&A: $829M (+19.1% YoY, 26.9% of revenue) — Includes sales, marketing, administrative, and customer support costs.
  • LUMN continues to invest in network modernization and digital transformation while controlling administrative overhead.

Net Income

• Pre-Tax Income: [Not disclosed]
• Income Tax: [Not disclosed]
• Net Income: $621M (+319.6% YoY, 20.1% net margin)
• LUMN converts a significant portion of sales into profit due to a combination of one-time items (notably $1.75B in "Other" income) and cost controls, despite revenue headwinds.

What Drives LUMN's Money Machine?

• Enterprise and Wholesale Services: Historically over 80% of revenue, driven by long-term contracts for fiber, data, and managed network solutions.
• Network Utilization: High-capacity fiber and IP backbone, with utilization rates and contract renewals as key metrics.
• Strategic Investments: Ongoing capital allocation to next-gen fiber, edge computing, and security services.
• Future Growth Areas: Cloud connectivity, edge services, and government contracts, though these segments are not yet offsetting declines in legacy voice/data.

Visualizing LUMN's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and network costs) taking the largest chunk.
• Even after significant costs and investments, 20.1% of revenue drops to the bottom line in Q3 2025, largely due to extraordinary "Other" income.

Key Takeaways

• LUMN's money comes overwhelmingly from enterprise and wholesale connectivity services.
• High net margin in Q3 2025 is driven by one-time income, not core operations.
• Heavy investment in network modernization, balanced by efficiency in SG&A.
• Ongoing growth is driven by demand for fiber, cloud, and edge solutions, though legacy declines remain a headwind.

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FAQ About LUMN's Income Statement

1. What is the main source of LUMN's revenue in 2025?

LUMN generates over 80% of its revenue from enterprise and wholesale connectivity services, including fiber, IP, and managed network solutions. Consumer and legacy voice/data services contribute a smaller share.

2. How profitable is LUMN in Q3 2025?

LUMN reported net income of $621M in Q3 2025, with a net margin of approximately 20.1%, reflecting significant profitability driven by a large "Other" income item rather than core operating improvements.

3. What are the largest expense categories for LUMN?

The biggest expenses on LUMN's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs, which reached $829M in Q3 2025 (26.9% of revenue), as LUMN prioritizes network operations, customer support, and digital transformation.

4. Why does the Consumer segment operate at a loss?

The Consumer segment, despite generating revenue, posted an operating loss in Q3 2025. This is because LUMN aggressively invests in network upgrades and customer retention, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does LUMN's effective tax rate compare to previous years?

LUMN's effective tax rate in Q3 2025 was not disclosed, but recent filings suggest it is consistent with prior years, reflecting the impact of tax benefits from restructuring and international operations.